Trade Alert - (AMZN) January 14, 2019 - SELL-TAKE PROFITS
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 - (AMZN) – TAKE PROFITS
SELL the Amazon (AMZN) February 2019 $1,200-$1,300 in-the-money vertical BULL CALL spread at $96.50 or best
Closing Trade
1-14-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 1 contracts
We have caught a fabulous run-up in Amazon shares, some 200 points. As a result, we have captured 84% of the maximum potential profit in a mere eight trading days. We now appear to be bumping up against some technical short-term resistance.
I am therefore selling the Amazon (AMZN) February 2019 $1,200-$1,300 in-the-money vertical BULL CALL spread at $96.50 or best. The risk/reward of carrying this position another month in this tempestuous environment is no longer favorable. I would rather have dry powder to put to work during the next market meltdown.
As a result, you have earned $1,450 or 17.68% in 8 trading days. I wish they were all this easy. I’ll look to buy back this position in the next serious market selloff. I love this stock. Well done, and on to the next trade.
If you bought the stock keep it. I highly doubt that Amazon will ever see $1,300 again. There’s a long-term double in the shares from here.
This was a bet that Amazon shares would NOT fall below $1,300 by the February 15 option expiration date in 29 trading days.
This is also a bet that we are NOT already in a recession which I believe is still at least 6-12 months off.
Here are the specific trades you need to execute this position:
Sell 1 February 2019 (AMZN) $1,200 calls at…….………$442.00
Buy to cover short 1 February 2019 (AMZN) $1,300 calls at..$345.50
Net Proceeds:………………………….…………..…….….....$96.50
Profit: $96.50 - $82.00 = $14.50
(1 X 100 X $14.50) = $1,450 or 17.68% in 8 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.