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) – SELL – TAKE PROFITS
SELL – TAKE PROFITS salesforce.com, inc. (CRM) June 2021 $205-$210 in-the-money vertical BULL call spread at $4.93
Closing Trade
6-4-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This was a short-term bet that San Francisco cloud firm Salesforce (CRM) would stay above $210 by the June 18th expiration but I am taking profits today after a surge to the upside.
We took profits on a similar CRM Bull call spread in February and I believed that bad news and an expensive M&A strategy had been largely digested and investors would look through to CRM’s next growth phase.
That is why I executed a short-term Bull call spread on CRM on a largely down day for the Nasdaq and the stock has returned my faith in them today as bad news is good news with employment numbers, CRMs has experienced an explosive move to the upside and now I am closing the position with a tidy profit.
We also had technical support from the 50-day moving average at $223.
I also mentioned if the Nasdaq was up big tomorrow which is now today, I would be inclined to execute a QQQ put spread which I did to taper some risk with our bullish positions. I would even be inclined to roll my QQQ put spreads up if there is another up day the next trading day.
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 exit this position:
Sell to Close 22 June 2021 (CRM) $205 calls at………….………$32.40
Buy to Close 22 June 2021 (CRM) $210 calls at…….........…….$27.47
Net Proceeds:……………………..…….……....................…..…….....$4.93
Profit: $4.93 - $4.45 = $.48
(22 X 100 X $.48) = $1,056 or 10.79%
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.
