Trade Alert - (CRM) January 9, 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.
SELL the Salesforce (CRM) February 2019 $105-$115 in-the-money vertical BULL CALL spread at $9.70 or best
Closing Trade
1-9-2019
expiration date: February 15, 2019
Portfolio weighting: 10%
Number of Contracts = 12 contracts
With 76.92% of the maximum potential profit, here I am going to take profits on Salesforce. The risk/reward of carrying on for another month until the February 15 option expiration day is no longer favorable.
We managed to catch the better part of the 25% move up in the shares in the past five trading days. Better to keep the bird in the hand versus 1 1/4 in the bush. This market has a nasty habit of taking nice profits away from you.
I am therefore selling the Salesforce (CRM) February 2019 $105-$115 in-the-money vertical BULL CALL spread at $9.70 or best.
By coming out here you get to earn $1,200, or 11.49% in only 5 trading days.
This was a bet that Salesforce (CRM) would not trade below $115.00 by the February 15 option expiration day in 29 trading days.
If you have the stock, sell it for the short term but keep it for the long term. It has another double in it.
Here are the specific trades you need to exit this position:
Sell 12 February 2019 (CRM) $105 calls at………….………$41.00
Buy to cover short 12 February 2019 (CRM) $115 calls at….$31.30
Net Proceeds:………………………….………..………….….....$9.70
Profit: $9.70 - $8.70 = $1.00
(12 X 100 X $1.00) = $1,200 or 11.49% 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.