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 - Invesco QQQ Trust (QQQ) – BUY
BUY - Invesco QQQ Trust (QQQ) May 2021 $344-$349 in-the-money vertical BEAR put spread at $4.50
Opening Trade
5-5-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This is a short-term bet that Invesco QQQ Trust (QQQ) will stay BELOW $344 in the next 16 days which means that even if it goes slightly up from the current price, we will still make a profit.
Money has rotated out of technology for the time being as the reopening of the economy is supercharging other sectors to the detriment of tech.
Price action has been weak in tech lately.
For example, rallies have been sold in Micron (MU) for the past week and that is a signal that the sector is fully priced. Examples proliferate such as Twitter which dropped from $71 to $53 just the other day.
Then take a look at last year’s darlings like DocuSign (DOCU), Zoom (ZM), and Teladoc (TDOC) if you want a broader view of the consolidation picture happening in tech as we speak.
I still love the cash cow of tech like Google, Apple, Microsoft, and Facebook, but as a whole sector, tech appears to be fully priced as even sensational earnings haven’t been the catalyst to spur the next leg up.
So I am executing a short-dated put spread betting that the Nasdaq will NOT make new all-time highs in the next 16 days.
I still love technology and they are the long term difference makers in the economy, but the sector is in the process of being rerated.
If you don’t do options, avoid for now.
Here are the specific trades you need to execute this position:
Buy 22 May 2021 (QQQ) $349 puts at………….………$18.69
Sell short 22 May 2021 (QQQ) $344 puts at………….$14.19
Net Cost:………………............……..…….………..…….....$4.50
Potential Profit: $5 - $4.50 = $.50
(22 X 100 X $.50) = $1,100 or 11.111% in 16 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.
