Trade Alert - (AAPL) November 13, 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.
SELL the Apple (AAPL) December 2018 $185-$190 in-the-money vertical BULL CALL spread at $3.50 or best
Closing Trade
11-13-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Apple got hit with two black swans in two days. We missed the first one but got hit with the second one.
First, they announced they would no longer release figures on iPhone sales to stop providing competitors with valuable market information. Then a major supplier conceded that their largest customer cut back orders for facial recognition chips by 30%.
Long term, this is a great company. However, in this time of greatly heightened volatility discretion is the better part of valor. Markets can remain irrational longer that you could remain liquid. It’s far easier to get out of a small hole than a big one.
The shares have dropped $13 in two days and we are now too close to our upper strike price with too long to go to the December 21 option expiration, some 33 days away.
I am therefore selling the Apple (AAPL) December 2018 $185-$190 in-the-money vertical BULL CALL spread at $3.50 or best.
If you bought the stock keep sell it for the short term but hold it for the long term. This will be a $300 stock someday, but it may have to go there via $185 or even $180, something my current position can’t tolerate.
Here are the specific trades you need to execute this position:
sell 25 December 2018 (AAPL) $185 calls at………….………$13.60
Buy to cover short 25 December 2018 (AAPL) $190 calls at….$10.10
Net Loss:……………………..…….…………..………….….....$3.50
Loss: $4.00 - $3.50 = -$0.50
(25 X 100 X -$0.50) = -$1,250 or -14.28%.
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.