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 - Airbnb, Inc. (ABNB) – STOP LOSS
SELL Airbnb, Inc. (ABNB) September 2023 $132-$137 in-the-money vertical BEAR PUT spread at $3.10
Closing Trade
8-29-2023
expiration date: September 15, 2023
Portfolio weighting: 10%
Number of Contracts = 24 contracts
I expected tech stocks to grind up but not this quickly as an analyst upgrade this morning has caused ABNB to spike by 4.5% and we are closing our trade here.
I agree that ABNB isn’t a bad company and that travel has been quite hot but I see this analyst upgrade as a little late.
We are cutting our losses here as the tech market is back to a buy the “Fed pivot” mentality and that should always put a floor under any selloff until algorithms are programmed to do something different.
The US 10-year Treasury at 4.2% doesn’t mean we are out of the woods, but it does mean the tech market can march in lockstep higher with bond yields.
This creates a positive setup for the last 3 months of the year as the weak hands have been shaken out in August.
Here are the specific trades you need to execute this position:
Sell to Close 24 September 2023 (ABNB) $137 puts at…………$6.75
Buy to Close 24 September 2023 (ABNB) 132 pust at………….$3.65
Net Proceeds:………………...................……..…….………..…….....$3.10
Loss: $4.15-3.10 = $1.05
(24 X 100 X $1.05) = $2,520 or 25.30%
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.