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 - (DE) – GO SHORT
BUY the Deere & Co. (DE) August 2024 $375-$385 vertical Bear Put debit spread at $8.70 or best
Opening Trade
8-7-2024
expiration date: August 16, 2024
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I only have one position left that is threatening to break a near-strike price and that is the Deere & Co. (DE) August 2024 $330-$340 vertical BULL CALL debit spread. So I am going to hedge it with a new short position in the same name.
This effectively lowers the breakeven point for the long-side trade by $3.40, or $336.60. That is well below a triple bottom for (DE) for the year.
Therefore, I am buying the Deere & Co. (DE) August 2024 $375-$385 vertical Bear Put debit spread at $8.70 or best.
Don’t pay for than $9.40 or you will be chasing.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and increase your bid by 10 cents with a second order.
The bull case for Deere & Co. is simple. Falling interest rates will bring huge cost reductions for heavy borrowers like (DE). The company provides tractors and other heavy equipment used for agriculture, mining, and construction, all of which will see imminent turnarounds thanks to lower interest rates.
Deere $ Co shares are trading at positively subterranean price-earnings multiple of 11X, compared to 21X for the S&P 500 and 40X for (NVDA). It also pays a modest 1.63% dividend yield.
For details about Deere & Co, (DE), please click here to visit their website.
This is a bet that the (DE) will not fall below $340 by the August 16 option expiration in 9 trading days.
Here are the specific trades you need to execute this position:
Buy 12 August 2024 (DE) $385 puts at………….………$42.00
Sell short 12 August 2024 (DE) $375 puts at……….…$33.30
Net Cost:………………………….………..…………........….....$8.70
Potential Profit: $10.00 - $8.70 = $1.30
(12 X 100 X $1.30) = $1,560 or 14.94% in 7 trading days.
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
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 on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
