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Trade Alert - (WMT) August 12, 2019 - SELL-TAKE PROFITS

Trade Alert

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.


Alert

SELL the Wal-Mart (WMT) August 2019 $114-$117 in-the-money vertical BEAR PUT spread at $2.90 or best

Closing Trade

8-12-2019

expiration date: August 16, 2019

Portfolio weighting: 10%

Number of Contracts = 40 contracts

This option spread expires on Friday, but Wal-Mart (WMT) earnings are out Thursday morning. So, I am going to take the bird in the hand rather than going for the 1.2 birds in the bush.

I am therefore selling the Wal-Mart (WMT) August 2019 $114-$117 in-the-money vertical BEAR PUT spread at $2.90 or best. By coming out here you get to take home 80% of the maximum potential profit. That amounts to $1,600 or 16% in six trading days, certainly nothing to sneeze at.

Which company has one of the largest shares of products imported from China? That would be Wal-Mart, which I have always referred to the local Chinese embassy.

Trump’s order to raise tariffs on the last $300 billion of Chinese imports will hit (WMT) squarely in between the eyes. Their profit margins are so small that they will be vaporized by a 10% increase in cost, which they will be unable to pass on in this Amazoned world. They are already the largest minimum wage employer in the US so there certainly isn’t room to cut wages.

On the other hand, the president might announce that he is satisfied with progress in the talks and delay the tariff rise by three months, six months, a year, or forever. Nobody knows anything.

This was a bet that the Wal-Mart (WMT) would not trade above $114 by the August 16 option expiration day in 10 trading days.

Here are the specific trades you need to execute this position:

Sell 40 August 2019 (WMT) $117 puts at………….………$11.00

Buy to cover short 40 August 2019 (WMT) $114 puts at…….$8.10

Net Cost:………………………….………..………….….....$2.90

Profit: $2.90 - $2.50 = $0.40

(40 X 100 X $0.40) = $1,600 or 16% in 6 trading days.

To see how to enter this trade in your online platform, please look at the order ticket below, 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 a Vertical Bear Put Spread” by clicking here at
https://www.madhedgefundtrader.com/ltt-vbpds/

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.

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https://www.madhedgefundtrader.com/wp-content/uploads/2016/02/Alert-e1457452190575.jpg 135 150 DougD https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png DougD2019-08-12 11:26:522019-08-12 11:26:52Trade Alert - (WMT) August 12, 2019 - SELL-TAKE PROFITS

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There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

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Link to: August 12, 2019 - MDT Pro Tips A.M. Link to: August 12, 2019 - MDT Pro Tips A.M. August 12, 2019 - MDT Pro Tips A.M. Link to: Trade Alert - (TTD) August 12, 2019 - BUY Link to: Trade Alert - (TTD) August 12, 2019 - BUY Trade Alert - (TTD) August 12, 2019 - BUY
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