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) – TAKE PROFITS
SELL – salesforce.com, inc. (CRM) February 2021 $195-$200 in-the-money vertical BULL call spread at $4.78
Closing Trade – NOT FOR NEW SUBSCRIBERS
1-26-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
This was a short-term bet that Salesforce will stay above $200 in the next 40 days.
We are accruing 74.7% of the maximum profits by exiting our position here. We have added quite a few tech positions and are taking some profits off the table.
We were diligently monitoring if CRM would fall anywhere close to $210 where there is maximum support at that technical level.
We never had to go that far as CRM held up well spending most of the time above $220 even with heightened volatility.
Again, let me remind you why we like this stock.
This cloud stock has been one of my favorite Silicon Valley trades and the stock is cheaper after the announcement of the Slack acquisition which caused a slew of analyst downgrades.
Salesforce's cloud-based customer relationship management (CRM) service controlled 18.4% of the global CRM market last year, according to IDC.
Salesforce leverages that leading position to tether companies to its other e-commerce, marketing, and analytics services.
Those services help companies streamline their businesses, outsource operations, automate repetitive tasks, and reduce their overall dependence on human employees.
In short, companies turn to Salesforce when they need to cut costs, during both economic expansions and contractions.
That's why Salesforce's business thrived throughout the pandemic. Its revenue rose 29% to $17.1 billion in fiscal 2020, then grew another 34% year over year to $15.4 billion in the first nine months of 2021.
Here are the specific trades you need to exit this position:
Sell 24 February 20201 (CRM) $195 calls at……............…….…….…$32.15
Buy to cover short 24 February 2021 (CRM) $200 calls at…...…….$27.37
Net Proceeds:……………………..…….……............................…..…….....$4.78
Profit: $4.78 - $4.13 = $.65
(24 X 100 X $.65) = $1,560 or 15.74%
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
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.
