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) – TAKE PROFITS
SELL of the Walmart (WMT) October 2019 $109-$112 in-the-money vertical bull call spread at $2.98
Closing Trade
10-11-2019
expiration date: October 18, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
If you sell a stock and it refuses to go down, you buy the daylights out of it.
That’s what I did with Walmart (WMT) over the past month. On September 19, I bought a (WMT) put spread. The stock quickly dropped 10%, but there was no follow-through, so I covered for a quick profit. Then on the next dip I went back in on the long side. Both trades worked.
This morning we have a massive 300 point opening up in the Dow Average on the back of optimism about the China trade talks. It is all short covering. Selling into these “optimism” rallies has been the most reliable moneymaker all year.
I am therefore taking profits in the Walmart (WMT) October 2019 $109-$112 in-the-money vertical bull call spread at $2.98 or best. I have already received emails from readers that they are getting done at this price.
This was a bet that the Walmart (WMT) would not trade below $112.00 by the October 18 option expiration day in 12 trading days.
Here are the specific trades you need to execute this position:
SELL 38 October 2019 (WMT) $109 calls at…….........…$10.60
BUY TO COVER 38 October 2019 (WMT) $112 calls at….$7.62
Proceeds:………………………….………..………….….……….....$2.98
Profit: $2.98 - $2.60 = $0.38
(38 X 100 X $0.38) = $1,444 or 14.61% in 7 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.
