Stop Price Raised for Ferrari

By Jim Pearce • June 2, 2017

I am raising the stop price for Ferrari NV (RACE) to $88.50 to lock in most of the gain we have realized since it was added to the portfolio two weeks ago. It has been on a tear since we bought it, and yesterday its share price crossed above its upper Bollinger Band at $88.46 so I don’t want to risk having it drop back below that level towards its lower band at $81.20.

NOTE: Unlike our stop loss prices which are only activated if a stock closes beneath that level on a dividend-adjusted basis, once a stop loss price has been raised to lock in a profit it is a live order and will be executed immediately if/when the stock trades at or beneath that price.

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Chutei Varkey

06/02/17 ‐ 11:57am ET June 2, 2017 at 11:57am ET

What about the option trades,Jim? I have Aug,80 Calls.

Jim Pearce

06/02/17 ‐ 1:09pm ET June 2, 2017 at 1:09pm ET

Since I do not provide specific options buy recommendations, I do not issue sell alerts for them, either. In this case, I would be thinking hard about selling that option soon since it is within 90 days of expiration so the time premium will begin dissolving at an accelerating rate. If RACE suffers even a mild setback anytime soon, about half the value of that option could disappear in a hurry. But we have many experienced options traders on this website, so I’ll invite them to weigh in with the best way to handle it.

Derek: Las Vegas, NV

06/02/17 ‐ 8:04pm ET June 2, 2017 at 8:04pm ET

What type of return do you have on the calls? Just think, you never lose money by taking profits. If it was me, I would close the call, take the profits and run.

Derek

Chutei Varkey

06/02/17 ‐ 3:42pm ET June 2, 2017 at 3:42pm ET

Thank you, Mr. Pearce.

Stogiefan

06/02/17 ‐ 5:45pm ET June 2, 2017 at 5:45pm ET

I am not familiar with stop prices but I don’t get the difference you point out in the note… What is the difference on the order you enter at your broker’s? stop price vs stop loss? Sorry I am a newbie on these type of things obviously. thanks for any help you can provide !

Derek: Las Vegas, NV

06/02/17 ‐ 8:11pm ET June 2, 2017 at 8:11pm ET

Systematic Wealth definition of stop loss applies only if the stock closes below the stop loss price. During the day the stock price can dip below the stop loss, but then rise again closing above the stop loss value. Stop price initiates a trade immediately, we don’t wait for the stock market close like we do for a stop loss.

Derek

Stogiefan

06/05/17 ‐ 12:58pm ET June 5, 2017 at 12:58pm ET

Thanks a lot ! Makes it more clear and a lot of sense. Truly appreciate !!

Kevin P

06/12/17 ‐ 11:01am ET June 12, 2017 at 11:01am ET

My stop triggered today and sold my shares at $88.50.

Jim Pearce

06/12/17 ‐ 11:10am ET June 12, 2017 at 11:10am ET

Yep, I just issued a sell alert on RACE for that reason: https://www.investingdaily.com/systematic-wealth/alerts/38289/sell-alert-ferrari-n-v-race/. Thank you.

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