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 2021 $205-$210 in-the-money vertical BULL call spread at $4.45
Opening Trade
6-3-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This is a short-term bet that San Francisco cloud firm Salesforce (CRM) will stay above $210 by the June 18th expiration which is exactly 15 days from now.
We took profits on a similar CRM Bull call spread in February and I believe the bad news and expensive M&A strategy has been largely digested and investors are looking through to CRM’s next growth phase.
That is why I am executing a short-term Bull call spread on CRM on a largely down day for the Nasdaq.
We also have technical support from the 50-day moving average at $223.
If the Nasdaq is up big tomorrow, I am inclined to execute a QQQ put spread.
Tech gains are limited to the upside in the short-term and the rotation has really stripped the wheels of the Toyota as money has been rerouted to different parts of the equity market namely energy and banks.
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.
Why is this a good tech story?
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.
If you don’t do options, avoid for now.
Here are the specific trades you need to execute this position:
Buy 22 June 2021 (CRM) $205 calls at………….………$26.30
Sell short 22 June 2021 (CRM) $210 calls at………….$21.85
Net Cost:……………………..……...............………..…….....$4.45
Potential Profit: $5 - $4.45 = $.55
(22 X 100 X $.55) = $1,210 or 12.36% in 15 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.
