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 - (VXX) – TAKE PROFITS
SELL the IPath S&P 500 VIX Short Term Futures ETN (VXX) January 2019 $40 calls at $3.25 or best
expiration date: January 18, 2019
Portfolio weighting: 5%
Number of Contracts = 17 contracts
I am going to take the low hanging fruit here and take profits on my position in the IPath S&P 500 VIX Short Term Futures ETN (VXX) January 2019 $40 calls at $3.25 or best.
By coming out here you have the cash available to buy the next (VIX) collapse. You make the money on the volume, not hanging on for the few home runs.
Despite an onslaught of bad news from Washington on the trade front declines in the indexes have been modest at best.
The rule of thumb in the Volatility Index (VIX) is that you sell every spike.
By coming out here you get to make a profit of $13.58%, or $646 on a 5% weighting.
Here are the specific trades you need to execute this position:
Sell 17 January 2019 (VXX) $40.00 calls at……………..…$3.25
Net Proceeds:…………($3.25 X 100 shares per option X 17) = $5,525
Profit: $3.25 – 2.87 = $0.39
$5,525 - $4,879 = $646
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.