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.
Tech Alert - Applied Materials, Inc. (AMAT) – TAKE PROFITS
SELL Applied Materials, Inc. (AMAT) December 2023 $130-$135 in-the-money vertical BULL CALL spread at $4.85
Closing Trade
12-4-2023
expiration date: December 15, 2023
Portfolio weighting: 10%
Number of Contracts = 23 contracts
AMAT was down in November because of a DOJ investigation, and I used that dip to execute an in-the-money bull call spread.
The semiconductor equipment maker was reportedly being investigated for evading export restrictions and sending advanced chipmaking equipment worth hundreds of millions of dollars to Chinese chipmaker SMIC without export licenses.
Citing national security concerns, the U.S. has imposed export controls curbing sales of advanced chips and chipmaking equipment to China. The Justice and Commerce Departments have also formed a task force to investigate and prosecute violations of these restrictions.
The chart looked great and AMAT is a strong company, and the trade was successful.
Now I am taking profits.
Here are the specific trades you need to exit this position:
Sell to Close 23 December 2023 (AMAT) $130 calls at………….………$17.30
Buy to Close 23 December 2023 (AMAT) $135 calls at……….........….$12.45
Net Proceeds:…………………..…..…….………..…….................................$4.85
Profit: $4.85 - $4.30 = $0.55
(23 X 100 X $0.55) = $1,265 or 12.80%
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
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 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.
