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) – STOP LOSS
SELL the Amazon (AMZN) November, 2018 $1,550-$1,600 in-the-money vertical BULL CALL spread at $35.00 or best
Closing Trade
10-31-2018
expiration date: November 16, 2018
Portfolio weighting: 10%
Number of Contracts = 3 contracts
I am going to exercise some risk control here and take advantage of the incredible $90 rally in Amazon shares this morning. That means stopping out of my nearest money position.
I have a hefty 30% model portfolio weighting in Jeff Bezos’s company and I don’t want to run that any longer than the current massive short covering rally.
I am therefore selling the Amazon (AMZN) November, 2018 $1,550-$1,600 in-the-money vertical BULL CALL spread at $35.00 or best.
Now that we are back in the money with this position it is much easier to stop out with a small loss. Our remaining double position in the Amazon (AMZN) November, 2018 $1,350-$1,400 in-the-money vertical BULL CALL is a gigantic 15.7% in-the-money and has only 12 days until the November 16 option expiration. In order words, it’s looking good.
It’s looking like the worst correction in tech stocks in a decade is now over. We should now rally through the end of 2018.
If you own Amazon shares outright, keep them. We are going to new highs.
Here are the specific trades you need to execute this position:
Sell 3 November 2018 (AMZN) $1,550 calls at…….………$95.00
Cover short 3 November 2018 (AMZN) $1,600 calls at……….$60.00
Net Cost:………………………….…………..…….….....$35.00
Loss: $40.76 - $35.00 = -$5.46
(3 X 100 X -$5.46) = $1,638 or 13.39%.
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.
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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.
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 it done, don’t worry there will be more.
