When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (VXX) TAKE PROFITS
SELL the IPath S&P 500 VIX Short Term Futures ETN (VXX) May, 2018 $32-$35 in-the-money vertical bull call spread at $2.90 or best
Closing Trade
4-25-2018
expiration date: May 18, 2018
Portfolio weighting: 10%
Number of Contracts = 40 contracts
The Volatility Index is through the roof this morning. Since we bought the (VXX) a week ago, it has risen by a gut churning 11.72%.
So, I am going to take profits on my position in the IPath S&P 500 VIX Short Term Futures ETN (VXX) May, 2018 $32-$35 in-the-money vertical bull call spread at $2.90 or best.
Besides, we have run out of equity positions with which to hedge.
By taking profits we get to relize 77.77% of the maximum potential profit without having to hold it 18 more days until the May 18 options expirations.
With the (VXX) you ALWAYS TAKE THE FIRST PROFIT. You are not rewarded for letting hair grow on this positions, the day to day movements can be so great.
By coming out here you get to reap a $1,400, or 13.72% profit in only 5 trading days.
This was a bet that the (VXX) would not trade below $35 at the May 18 expiration date in 22 trading days.
Here are the specific trades you need to execute this position:
Sell 40 May 2018 (VXX) $32 calls at...............$13.50
Buy to cover short 40 May 2018 (VXX) $35 calls at...$10.60
Net Proceeds:.....................................................$2.90
Profit: $2.90 - $2.55 = $0.35
(40 X 100 X $0.35) = $1,400 or 13.72% in 5 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don't execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
