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 - (AAPL) – BUY
BUY the Apple (AAPL) February 2022 $135-$140 in-the-money vertical Bull Call spread at $4.20 or best
Opening Trade
1-24-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I love Apple for the long term.
With the Dow Average down $1,000 and the Volatility Index (VIX) just short of a one-year high, it’s time to ring the cash register again with new underpriced longs.
The S&P 500 is now down an astonishing 12.5% from the high made 12 trading days ago. It has already hit my worst-case scenario downside target presented at my Wednesday, January 19 global strategy webinar.
Time to buy!
I am therefore buying the Apple (AAPL) February 2022 $135-$140 in-the-money vertical Bull Call spread at $4.20 or best.
Don’t pay more than $4.50 or you’ll be chasing on a risk/reward basis.
This is a bet that Apple will not fall below $140 by the February 18 option expiration. Even if Russia invades the Ukraine, the public is not going to stop buying iPhones.
The advantage of these strike prices is that you get huge support from the 50-week moving average at $143.88.
Here are the specific trades you need to execute this position:
Buy 24 February 2022 (AAPL) $135 calls at………….………$26.00
Sell short 24 February 2022 (AAPL) $140 calls at….………$21.80
Net Cost:………………………...............….………..………….….....$4.20
Potential Profit: $5.00 - $4.20 = $0.80
(24 X 100 X $0.80) = $1,920 or 16.27% in 19 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 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.
