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 - (RIVN) – TAKE PROFITS
SELL the Rivian (RIVN) October 2022 $25-$30 in-the-money vertical Bull Call spread at $4.30 or best
Closing Trade
10-13-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I am going to use the$2.00 rally of the lows this morning to get out of my position in Rivian at cost. We are too close to our nearest strike price to continue in these incredibly volatile conditions for six more trading days.
Absolutely everything went against us on this trade. The stock fell 25% and volatility rose. All of our profit came from one month of time decay, such is the wonder of the vertical bull call debit spread.
I am therefore selling the Rivian (RIVN) October 2022 $25-$30 in-the-money vertical Bull Call spread at $4.30 or best.
As a result, you get to take home $240 or 2.30% in 20 trading days. Well done and on to the next trade.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
Rivian is the one electrical vehicle maker most likely to make it after Tesla (TSLA). Its largest outside shareholder is Amazon, which helped start of the company with an order for 100,000 electric delivery vehicles. Yes, I hate to say it, but Rivian could be the next Tesla and I did pretty good with the last one.
A Rivian passed me on the road the other day and it’s the coolest thing I’ve ever seen. Don’t bother trying to buy one as there is a two-year waiting list, even at $69,000 each stripped down, and I don’t care who you know. Fully loaded they are selling for $89,000 list with a 400-mile range, and $140,000 on the black market.
To learn more about the company, please visit their website at https://rivian.com.
With the Volatility Index (VIX) reaching $26 today, it’s time to start dipping your toe in the water with risk again. Today, you can add call spreads that are so far in the money that it is almost impossible to lose money.
This was a bet that Rivian would not fall below $30 by the October 21 options expiration in 26 trading days.
Here are the specific trades you need to close out this position:
Sell 24 October 2022 (RIVN) $25 calls at……….............….………$7.00
Buy to cover short 24 October 2022 (RIVN) $30 calls at…………$2.70
Net Proceeds:…………………………...............………..………….….....$4.30
Profit: $4.30 - $4.20 = $0.10
(24 X 100 X $0.10) = $240 or 2.30% in 20 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.
Cool!
