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 - Netflix, Inc. (NFLX) – BUY
Buy Netflix, Inc. (NFLX) October 2023 $355-$360 in-the-money vertical BULL CALL spread at $3.70
Opening Trade
9-18-2023
expiration date: October 20, 2023
Portfolio weighting: 10%
Number of Contracts = 25 contracts
NFLX is down 12% from its peak last month and this is a trade that NFLX will be above $360 in 32 days.
NFLX sold off recently due to management reiterating future soft margins which is not that surprising considering many factor.
With the 12% selloff, the risk/reward is favorable to execute a bullish call spread and even though tech stocks are expensive, I do believe that “fighting the Fed” will continue to work in the short term as traders bet on a change in interest rate policy.
I won’t say that NFLX has a great future because the content has become stale, but I do believe this could be a nice buy-the-dip trade in the short term.
Don’t pay more than $3.90.
Here are the specific trades you need to execute this position:
Buy 25 October 2023 (NFLX) $355 calls at………….………$49.40
Sell short 25 October 2023 (NFLX) $360 calls at………….$45.70
Net Cost:……………………..…….……….......................…….....$3.70
Potential Profit: $5 - $3.70 = $1.30
(25 X 100 X $1.30) = $3,250 or 35.13% in 32 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.