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 - (BA) – SELL-TAKE PROFITS
SELL the Boeing (BA) December 2019 $310-$330 in-the-money vertical BULL CALL spread at $18.80 or best
Closing Trade
12-11-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 6 contracts
With seven trading days to go until the December 20 option expiration, the risk reward on our Boeing position is turning against us. We are now only $12 above our upper strike price.
I am therefore going to take profits on the Boeing (BA) December 2019 $310-$330 in-the-money vertical BULL CALL spread at $18.80 or best.
This will give us cash with which to rebuy the shares lower down. By taking profits here, you get to book $1,080, or 10.59% in 6 trading days. Not bad.
Buy every bad news on Boeing (BA).
Did you know that this company has returned more cash to shareholders over the last 20 years than any other company, including dividends and share buybacks? It is essentially the best and most stable company in America. Buying it at a huge discount is a gift.
The latest dive was prompted by a stress test that tore a plane apart. The incident was totally misread by the media, which was interpreted as a fail. In fact, it was a pass, as these tests are ALWAYS continued until the plane is torn apart. To really break a plane, you have to have someone like ME fly it.
All Boeing 737 Max 8 planes have been grounded. The 58 new $100 million planes a month scheduled for delivery have been suspended. That means one of the largest companies in the United States is banned from selling far and away its most important product.
We are probably only a month away from Boeing receiving the biggest piece of GOOD news ever when the 737 max returns to the skies.
The truth is that the technological and cost advantages of the Boeing 737 Max are so enormous that airlines can’t compete without them. That explains why Boeing has a ten-year, 4,636 plane order book for the plane. Boeing has to fix this problem or there will be NO aircraft industry.
This is also why Southwest Airlines (LUV) has ordered 249 of the cutting edge planes, followed by 123 for United (UAL) and 76 for American (AAL).
Having been a commercial pilot for most of my life, and once owned a European air charter company, I have some insights into this issue.
These two crashes are not just a software problem, which can be fixed in days. It is a pilot training issue. And I have been subjected to this training myself hundreds of times until I can do it blindfolded and in my sleep. Whenever you have a runaway autopilot problem, you PULL THE DAMN CIRCUIT BREAKER!
However, if you are poorly trained, as are many emerging airline pilots, and can’t remember which of the 100 circuit breakers you need to pull with a runaway autopilot, then the plane will crash. The harsh truth here is that MOST modern-day pilots can’t hand fly a plane without an autopilot.
This ws a bet that Boeing shares will not fall below the $330 strike price by the December 20 options expiration date.
Here are the specific trades you need to execute this position:
Sell 6 December 2019 (BA) $310 calls at….....……….………$32.00
Buy to cover short 6 December 2019 (BA) $330 calls at….$13.20
Net Proceeds:……………………...………............………….….....$18.80
Profit: $18.80 - $17.00 = $1.80
(6 X 100 X $1.80) = $1,080 or 10.59% in 6 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.
