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) - BUY
BUY Amazon.com, Inc. (AMZN) March 2021 $3,310-$3,315 in-the-money vertical Bear put spread at $4.38
Opening Trade (TO HEDGE AGAINST THE AMZN MARCH $2,940-$2,950 BULL CALL SPREAD)
3-4-2021
expiration date: March 19, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
Tech has been hammered the last few trading days and our last position is an in-the-money AMZN bull call spread with an upper strike price of $2,950.
Now are putting on a hedge to guard against the underperformance in tech which has been caught out because of a surge in interest rates.
We are also only less than 2% from $2,950, and in the case that there is more downside to run, this will soften the blow and maintain our performance.
In the long term, this is the best company in the world and my yearend target is $3,500.
What’s the reason to like Amazon?
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 if 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 late was clearly that Jeff Bezos, the company’s founder and CEO, would leave from his role in the third quarter of 2021.
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 part of 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 yearend target is $3,500.
Here are the specific trades you need to execute this position:
Buy 22 March 20201 (AMZN) $3,315 puts at………….………$320.88
Sell short 22 March 2021 (AMZN) $3,310 puts at……….….$316.50
Net Cost:………........................……………..…….………..…….....$4.38
Potential Profit: $5 - $4.38 = $.62
(22 X 100 X $.62) = $1,364 or 14.16% in 15 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.
