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) TAKE PROFITS
SELL the Apple (AAPL) October, 2017 $140-$145 in-the-money vertical BULL CALL spread at $4.98 or best
Closing Trade-NOT FOR NEW SUBCRIBERS
expiration date: October 20, 2017
Portfolio weighting: 10%
Number of Contracts = 22 contracts
With the markets now more overbought than at any time in the last 17 years, I am going to start taking money off the table.
I am therefor taking profits in my position in the (AAPL) October, 2017 $140-$145 in-the-money vertical BULL CALL spread at $4.98 or best.
Get anywhere close to the price and you will have captured 96.15% of the maximum potential profit.
Your 12 day profit comes to a respectable 11.16%.
The risk/reward of continuing for the remaining six trading days until the??October 20 options expiration is no longer favorable.
We are now three months into the FANG flat line that started in July, and I think we have at least another three months to go, when the iPhone X numbers start coming out.
This favors an “Iron Condor” type strategy of buying ever dip and selling every rally.
If Apple drops back to the high $140’s I strap this position on again. If Apple rises too fast, I’ll sell.
Rapid moves in the shares of the world’s largest company are no sustainable.
Buying Apple shares after a $21, 12% correction sounded like a good idea to me last month.
We have a Ping-Pong market now, with investors rapidly rotating back and forth between the FANG’s and domestic laggards, like industrial, railroads, energy, legacy semiconductors, financials, and metals.
After a serious dump, the FANG’s are not far from a short-term bottom.
This was a bet that Apple shares would NOT fall below $145 by theOctober 20 option expiration in 18 trading days, compared to the then current $156.46.
Longer term, I think Apple will continue to appreciate, possibly to $200 by some time in 2018.
Here are the specific trades you need to execute this position:
Sell 22??October, 2017 (AAPL) $140 calls at……………………………………$17.00
Buy to cover short 22??October, 2017 (AAPL) $145 calls at……………..$12.02
Profit: $4.98 – $4.48 = $0.50
(22 X 100 X $0.50) = $1,100 or 11.16% in 12 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 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.