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 - (WMT) - BUY
BUY the Wal-Mart (WMT) September 2019 $119-$122 in-the-money vertical BEAR PUT spread at $2.60 or best
Opening Trade
8-19-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 42 contracts
Which company has one of the largest shares of products imported from China? That would be Walmart, which I have always referred to the local Chinese embassy.
We have just had a major pop in the stock, thanks to surprisingly good earnings. However, I don’t think the company is out of the woods yet and another leg down is in the works.
Next to come? The Chinese retaliation against new American tariffs on September 1.
Trump’s order to raise tariffs on the last $300 billion of Chinese imports will hit (WMT) squarely in between the eyes. Their profit margins are so small that they will be vaporized by a 10% increase in cost, which they will be unable to pass on in this Amazoned world. They are already the largest minimum wage employer in the US so there certainly isn’t room to cut wages.
I am therefore buying Walmart (WMT) September 2019 $119-$122 in-the-money vertical BEAR PUT spread at $2.60 or best.
Don’t pay more than $2.75 or the risk/reward will go against you.
This is a bet that the Walmart (WMT) will not trade above $119.00 by the September 20 option expiration day in 19 trading days.
If you don’t do options, stand aside. We are close to the top of a new range and it is too late to go long or short.
Here are the specific trades you need to execute this position:
Buy 42 September 2019 (WMT) $122 puts at………….………$10.00
Sell short 42 September 2019 (WMT) $119 puts at……..…….$7.40
Net Cost:………………………….………..………….….....................$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(42 X 100 X $0.40) = $1,680 or 15.38% in 19 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.
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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.
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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.
