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.
Trade Alert - (KO) – BUY
BUY the Coca-Cola (KO) February 2021 $44-$47 in-the-money vertical Bull Call spread at $2.65 or best
Opening Trade
2-4-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 38 contracts
If you don’t do options, buy the stock. My target for (KO) this year is $55, up 21%.
This trade is totally out of character for me. Soft drinks are not where the future is. However, it is Warren Buffet’s largest position in Berkshire Hathaway (BRK/A) and it is at the bottom of a six-month trading range after a big selloff.
If the stock drops anymore, Warren will come in as a big buyer, as will all of his many copy cats.
As is Warren’s way, it has a monster 3.36% dividend yield, or three times the ten year US Treasury bond yield. (KO) is a classic cash flow king and dividend aristocrat. So, I believe the downside risk over the next nine trading days is minimal. I’ll take the free money, thank you very much.
I am therefore buying the Coca-Cola (KO) February 2021 $44-$47 in-the-money vertical Bull Call spread at $2.65 or best
Don’t pay more than $2.80 or you’ll be chasing.
Covid-19 is rapidly approaching its third peak. Total US deaths could exceed the 1919 Spanish Flu 625,000 peak by the time it is all over. We passed all WWII deaths last week. That means millions of Coke drinkers will be out and about soon.
And no, they don’t put cocaine in it anymore.
This is a bet that Coca-Cola (KO) will not fall below $47 by the February 19 option expiration day in 9 trading days.
Here are the specific trades you need to execute this position:
Buy 38 February 2021 (KO) $44 calls at………….………$5.00
Sell short 38 February 2021 (KO) $47 calls at………....$2.35
Net Cost:……......………………..…….………..………….….....$2.65
Potential Profit: $3.00 - $2.65 = $0.35
(38 X 100 X $0.35) = $1,330 or 13.20% in 9 trading days.
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.
And I Got a Free Coke Too
