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 - salesforce.com, inc. (CRM) – EXPIRATION – TAKE PROFITS
EXPIRATION of the salesforce.com, inc. (CRM) December 2020 $195-$200 in-the-money vertical BULL call spread at $5.00
Closing Trade
12-18-2020
expiration date: December 18, 2020
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This options call spread does not expire for one more day, but I am just giving readers a heads-up.
We executed this trade because Salesforce’s (CRM) stock was down 9% on the news that growth is slowing, and they overpaid for software company Slack (WORK).
The recent slowdown in the company's leading indicators, while partially explainable due to large M&A expenditure, tough comparison, and a challenging selling environment among the distressed industries, was likely to weigh on investor confidence in the near-term and we saw that in the slight dip in shares as this will delay any type of capital return to shareholders.
This cloud company is absolutely worth a buy the dip trade and that’s exactly what we did provided the stock doesn’t collapse by 11.4% or over 25 points by tomorrow’s expiration.
The pullback makes salesforce look awfully attractive in the short-term and this is still a great tech company for the long haul.
You don’t have to do anything with this expiration – just watch it expire at tomorrow’s close and reap maximum profit.
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, December 21 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Here are the specific trades you need to exit this position:
Expiration of 22 December 2020 (CRM) $195 calls at………….………$30.35
Expiration of 22 December 2020 (CRM) $200 calls at……........…….$25.35
Net Proceeds:……………………..…..............................….………..…….....$5.00
Profit: $5 - $4.47= $.53
(22 X 100 X $.53) = $1,166 or 11.66% in 16 days
