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.
Tech Trade Alert - Twitter, Inc. (TWTR) – BUY
BUY Twitter, Inc. (TWTR) December 2019 $24-$27 in-the-money vertical BULL CALL spread at $2.64
Opening Trade
11-11-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 37 contracts
For the last two years, earnings have grown faster than price. Since 2017, earnings have grown 11% per year and the market is up only 7% per year. What’s happening now is a catch-up in stock prices.
Twitter cratered 20% on its earnings report two weeks ago because of weak guidance and a top line miss.
The reasons were largely technical adjusting to the new era of tighter data privacy. The stock got ahead of itself but the revaluation has given us a great entry point into the second best social media company that turns a profit.
The company's average daily active users reached 145 million beating analyst expectations of 141 million rising 17% from the year-ago period and I don’t see anti-trust issues blowing up in their face before Christmas.
This is a short-term trade that Twitter won’t drop more than 7% in the next 40 days.
If you don’t do option, take a pass on this one.
Here are the specific trades you need to execute this position:
Buy 37 December 2019 (TWTR) $24 call at………….………$5.20
Sell short 37 December 2019 (TWTR) $27 call at………….$2.56
Net Cost:………………...................……..…….………..…….....$2.64
Potential Profit: $3.00 - $2.64 = $.36
(37 X 100 X $.36) = $1,332 or 13.32% in 40 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 Bull Call Spread” by clicking here.
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.