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.
Tech Alert - Fiserv, Inc. (FISV) – SELL – TAKE PROFITS
SELL TAKE PROFITS Fiserv, Inc. (FISV) May 2020 $110-$115 in-the-money vertical BULL put spread at $4.65 (20% to 0%)
Closing Trade
5-1-2020
expiration date: May 15, 2020
Portfolio weighting: SELL 20% DOWN TO 0%
Number of Contracts = 44 contracts
If you remember correctly, I executed 2 FISV put spreads to protect my aggressive MSFT call spread and FISV call spread.
FISV exploded 5% up to $105 on Google’s earnings results and that had us deep in the red on these two FISV put spreads which we bought for $4.25 and $4.50, but it also gave us a chance to take profits on the call spreads.
Well, after breaking $105 a few days ago, the tech market has sold off with vengeance with FISV trading closer to $100 today and I am inclined to take profits here on both positions.
By taking proceeds of $4.65 here, we will make 3.30% on the put spread that cost $4.50 and 8.80% on the spread that cost $4.25.
The tech markets are exhausted to the upside and we are reloading the bazookas after big tech has had a largely successful earnings season.
After a rough start to the year staring at -7% performance on the year, we have hit all the right spots the past month and are in positive territory for the year with some room to spare.
The volatility has been treacherous this year and taking quick profits is not only a great strategy but a means of survival.
Good job and on to the next trade. We have one more call spread left on Akamai with a May 15th expiration.
Here are the specific trades you need to execute this position: (closing out 2 put spreads)
Sell 44 May 2020 (FISV) $115 put at…………..........………$14.60
Buy to cover short 44 May 2020 (FISV) $110 put………….$9.95
Net Proceeds:………............……………..…….………..…….....$4.65
(For the put spread executed on 4/28 at $4.25)
Profit: $4.65 - $4.25 = $0.40
(22 X 100 X $.40) = $880 or 8.80%
(For the put spread executed on 4/20 at $4.50)
Profit: $4.65 – 4.50 = $0.15
(22 X 100 X $.15) = $330 or 3.3%
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.
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.
