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) June 2022 $1,830-$1,840 in-the-money vertical BULL CALL spread at $7.50
Opening Trade
5-11-2022
expiration date: June 17, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contract
Amazon.com, Inc. (AMZN) is one of my favorite ecommerce companies and this is my first bull call spread in AMZN this year.
Shares have collapsed by 40% since Nov 2021, but this trade is essentially a call for a short-term bear market rally or something that masquerades as one.
Yes, the number wasn’t good, but at least it wasn’t a 2-digit number like 10%.
We aren’t out of the woods yet and I would say risk-reward can still improve from here, but we are so oversold that it might even take another “once in a million year event” asteroid hitting earth for another short-term deep sell off.
Traders should keep stops tight due to market conditions. I am also highly encouraged by the VIX index down over 6% even after the high inflation number.
We might be tapped out here to the downside in the short-term, so I believe it’s prudent to execute a deep-in-money AMZN call spread and traders can go aggressive if they want by moving up strike prices and contract number.
The Mad Hedge Tech Letter believes a bear market rally right here will be massively healthy in regard to an orderly march down which is what we need for a soft landing.
The inflation monsters will not go away and the market won’t recover fully until that has been addressed.
Here are the specific trades you need to execute this position:
Buy 12 June 2022 (AMZN) $1,830 calls at………….………$379.50
Sell short 12 June 2022 (AMZN) $1,840 calls at………….$372.00
Net Cost:……………………......................…….………..…….....$7.50
Potential Profit: $10 - $7.50 = $2.50
(12 X 100 X $7.50) = $3,000 or 33.33% in 37 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.
