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 - Adobe Inc. (ADBE) – SELL – TAKE PROFITS
SELL – TAKE PROFITS Adobe Inc. (ADBE) April 2022 $420-$440 in-the-money vertical BULL CALL spread at $16.00
Closing Trade
4-8-2022
expiration date: April 14, 2022
Portfolio weighting: 10%
Number of Contracts = 6 contracts
This was a tactical trade in tech software company Adobe (ADBE) and we went aggressive short-term to reflect that much of the bad news (there’s been a lot lately) has been priced into the stock.
However, the bond market has been gouged with the 10-year US treasury rate up past 2.7% reflecting that there could be an absolute bombshell CPI number next week.
ADBE has terrible price action until yesterday with a relief rally taking it over $450 and we are able to take a small profit because of the time decay but don’t get me wrong, the Nasdaq has been brutal.
The bond market is telling us to take a small profit and next week could get quite ugly.
The Fed jawboning is one thing, but the bond market doesn’t believe the carnage is over, therefore, strap on your seatbelt for next week as I expect heightened volatility.
Here are the specific trades you need to exit this position:
Sell to Close 6 April 2022 (ADBE) $420 calls at….………$31.00
Buy to Close 6 April 2022 (ADBE) $440 calls at………….$15.00
Net Proceeds:……………………..……..........………..…….......$16.00
Profit: $16 - $15 = $1
(6 X 100 X $1) = $600 or 6.7%
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.
