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 - Meta Platforms, Inc. (META) – TAKE PROFITS
SELL Meta Platforms, Inc. (META) November 2022 $140-$145 in-the-money vertical Bear Put spread at $3.70
Closing Trade
10-21-2022
expiration date: November 18, 2022
Portfolio weighting: 10%
Number of Contracts = 30 contracts
This bear put spread in META was only designed to be a hedge on my other 2 aggressive bullish positions in ABNB and I took profits in PINS before it cratered today.
However, I will take profits in META here as there have been rumors in the market today of the US Central Bank switching to smaller rate hikes after November which is very bullish short-term. This could mean that expectations could go from 5% Fed Funds rate in March 2023 to a lower 4.75% expectation. The lower the rate, the better it is for all equities.
SNAP had a terrible earnings report and the momentum changed on a dime with META down 4% this morning.
META is down around 2.5% this session and I see the bulls coming out of the woodwork so I will take profits here. It’s disappointing because I believe that META would probably close the session around 5-6% lower if not for positive interest rate upgrades in expectations.
Short-term, lower rate expectations are highly bullish for tech stocks as rising interest rates are still the biggest risk to the overall market.
Here are the specific trades you need to exit this position:
Sell to Close 30 November 2022 (META) $145 puts at……..……$21.00
Buy to Close 30 November 2022 (META) $140 puts at………….$17.30
Net Proceeds:……………………..…….......................………..…….....$3.70
Profit: $3.7-$3.3 = $0.40
(30 X 100 X $0.40) = $1,200 or 10.81%
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.
