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 – Zoom Video Communications, Inc. (ZM) – BUY
Zoom Video Communications, Inc. (ZM) October 2023 $74-$79 in-the-money vertical BEAR PUT spread at $4.25
Opening Trade
10-2-2023
expiration date: October 20, 2023
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I am executing a trade that underlying shares of video conferencing company Zoom (ZM) will stay below $74 in the next 18 days.
With the US 10-year treasuries spiking to 4.7%, this has meant a difficult short-term situation for tech stocks.
I don’t believe that small cap stocks like ZM will benefit in the short term if there is a nice bump. Tech could eventually become the safety trade and ZM doesn’t deliver any dividends where it could become a safety play.
The Nasdaq has been exhibiting weak price action and it’s possible that there is a lack of juice in the short term to push up tech small caps. Any recovery will be led by Apple, Microsoft, Meta, Nvidia, Tesla and Google.
I believe making a tactical short-term bet in ZM is a good trade right here with an 18-day time horizon.
Here are the specific trades you need to execute this position:
Buy 24 October 2023 (ZM) $79 puts at………….………$9.35
Sell short 24 October 2023 (ZM) $74 puts at………….$5.10
Net Cost:……………………..…….………...............…….....$4.25
Potential Profit: $5- $4.25 = $.75
(24 X 100 X $.75) = $1,800 or 17.65% in 18 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.
