Trade Alert - (GS) October 13, 2017
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 - Goldman Sachs (GS) STOP LOSS
SELL the Goldman Sachs (GS) October, 2017 $227.50-$232.50 in-the-money vertical bull call spread at $4.10 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
10-13-2017
expiration date: October 20, 2017
Portfolio weighting: 10%
Number of Contracts = 22 contracts
Goldman Sachs earnings are out oon Tuesday morning, so I am going to continue to de-risk my portfolio.
Also not helping is a gap up in the bond market this morning, which is holding back all bank shares.
This position shot straight up since we first put it on, racing four dollars all the way up to $247.50.
However, it lost momentum a few days later as interest rates started to edge down. We no longer have enough room to weather a negative surprise and avoid hitting our upper $232.50 strike price.
So I am selling my position in the Goldman Sachs (GS) October, 2017 $227.50-$232.50 in-the-money vertical bull call spread at $4.10 or best.
Protection of profits is crucial at this time of the year, so I tend to stop out quicker than usual to minimize profits.
That's what you do when you're up 52% on the year, and 64% over the past 12 months.
As I designed this trade, your short position in the October $232.50 calls successfully protected you from most of the loss in this trade.
That's what in-the-money vertical bull call spreads are all about.
If you didn't buy options I think it's pretty safe to keep the stock on a medium-term view. I think (GS) can double from here over the next three years.
Keep in mind that these are ballpark prices at best.
Here are the specific trades you need to execute this position:
SELL 22 October, 2017 (GS) $227.50 calls at............................................$12.10
Buy to cover short 22 October, 2017 (GS) $232.50 calls at................$8.00
Net Proceeds:...........................................................................................$4.10
Loss: $4.50 - $4.10 = -$0.40
(22 X 100 X -$0.40) = -$880 or -8.88%.
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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.