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 - Adobe Inc. (ADBE) – BUY
BUY Adobe Inc. (ADBE) February 2021 $425-$430 in-the-money vertical BULL call spread at $4.15
Opening Trade
1-14-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
This is a short-term trade that software company Adobe (ADBE) will stay above the strike price of $430 in the next 37 days.
We have technical resistance at $440 and it was just last March that I was executing call spreads on Adobe for $100 lower than we are now.
Adobe has some of the best fundamentals out of any software company. This year’s revenue is forecast to grow 18%, in line with its 20% annual growth over the past five years.
This company is as stable as they come, and their software is a utility for creative people on the digital side of things.
Oh, I forgot to mention they are insanely profitable and have zero China exposure.
I anticipate revenues of US$14.8b and earnings per share (EPS) of US$8.82 in 2021.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by five cents with a second order.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Buy 24 February 2021 (ADBE) $425 calls at………….………$48.68
Sell short 24 February 2021 (ADBE) $430 calls at………….$44.53
Net Cost:……………………..…….………..…........................….....$4.15
Potential Profit: $5 - $4.15 = $.85
(24 X 100 X $.85) = $2,040 or 20.48% in 37 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.
