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 - DoorDash, Inc. (DASH) – BUY
BUY DoorDash, Inc. (DASH) March 2022 $130-140 in-the-money vertical BEAR PUT spread at $7.85
Opening Trade
2-17-2022
expiration date: March 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
This is a tactical trade in digital food delivery platform DoorDash (DASH) that DASH will not rise above $130 in the next 29 days.
I’ve been wanting to get back in on the short side, especially since we hold a long position in Alphabet (GOOGL), and specifically, the right thing to do now is target tech growth.
However, with a slew of them approaching earnings, price action will be volatile.
Case in point DASH, the stock popped 16% this morning on positive sales growth in the mid 30% and I believe this is a great entry point to short the stock with a defined expiration date of 29 days from here.
I don’t envision tech growth outperforming as we approach the 5-7 interest rate hikes that Goldman Sachs (GS) proposes are in the cards.
This year will be a hard slog for marginal tech stocks and DASH is nothing special. It’s Uber Eats without the Uber driving business and it matches drivers with restaurants to courier the food over to people’s houses.
In an era of imposing AI that will eventually wipe out DASH, one of the bigger tech companies will just use self-driving technology to root out DASH and its human driver model. It’s not like DASH has the billions or the staff to develop self-driving tech either.
Don’t buy this stock – if anything, sell the rallies like we are doing here.
This bear put spread options trade is a short-term wager that DASH will not rise above $130 in the next 29 days and we have a big cushion because of the high volatility permeating the current market.
Here are the specific trades you need to execute this position:
Buy 12 March 2022 (DASH) $140 puts at……..….………$30.00
Sell short 12 March 2022 (DASH) $130 puts at………….$22.15
Net Cost:……………………..…….………..…..................….....$7.85
Potential Profit: $10 - $7.85 = $2.15
(12 X 100 X $2.15) = $2,580 or 27.39% in 29 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.
