Trade Alert - (HD) August 28, 2017
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 - (HD) TAKE PROFITS
SELL the Home Depot (HD) September, 2017 $141-$144 in-the-money vertical BULL CALL spread at $2.94 or best
Closing Trade
8-28-2017
expiration date: September 15, 2017
Portfolio weighting: 10%
Number of Contracts = 38 contracts
I love taking a monster profit in only three trading days.
I can't believe that other traders didn't run up Home Depot (HD) stock ahead of a massive Hurricane Harvey hours before I was going to slam into Texas.
As of this writing, every Home Depot store in the Lone Star State have been sold out of building supplies.
At the current price we have harvested 85% of the maximum potential profit in the position.
In addition, by taking profits today, you can avoid getting hit with the quarter stock dividend triggered by your short position in the (HD) $144 calls, however unlikely that may be.
I am therefore taking profits in the Home Depot (HD) September, 2017 $141-$144 in-the-money vertical BULL CALL spread at $2.94 or best.
My profit on this position is $1,292, or 13.08% for the model $10,000 position size.
With this trade, the Mad Hedge Fund Trader August performance rockets to a ballistic 18%, the most since the decode old inception of the service.
As for the many of you who first subscribed the this service, well done. You covered most of the cost of this serve ON THE FIRST TRADE, as I promised.
This was a bet that Home Depot shares would NOT fall below $144.00 by the September 15 option expiration in 16 trading days, compared to the then current $147.81.
As it turned out, we only had to wait three days, or one hurricane later.
We now have the extra cash we need to plow into a new position.
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bull Call Spread by clicking here at
https://www.madhedgefundtrader.com/ltt-vbpds/
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. If it doesnt get done, then bump up your bid for the spread by a few cents.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. You are trying to buy your own yacht with this trade, not your broker's.
Don't execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
Here are the specific trades you need to execute this position:
SELL 38 September, 2017 (HD) $141 calls at...............................$10.50
Buy to cover short 38 September, 2017 (HD) $144 calls at.............$7.56
Net Cost:.......................................................................................$2.94
Profit: $2.94 - $2.60 = $0.34
(38 X 100 X $0.34) = $1,292 or 13.07% in 3 trading days.
