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 - ARK Innovation ETF (ARKK) – BUY
BUY the ARK Innovation ETF (ARKK) June 2022 $47.22-$52.22 in-the-money vertical BEAR PUT spread at $3.95
Opening Trade
5-23-2022
expiration date: June 17, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This is a tactical trade on Cathie Wood’s ARK Innovation ETF (ARKK) that ARKK will not rise above $47.22 in the next 25 days.
This is a highly layered tactic in the pursuit of protecting our TSLA call spread and projecting that this bear market rally in growth tech won’t last.
TSLA has been hammered lately and was down over 9% on the last big up day in the Nasdaq.
TSLA is one of Cathie Wood’s largest position, although it was reported that ROKU is now her biggest position, which I view as another poor decision by the fund manager.
ARKK has had a nice “innovation” bump lately and this is a bet that it won’t last too long.
This also takes the portfolio net neutral which I am more comfortable with considering the choppy trading.
Aggressive traders can roll down to lower strikes at $46 or $45 if increasing the beta fits your risk profile.
Here are the specific trades you need to execute this position:
Buy 25 June 2022 (ARKK) $52.22 puts at………….………$10.75
Sell short 25 June 2022 (ARKK) $47.22 puts at………….$6.80
Net Cost:……………………..….................…..………..…….....$3.95
Potential Profit: $5 - $3.95= $1.05
(25 X 100 X $1.05) = $2,625 or 26.58% in 28 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.
