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 - Lyft, Inc. (LYFT) – TAKE PROFITS
SELL Lyft, Inc. (LYFT) February 2022 $43-46 in-the-money vertical BEAR PUT spread at $2.70
Closing Trade
2-9-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 39 contracts
I kept this vertical bear put spread through the earnings report and I was proved exactly correct.
Lyft disappointed when active riders missed 18.73 million vs 20.2 million expected.
Like I believed, inflationary pressures and finding labor made it hard for the company to supply the units needed to beat the number of riders expected.
Lyft is at the forefront of inflationary pressures with drivers dealing with higher automobile insurance premiums, less riders due to the omicron virus, higher gas prices, and higher labor costs.
However, which is a big however, Lyft has been swept up in the tech melt-up and the Nasdaq has continued to rip higher meaning this 4% drop after Lyft’s earnings report is ideal to take profits.
In a bit quieter market, I would like to hold the position until expiration, but we are only accruing about half the profit because of improving tech stock sentiment.
Nobody should be holding shares of LYFT, only use options.
Here are the specific trades you need to exit this position:
Sell to Close 39 February 2022 (LYFT) $46 puts at….………$6.40
Buy to Close 39 February 2022 (LYFT) $43 puts at………….$3.70
Net Proceeds:……………………..…..............…..………..…….....$2.70
Profit: $2.70 - $2.45 = $.25
(39 X 100 X $.25) = $975 or 9.30% in 23 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.
