Trade Alert - (DIS) May 6, 2019 - SELL

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 - (DIS) – SELL - TAKE PROFITS

SELL the Walt Disney Corp (DIS) May 2019 $125-$130 in-the-money vertical BULL CALL spread at $4.20 or best

Closing Trade

5-6-2019

expiration date: May 17, 2019

Portfolio weighting: 10%

Number of Contracts = 22 contracts

The kitchen is getting too hot for me.

Trump’s decision to raise tariffs on $200 billion worth of Chinese imports by 25% definitely puts a chink in the armor of the bull market. Markets have been wildly overbought and were just served up a reason for a correction on a silver platter. What we have here is potential major black swan, the first of 2019.

I am therefore selling the Walt Disney Corp (DIS) May 2019 $125-$130 in-the-money vertical BULL CALL spread at $4.20 or best. We have major profits this year to protect and this is no time to take a flyer.

I rarely stop out of a position this far in-the-money with such a short time to expiration. But the China trade situation could get a lot worse before it gets better. It’s far easier to dig yourself out of a small hole than a big one.

Now we know why copper and Freeport McMoRan (FCX) suffered its big drop last week. The Chinese clearly had the heads up that the trade talks were dead in the water, while our administration was telling us a beautiful deal would be signed on Friday.

This was a bet that Disney shares would not fall below the $130.00 strike price by the May 17 options expiration date.

Here are the specific trades you need to enter this position:

Sell 22 May 2019 (DIS) $125 calls at………………...………$9.40
Buy to cover short 22 May 2019 (DIS) $130 calls at………….$5.20
Net proceeds:……………………..…….………..………….….....$4.20

Loss: $4.55 - $4.20 = -$0.35

(22 X 100 X -$0.35) = -$770.

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 Spread” by clicking here at
https://www.madhedgefundtrader.com/ltt-vbpds/

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.

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