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 Walmart (WMT) November 2019 $125-$130 in-the-money vertical bear put spread at $4.20 up to $4.50
Opening Trade
10-14-2019
expiration date: November 15, 2019
Portfolio weighting: 10%
Number of Contracts = 23 contracts
The truth is out from the China state media about the trade deal and the fact is that there is no trade deal. There is just a desire to keep talking. Everything the administration told us last week was nothing more than hot air, as I expected. As a result, the air is going to come out of this market for the time being.
I am therefore going to use the 1,400-point rally to increase my short positions. My remaining longs are so far in-the-money that they will almost certainly expire at their maximum value at the Friday options expiration on October 18.
So, I am buying the Walmart (WMT) November 2019 $125-$130 in-the-money vertical bear put spread at $4.20 or best.
Don’t pay more than $4.50 or the risk/reward will go against you.
This is a bet that the Walmart (WMT) will not trade above $125.00 by the November 15 option expiration day in 23 trading days. Walmart has major exposure to the China trade, dependent on the Middle Kingdom for a high percentage of their imports.
If you don’t do options, stand aside. This is just a short-term bear play.
Here are the specific trades you need to execute this position:
Buy 23 November 2019 (WMT) $130 puts at…………..……$10.50
Sell short 23 November 2019 (WMT) $125 puts at………….$6.30
Net Cost:………………………….………..………….……................$4.20
Potential Profit: $5.00 - $4.20 = $0.80
(23 X 100 X $0.80) = $1,840 or 19.04% in 23 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.
