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) - BUY
BUY salesforce.com, inc. (CRM) June 2020 $157.50-$162.50 in-the-money vertical BULL call spread at $4.50
Opening Trade
6-3-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This is a short-term bet that Salesforce will go at least slightly down to sideways in the next 16 days with our floor being a strike price of $162.50.
The company came out with an earnings report just 4 days ago with revenue improving 30% to $4.87 billion from $3.74 billion a year ago, pretty good for semi-dystopian economic conditions.
They guided light and the stock sold off mildly but not much to be worried about.
Don’t get me wrong, there is a lot to love about other cloud stocks as well, but the brief weakness in shares is enough to try to force my way into Salesforce right now.
Traders who want to be even more aggressive can play this from the $165 strike price as a floor too.
Tech stocks are hard to get into at all as they constantly run away from traders. It seems that they only stay down for a matter of hours and not days.
We still have a large bullish position in GOOGL and that call spread is most likely to expire with full profits delivering us over $4,000.
The GOOGL put spread is getting closer to our upper limit and we might have to take a small loss that is more than overcompensated by the GOOGL call spread.
Adding exposure here also helps nullify that put spread as tech stocks are roaring.
It seems that not even a massive tsunami or earthquake can stop tech shares at this point.
If you don’t do options, avoid for now.
Here are the specific trades you need to execute this position:
Buy 22 June 2020 (CRM) $157.50 call at……….….………$17.93
Sell short 22 June 2020 (CRM) $162.50 call at………….$13.43
Net Cost:………….................…………..…….………..…….....$4.50
Potential Profit: $5 - $4.50 = $0.50
(22 X 100 X $.50) = $1,100 or 11.00% in 16 days
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 on 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.
