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 - (CCL) – TAKE PROFITS
SELL the Carnival Cruise Lines (CCL) March 2020 $36-$38.00 in-the-money vertical Bear Put spread at $1.98 or best
Closing Trade – NOT FOR NEW SUBSCRIBERS
3-11-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 59 contracts
I am going to keep with my buy low, sell high philosophy.
So, I am going to use today’s 900-point dip in the Dow Average to cover my short. It's not often that I get to sell short a stock like Carnival Cruise Lines and watch it collapse 40% in 5 trading days, but that is what has happened.
My bet that the Corona effects on the cruise industry were vastly underestimated by the market and that the industry was about to implode proved correct.
I checked cruise prices for this summer, and they are offering fantastic deals down 50% from the list prices that prevailed only a month ago. Almost all Asian cruises have been cancelled forcing massive refunds which have yet to hit the income statement.
I am therefore selling the Carnival Cruise Lines (CCL) March 2020 $$36-$38.00 in-the-money vertical Bear Put spread at $1.98 or best. Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This was a bet that Carnival Cruise Lines (CCL) would not trade above $36 by the March 20 option expiration day in 12 trading days.
Here are the specific trades you need to execute this position:
Sell 59 March 2020 (CCL) $38.00 puts at…….........…….………$17.00
Buy to cover short 59 March 2020 (CCL) $36.00 puts at….….$15.02
Net Proceeds:……….……..…….………..…...................……….….....$1.98
Profit: $1.98 - $1.60 = $0.38
(59 X 100 X $0.38) = $2,242 or 23.75% in 5 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.
