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 AT MAX PROFIT
EXPIRATION of Amazon.com, Inc. (AMZN) February 2021 $3,095-$3,100 in-the-money vertical BULL call spread at $5.00
Closing Trade
2-19-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a short-term bet that Amazon.com, Inc. (AMZN) would stay above $3,100 by February 19th expiration.
You don’t have to do anything with this expiration.
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, February 22 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
What are the reasons to like Amazon?
The price action suggests that AMZN has a favorable chance to break up to the upside some point after what was a blowout fourth quarter results of net income of decisively more than the predicted $6.3 billion and revenue approaching $120 billion.
They outdid themselves and reported earnings of $14.09 per share on record revenue of $125.56 billion.
The e-commerce and technology titan went into its important holiday quarter report on a strong note and 2021 will be no different as features of the pandemic persists.
Just a quick rewind to the third quarter, revenue and earnings also easily beat consensus estimates, and Amazon perennially guides up. This is becoming a constant pattern with the stock boding well for the future stock price.
Investors like companies who constantly over-deliver on earnings metrics.
The biggest bombshell of yesterday’s report was clearly that Jeff Bezos, the company’s founder and CEO, would leave his role in the third quarter of 2021.
I thought it was interesting that after-hour trading was largely indifferent as investors were digesting the founder leaving his creation.
Next on deck is Andy Jassy, who currently leads Amazon Web Services (AWS), and will take over Bezos’ job.
Bezos will stick around in an “executive chairman” role and I envision this as Bezos not really leaving and still handling all the “big vision” stuff.
Inside the company, Jassy is the highest profile candidate and in the most profitable part of the company giving him major clout.
This is out of the same mold of Microsoft’s CEO Satya Nadella who was also promoted to the top via the cloud division.
Bezos will now have more time to spend on Day 1 Fund which is a non-profit organization that will launch and operate a network of high-quality, full-scholarship Montessori-inspired preschools in underserved communities.
Along with that, he will spend time with the Bezos Earth Fund, Blue Origin, The Washington Post while Jassy handles the daily grind of the operation.
Don’t forget that Bezos is the largest shareholder, but because Amazon has become quite heralded for grooming top-level management, the company won’t miss a beat with Jassy.
This year could be a similar repeat of 2020 with consumers crazy for e-commerce services and Amazon, best of breed service.
This should be a buy on every small dip stock and simply the best company in the world right now whether examining tech or anything else.
If you don’t do options, buy the stock, my end-of-year target is $3,400.
Here are the specific trades you need to close out this position:
Expiration of 23 February 20201 (AMZN) $3,095 calls at……..….………$212.20
Expiration of short 23 February 2021 (AMZN) $3,100 calls at………….$207.20
Net Proceeds:……………………......................................…….………..…….....$5.00
Profit: $5 - $4.30 = $.70
(23 X 100 X $.70) = $1,610 or 16.27% in 15 days
