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 - (AMZN) – BUY
BUY the Amazon (AMZN) March 2024 $155-$160 in-the-money vertical Bull Call spread at $4.50 or best
Opening Trade
2-22-2024
expiration date: March 15, 2024
Portfolio weighting: 10%
Number of Contracts = 25 contracts
With all of the hubbub over NVIDIA, few have noticed that Amazon has joined the Dow Average, taking the place of the Walgreen Boots Alliance (WBA). Stocks ALWAYS go up when they are added to a major index like the Dow because it triggers a large amount of index buying.
Amazon's entry into the Dow Jones Industrial Average was enabled by a 20-for-one stock split in 2022 that made its stock price sufficiently low for it to be included in the price-weighted index. Out with the old retailer, in with the new.
I love Amazon for the long term.
In the AI world, data is king and nobody has more data than Amazon. It has perhaps tracked half of all the sales of everything in the US for the past decade. And if you want to do anything online you have to execute through Amazon Web Services, the 800-pound gorilla of the hosting world (Mad Hedge does for cloud storage.)
As a result, Amazon along with NVIDIA should be among the top two big technology stocks in 2024. Look at the five-year chart below and it's clear that it should break out to a new all-time high this year. Oh, and if you break it up, as the US government would love to do, the company becomes worth twice as much in pieces.
I am therefore buying the Amazon (AMZN) March 2024 $155-$160 in-the-money vertical Bull Call spread at $4.50 or best.
Don’t pay more than $4.70 or you’ll be chasing on a risk/reward basis.
This is a bet that Amazon will not fall below $160 by the March 15 option expiration in 16 trading days.
Here are the specific trades you need to execute this position:
Buy 25 March 2024 (AMZN) $155 calls at………….………$19.00
Sell short 25 March 2024 (AMZN) $160 calls at…….……$14.50
Net Cost:………………………….………..………….............….....$4.50
Potential Profit: $5.00 - $4.50 = $0.50
(25 X 100 X $0.50) = $1,250 or 11.11% in 16 trading days.
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.
