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.
Trade Alert - (AMD) – BUY
BUY the Advanced Micro Devices (AMD) February 2021 $75-$80 in-the-money vertical Bull Call spread at $4.40 or best
Opening Trade
2-2-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
If you don’t do options, buy the stock. My three-year target for (AMD) is $200, up 112%.
The Volatility Index (VIX) still at $26 has the effect of vastly overvaluing stock options. This is a gift for traders like us.
The world is suffering from a global chip shortage which the public is wildly underestimated. Auto and electronics makers around the world are shutting down assembly lines because of chip shortages.
That shortfall is about to get far worse as electric vehicles use five times the number of chips as conventional cars. The advent of 5G has also created astronomical demand for more semiconductors. Within five years, if your device isn’t 5G, it's plainly old and won’t work.
I am therefore buying the Advanced Micro Devices (AMD) February 2021 $75 - $80 in-the-money vertical Bull Call spread at $4.40 or best
Don’t pay more than $4.60 or you’ll be chasing.
This is a bet that Advanced Micro Devices (AMD) will not fall below $80 by the February 19 option expiration day in 12 trading days.
Here are the specific trades you need to execute this position:
Buy 23 February 2021 (AMD) $75 calls at………….………$13.00
Sell short 23 February 2021 (AMD) $80 calls at………....$8.60
Net Cost:……………………..…….………..…………..........….....$4.40
Potential Profit: $5.00 - $4.40 = $0.60
(23 X 100 X $0.60) = $1,380, or 13.63% in 12 trading days.
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.
