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 $167.50-$172.50 in-the-money vertical BEAR PUT spread at $4.80 or best
Closing Trade
9-20-2017
expiration date: October 20, 2017
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am going to take the gift of a sudden $4.00 plunge in Apple shares this morning and take profits in my short position.
The reviews are out on the new series 3 IWatch, and they are dreadful.
Apparently it doesn't work, with problems in battery life, connectivity, and security.
I expected something just like this to happen after all the hoopla surround the IPhone X launch. I just didn't expect it to happen in only two days.
So I am therefore selling my position in the Apple (AAPL) October, 2017 $167.50-$172.50 in-the-money vertical BEAR PUT spread at $4.80 or best.
Buy coming out here we don't have to lug the position for 22 days more into the October 20 options expiration.
Yet we get to keep 66.66% of the maximum potential profit. The risk/reward overwhelmingly favors taking the money and running.
By exiting here you have earned $920 in only two days, or a 9.09% return on your investment.
This is the 25th consecutive profitable trade in the Mad Hedge Trade Alert Service.
By following my proprietary Mad Hedge Market Timing Index over time, you find that accidents like this constantly tend to happen in your favor.
The Index was at a nosebleed 81 when I strapped this baby on. Now it has backed off to 76.
This was a bet that Apple shares would NOT rise above $167.50 by the October 20 option expiration in 24 trading days, compared to the then current $159.81.
Apple share are now trading at $154.78.
If you bought Apple shares, keep them.
Longer term, I think Apple will continue to appreciate, possibly to $200 by some time in 2018.
To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bear Put Spread by clicking here at
http://www.madhedgefundtrader.com/ltt-vbpds/
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.
Here are the specific trades you need to execute this position:
Sell 23 October, 2017 (AAPL) $172.50 puts at.............................$18.00
Buy to cover short 23 October, 2017 (AAPL) $167.50 puts at......$13.20
Net Proceeds:............................................................................$4.80
Profit: $4.80 - $4.40 = $0.40
(23 X 100 X $0.40) = $920 or 9.09% in 2 trading days.
