Tech Trade Alert - (MSFT) May 14, 2018 TAKE PROFITS
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 - (MSFT) TAKE PROFITS
SELL the Microsoft (MSFT) June, 2018 $77.50-$82.50 in-the-money vertical BULL CALL spread at $4.90 or best
Closing Trade
5-14-2018
expiration date: June 15, 2018
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I think tech stocks are peaking here for the short term. The long term story is still alive and well, but they have had a monster run over the past two weeks.
So I am selling my position in the Microsoft (MSFT) June, 2018 $77.50-$82.50 in-the-money vertical BULL CALL spread at $4.90 or best.
Buy coming out here, you get to make a respectable 11.36% in 20 trading days. That brings our year to date performance for the Mad Hedge Technology Letter up to a robust +14.31%. At this point we have zero risk.
In any case, we have reaped 83.33% of the maximum potential profit, so there is not much payoff for hanging on for another month in this unpredictable world.
If you own Microsoft stock keep it. It can still rise substantially from here over the long term.
Here are the specific trades you need to exit this position:
Sell 23 June 2018 (MSFT) $77.50 calls at........................$20.80
Buy to cover short 23 June 2018 (MSFT) $82.50 calls at...........$15.90
Net Proceeds:..................................................................$4.90
Profit: $4.90 - $4.40 = $0.50
(23 X 100 X $0.50) = $1,150 or 11.36% in 20 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, 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 Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.