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 – (BIIB) STOP LOSS
SELL the Biogen (BIIB) July, 2017 $260-$265 in-the-money vertical bull call spread at $3.42 or best
expiration date: July 21, 2017
Portfolio weighting: 10%
Number of Contracts = 24 contracts
There is a research report circulating in the market today predicting that Biogen’s interferon therapies, Avonex and Plegridy, will see a 6% fall in sales this year.
This is not a big deal, but it is prompting traders to take profits in the name on a generally weak day.
This is the ultimate high beta sector, and while the returns on winners can be huge, stop losses are also a much more frequent occurrence.
I know many traders who won’t touch the sector with a ten-foot pole, ever, no matter how good the story.
The big buzz kill for pharmaceuticals and health care this week was the Senate’s dismal failure to pass a Health Care bill, triggering a route. They weren’t even close.
We may not see a health care bill pass in 2017.
So and am going to exercise my rigid risk control and stop out of my position in Biogen (BIIB) July, 2017 $260-$265 in-the-money vertical bull call spread.
This is the high beta name in my trading book, and ditching it will substantially de-risk my portfolio. This cancels out the one-day profit we made in Gilead Sciences (GILD) last week.
The key to keeping my performance close to a new all time high all year has been my preference for stopping out of losers quickly once it apr’s the wheels may fall off.
If you have the (XLV), keep it. It is a long-term winner.
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 Bull Call Debit Spread by clicking here at http://members.madhedgefundtrader.com/ltt-executetradealerts/.
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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.
Be sure you’ve signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today’s market, investors need every advantage they can get.
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 with only 13 days to expiration.
Here are the specific trades you need to execute this position:
Sell 24 July, 2017 (BIIB) $260 calls at……………$13.10
Buy to cover short 24 July, 2017 (BIIB) $265 calls at…….$9.68
Loss: $4.25 – $3.42 = -$0.83
(24 X 100 X -$0.83) = $1,992 or 19.52%.