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) – TAKE PROFITS
SELL – TAKE PROFITS Adobe Inc. (ADBE) February 2021 $425-$430 in-the-money vertical BULL call spread at $4.90
Closing Trade – NOT FOR NEW SUBSCRIBERS
2-4-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
This was a short-term trade that software company Adobe (ADBE) would stay above the strike price of $430 until the February 19th expiration and the trade has been a homerun.
The underlying stock never really threatened our upper strike price and we are taking profits as the risk of holding the trade until expiration is no longer favorable.
We accrued 88.2% of our maximum profit on this trade.
Adobe has some of the best fundamentals out of any software company. This year’s revenue is forecast to grow 18%, in line with its 20% annual growth over the past five years.
This company is as stable as they come, and their software is a utility for creative people on the digital side of things.
Oh, I forgot to mention they are insanely profitable and have zero China exposure.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
If you don’t do options, stand aside.
Here are the specific trades you need to exit this position:
Sell to Close 24 February 2021 (ADBE) $425 calls at………….………$63.35
Buy to Close 24 February 2021 (ADBE) $430 calls at…........……….$58.45
Net Proceeds:……………......................,.....………..…….………..…….....$4.90
Profit: $4.90 - $4.15 = $.75
(24 X 100 X $.75) = $1,800 or 18.07%
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
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.
