We own a total of 20 shares of DELL in our current Trading Mentors program. While I have personally owned DELL for years, and we also own shares from our very first Trading Mentors program, the stock has recently made a tremendous move higher following earnings. The future remains bright for AI and for DELL, but we always need to evaluate whether a stock’s current valuation justifies its price.
For that reason, we are going to sell 10 of our 20 shares. While many of our investments have performed well, DELL has generated more than $5,000 in profits , making it one of our largest winners and a much larger position than originally intended.
By selling half of the position, we are rebalancing the portfolio. Rebalancing simply means trimming a position that has grown too large and bringing it back in line with the rest of the portfolio. This helps reduce risk, lock in profits, and prevent any one stock from having too much impact on our overall results.
We also currently have a bear call spread on DELL with a maximum risk of approximately $895. While we are up over $5,000 on the stock position, there is still a possibility of giving back some of those gains if the spread loses money. The spread expires in a few weeks, and ideally we will see the stock pull back slightly after its strong earnings rally.
By selling half of our shares, we lock in a portion of our profits, reduce risk, and still maintain exposure to any future upside in DELL. At this point, we believe taking some profits while continuing to hold a position is the prudent course of action.
We have sold 10 shares of DELL and all of our shares in UNH. Both have performed well. However, since we don’t plan to add to UNH, we will exit the full position at this time (locks-in a profit of +$185 in that position as well).
Sold 2.015 shares of UNH at 382.40
Sold 10 shares of DELL at 423.73