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) – TAKE PROFITS
SELL the Tesla (TSLA) December 2022 $225-$230 in-the-money vertical bear put spread at $4.95 or best
Closing Trade - NOT FOR NEW SUBSCRIBERS
12-12-2022
expiration date: December 16, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
I am going to use the 5% dive in Tesla shares this morning to ring the cash register on my Tesla short.
Since I added this trade 15 days ago, Tesla shares have hit new two-year lows, absolutely hammered by the Twitter disaster, product recalls, and production cutbacks in China.
Since I am in “take the money and run” mode, I have inclined to take 92.3% of the maximum potential profit here. Going into cash the day before the epochal and market-moving Consumer Price Index release tomorrow also seems prudent.
As much as I love Tesla for the long term, for 19 trading days until the December 16 option expiration, I thought it would trade sideways at best and down at worst. At the very least, you could use this trade to hedge existing Tesla longs. That is exactly what happened.
Therefore, I am selling the Tesla (TSLA) December 2022 $225-$230 in-the-money vertical bear put spread at $4.95 or best.
As a result, you get to take home $1,500, or 13.79% in 15 trading days. Well done, and on to the next trade.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and lower your offer by 5 cents with a second order.
This was a bet that Tesla (TSLA) would not trade above $225 by the December 16 option expiration day in 19 trading days.
Here are the specific trades you need to close out this position:
Sell 25 December 2022 (TSLA) $230 puts at………........……..…$51.00
Buy to cover short 25 December 2022 (TSLA) $225 puts at….$46.05
Net Proceeds:…………………………..................……….………………$4.95
Profit: $4.95 - $4.35 = $0.60
(25 X 100 X $0.60) = $1,500, or 13.79% in 15 trading days.
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.
