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 - Cisco Systems, Inc. (CSCO) – BUY
BUY Cisco Systems, Inc. (CSCO) November 2020 $40-$43 in-the-money vertical BEAR put spread at $2.65
Opening Trade
11-3-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 37 contracts
This is a short-term trade that IT infrastructure company Cisco Systems, Inc. (CSCO) won’t rise above $40 in 17 days.
On Monday, traders finally saw the massive lines at the early voting sites and concluded that Biden was a slam dunk win.
Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry and this resurgence of the coronavirus means that tech companies aren’t likely to sit on the equipment they have now instead of upgrading to save on costs.
Survival is really what is at the forefront of tech executives these days and expanding or re-upping IT equipment will be pushed back until the economy comes back and I believe this will be detailed in the Cisco earnings report that is coming up in 9 days.
R&D is also on hold and it is just an awful time for any capital spend as management also reduces salary with incremental layoffs to address the demand shock.
I believe that Cisco will guide poorly for the next year and the stock has a ceiling with any short-term appreciation.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES AND DO NOT BUY THE STOCK.
Here are the specific trades you need to execute this position:
Buy 37 November 2020 (CSCO) $43 puts at………….………$6.40
Sell short 37 November 2020 (CSCO) $40 puts at………….$3.75
Net Cost:…………………….....................…….…….…..…….....$2.65
Potential Profit: $3.00 - $2.65 = $.35
(37 X 100 X $.35) = $1,295 or 13.20% in 19 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 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.
