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 Adobe Inc. (ADBE) March 2024 $490-$495 in-the-money vertical BULL CALL spread at $4.77
Closing Trade
3-11-2024
expiration date: March 15, 2024
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Adobe (ADBE) shares pulled back after high-profile artificial intelligence startup OpenAI introduced a new text-to-video generator. ADBE stock plunged more than 7% on the news.
I used that drop to execute an in-the-money bull call spread and ADBE has held up quite well, but as ADBE’s earnings report approaches on the 14th, it’s time to take profits here as ADBE is up over 1.5% this morning.
San Francisco-based OpenAI introduced Sora, which can create lifelike videos from simple text descriptions. Earlier OpenAI services can create written articles and images from basic prompts.
Sora is able to generate complex video scenes with multiple characters, specific types of motion, and accurate details of the subject and background, the company said. It currently can generate videos up to a minute long. But Sora is still in testing and not yet available for public use.
Well done and on to the next trade.
Here are the specific trades you need to exit this position:
Sell to Close 24 March 2024 (ADBE) $490 calls at…...….………$73.67
Buy to Close 24 March 2024 (ADBE) 495 calls at…….......…….$68.90
Net Proceeds:……………………..…….……......................…..…….....$4.77
Profit: $4.77 - $4.20 = $0.57
(24 X 100 X $0.57) = $1,368 or 13.57%
If you are uncertain about 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.
