As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (EEM)- SELL-STOP LOSS
SELL the iShares MSCI Emerging Market ETF (EEM) October, 2016 $33.50-$36.50 in-the-money vertical bull call spread at $2.24 or best
Expiration Date: October 21, 2016
Portfolio Weighting: 10%
Number of Contracts = 38 contracts
As much as I love the emerging markets long term, this position has violated both of my stop loss limits.
It is approaching a 2% loss of capital, and it also hit its upper strike price at $36.50.
This may just be a short term taper tantrum ahead of the Sept 20 Fed meeting. However, I have to consider my overall risk in view of the Friday losses.
The iShares MSCI Emerging Market ETF (EEM) October, 2016 $33.50-$36.50 in-the-money vertical bull call spread is my most aggressive position. Therefore, out it goes.
If you bought the ETF instead, keep it. I think the (EEM) is going much higher over time.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain about how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must be logged into your account to view the video.
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.
Here are the specific trades you need to execute this position:
SELL 38 October, 2016 (EEM) $33.50 calls at????.?.??$3.30
BUY TO COVER ?short 38 October, 2016 (EEM) $36.50 calls?..$1.06
Loss: $2.66 - $2.24 =- $0.42
(38 X 100 X -$0.42) = -$1,596 or -15.78%