Trade Alert – (TSLA) April 3, 2019 – SELL-STOP LOSS
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 – (TSLA) – SELL-STOP LOSS
SELL the Tesla (TSLA) April 2019 $300-$320 in-the-money vertical BEAR PUT spread at $14.00 or best
Closing Trade
4-3-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 5 contracts
This trade has been a real disaster. Since I sold short last week the shares have risen almost every day. This shows you the risks of executing a counter-trend trade.
We are getting too close to the lower strike in the spread with only eight days to expiration, so the risk/reward is turning against us.
I am therefore selling the Tesla (TSLA) April 2019 $300-$320 in-the-money vertical BEAR PUT spread at $14.00 or best.
This was a bet that Tesla shares will not rise above the $300 strike price by the April 18 options expiration date in 14 trading days. That would be a total rise of 15.38% from the current level, or $38.
If you sold short a small position the stock outright for a quick trade, cover your short.
Here are the specific trades you need to exit this position:
Sell 5 April 2019 (TSLA) $320 puts at……………..…….………$61.00
Buy to cover short 5 April 2019 (BA) $300 puts at………….$43.20
Net Cost:……………………..…….………..………….…………………$17.80
Loss: $17.80 – $14.00 = -$3.80
(5 X 100 X $3.80) = -$1,900
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.