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 - (ADSK) – EXPIRATION – TAKE PROFITS
Expiration of Autodesk, Inc. (ADSK) November $125-$130 vertical BULL CALL spread at $5.00
Closing Trade
11-15-2019
expiration date: November 15, 2019
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a short-term bet that Autodesk’s shares won’t drop more than 8% in the next 26 days and the stock did nothing but shoot up.
The risk-reward justified making this trade and our upper strike of $130 robustly held.
We executed this trade because of a soft earnings report offering us a nice entry point in this stock.
Autodesk president and CEO Andrew Anagnost said, “While we continue to execute well and are not materially impacted by current trade tensions and macro uncertainty, we are taking a prudent stance to our second half fiscal 2020 outlook.”
The trade war isn’t hurting Autodesk’s business, but is creating uncertainty.
That means the stock won’t go up in a straight line but shouldn’t go down in a straight line either.
Autodesk (ADSK) is a solid design software company headquartered in Marin County just north of the Golden Gate Bridge.
It sells a whole host of visualization software for engineering, manufacturing, and construction.
Autodesk’s narrative is still robust – its conversion into a SaaS model will prove lucrative and the lack of competition and stickiness will bode well.
Autodesk became best known for AutoCAD, but now boasts a broad range of software for design, engineering, and entertainment—and a line of software for consumers, including Sketchbook.
The manufacturing industry uses Autodesk's digital prototyping software—including Autodesk Inventor, Fusion 360, and the Autodesk Product Design Suite—to visualize, simulate, and analyze real-world performance using a digital model in the design process.
The company's Revit line of software for building information modeling is designed to let users explore the planning, construction, and management of a building virtually before it is built.
I fancy second-tier software stocks - they still prove their worth in a late-cycle economy.
Here are the specific trades you need to execute this position:
Expiration of 23 November 2019 (ADSK) $125 calls at…………$36.60
Expiration of short 23 November 2019 (ADSK) $130 calls at…$31.60
Net Proceeds:………………………….………..…………...............….....$5.00
Profit: $5.00 - $4.32 = $0.68
(23 X 100 X $0.68) = $1,564 or 15.64% in 26 days.
