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 - Amazon.com, Inc. (AMZN) - EXPIRATION-TAKE PROFITS
EXPIRATION of the Amazon.com, Inc. (AMZN) December 2020 $2,940-$2,950 in-the-money vertical BULL call spread at $10.00
Closing Trade
12-18-2020
expiration date: December 18, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
This options call spread does not expire until end of today, but I am just giving readers a heads-up.
This was a short-term trade that underlying shares of Amazon (AMZN) would stay above $2,950 by the December 18th expiration date.
I thought Amazon shares would benefit from positive headlines about the domination of their e-commerce business going into 2021 and I was absolutely correct.
With AMZN being the e-commerce market share leader, I thought it was the biggest beneficiary of the shelter-at-home trend which we are seeing again with the virus spreading like wildfire across the continental U.S.
About 69% indicated they’d use Amazon the same as they did during the pandemic, which is when Amazon’s demand spiked, while another 15% said they would shop on the site even more.
Of those surveyed, 44% stated that 50%-100% of their holiday shopping had already been completed and mostly done on Amazon.
Amazon had been trending sideways the past month and I was willing to bet that shares would hold up in the short-term through the holiday season and that is exactly what happened.
I used a short-term dip in shares to execute a deep-in-the-money call spread on Amazon and if Amazon doesn’t drop by 8.9% or 287 points at today's market close, this trade will expire with maximum profits.
You don’t have to do anything with this expiration – just watch it expire at tomorrow’s close and reap maximum profit.
Your broker (are they still called that?) will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, December 21 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Here are the specific trades you need to exit this position:
Expiration of 12 December 2020 (AMZN) $2,940 calls at………….………$296.75
Expiration of 12 December 2020 (AMZN) $2,950 calls at…….........…….$286.75
Net Proceeds:……………………..…….………..……........................................$10.00
Profit: $10 - $8.33= $1.67
(12 X 100 X $1.67) = $2,004 or 20.04% in 19 days
