Trade Alert - (AAPL) June 19, 2018 STOP LOSS
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) - STOP LOSS
SELL the Apple (AAPL)?July, 2018 $180-$185 in-the-money vertical BULL CALL spread at $3.40 or best
Closing Trade
6-19-2018
expiration date: July 20, 2018
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This trade is a classic example of what happens when you get too aggressive, overconfident, and complacent in the late stages of a bull market.
With the markets now in an extremely overbought condition, and my?Mad Hedge Market Timing Index?just having made a heroic run from single digits to 52 I am going to be more cautious than usual.
All it took was yet another cataclysmic presidential tweet ramping up the trade war to push me over the edge.
So now that my long in Apple is approaching a 2.00% of capital loss I am going to stop out and cut my risk.
I am therefore selling my position in the Apple (AAPL) July, 2018 $180-$185 in-the-money vertical BULL CALL spread at $3.40 or best.
With a trailing one year return now at a record 62% we have enormous performance numbers to protect so my tolerance for losses is minimal. In the meantime, the Dow Average is unchanged on the year, while the broader stock indexes are down.
If you don't do options and bought Apple shares outright keep them as the bull story on Apple is alive and well. I just can't promise you what it will do over the next month or so.
Here are the specific trades you need to execute this position:
Sell 25 July 2018 (AAPL) $180 calls at.........................$8.20
Buy to cover short 25 July 2018 (AAPL) $185 calls at..........$4.80
Net Proceeds:.......................................................
Loss: $4.10 - $3.40 = $0.70
(25 X 100 X $0.70) = $1,750 or 20.58%.
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.