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 Trade Alert - (AMZN) – STOP LOSS
SELL the Amazon (AMZN) October, 2018 $1,800-$1,900 in-the-money vertical BULL CALL spread at $79.00 or best
Closing Trade
10-4-2018
expiration date: October 19, 2018
Portfolio weighting: 10%
Number of Contracts = 1 contract
The two-day, 12 basis point spike in the US Treasury bond market has certainly put the cat among the pigeons in the stock market and risk taking in general. Traders are bailing on their winners at an astounding rate.
I am therefore going to de-risk my portfolio and sell my position in the Amazon (AMZN) October, 2018 $1,800-$1,900 in-the-money vertical BULL CALL spread at $79.00 or best.
This was a short term momentum driven expiration play, and once these turn against you, you should run for cover.
The loss here is offset by the profit we made selling short US Treasury bonds (TLT). That leaves us with Microsoft (MSFT), which is still showing a nice profit and will leave us still up on the month.
If you own Amazon stock, sell it for the short term but hold it for the long term.
Here are the specific trades you need to execute this position:
Sell 1 October 2018 (AMZN) $1,800 calls at…….………$136.00
Buy to cover short 1 October 2018 (AMZN) $1,900 calls at….$57.00
Net Proceeds:………………………….…………..…….…
LOSS: $90.00 = $79.00
(1 X 100 X $79.00) = -$1,100 or -11.11%.
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.
