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 Alert - Fiserv, Inc. (FISV) - BUY
BUY Fiserv, Inc. (FISV) May 2020 $110-$115 in-the-money vertical BEAR put spread at $4.25 (DOUBLE UP)
Opening Trade
4-28-2020
expiration date: May 15, 2020
Portfolio weighting: 10% - Increase to 20%
Number of Contracts = 22 contracts
We put on the same trade with a 10% weighting on April 20th and scored a price of $4.50 as shares of Fiserv nosedived down to $91.
Well, shares have reversed on a dime and are now bobbing up to $101.
I am inclined to add to the short side of this trade at the same strike prices. This goes against our bull call spread which will make money above $85 by the expiration date of May 15.
This three spread trades in 1 bet has morphed into a scenario where I will make maximum profits if the underlying shares at the time of expiration are between $85 and $110 which is highly likely.
Fiserv has been trading in a range since the coronavirus hit and I am quite comfortable by adding exposure to the downside.
The momentum indicator called the relative strength index (RSI) is completely oversold on this one and I do feel that Fiserv will settle back in the high 90s range.
Please feel free to take profits on single spreads as the shares zig and zag.
We have had a remarkable run-up with the tech letter calling the bottom of the negative priced oil unwind by buying Microsoft. This all layers and meshes with our 15% position in cloud growth name in Box.
If everything goes our way (meaning shares don’t explode either way), our performance could surge past the 5% mark on the next expiration.
Tech shares have settled into a nice buy-the-dip type of price action and even though there is quite a massive risk to the downside because of the damage to the internals of tech firms, I am hedging to protect my upside calls right now.
If Fiserv does run up to the $110 strike price, it also means that our big positions in Microsoft, Fiserv call spread, and Box equity position will be primed to harvest at the maximum profit points.
The risk – rewards to this trade is quite favorable.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Buy 22 May 2020 (FISV) $115 put at………….………$13.85
Sell short 22 May 2020 (FISV) $110 put……....…….$9.60
Net Cost:……………………..…….………..…..........….....$4.25
Potential Profit: $5 - $4.25 = $0.75
(22 X 100 X $.75) = $1,650 or 16.50%
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 at
http://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.
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.
