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 - CrowdStrike Holdings, Inc. (CRWD) – BUY
BUY CrowdStrike Holdings, Inc. (CRWD) February 2021 $250-$255 in-the-money vertical Bear Put spread at $4.32
Opening Trade
1-29-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This is a short-term trade that software company CrowdStrike Holdings CRWD will stay BELOW the strike price of $250 in the next 22 days.
After the strong rally yesterday, that saw CRWD gain 7%, today’s opening has confirmed that volatility could persist.
I mentioned yesterday that executing a put spread on CrowdStrike Holdings CRWD would be the next step to protect the tech portfolio after executing a put spread for the fintech company Square (SQ) to balance out our call spread on SQ.
Well, we have reached that point, and cutting our “beta” even more is the smart thing to do while implied volatility is high giving us advantageous prices for in-the-money put spreads.
This is not the time to bet the ranch as wonky phenomenon pop up like Reddit trading forums taking over the market narrative. This has surely influenced the trading algorithms that many hedge funds use to allocate capital meaning the imbalance is seeping into the broader market and triggering heightened volatility.
Why do we like CrowdStrike Holdings CRWD?
CrowdStrike Holdings CRWD is the darling of cybersecurity stocks. Shares were up 287% over the last year and they have consolidated somewhat recently which gives us the optimal entry point for a short-term trade.
CrowdStrike is enabling the trend toward cloud-based computing.
The cloud security leader in endpoint security, which provides protection at the device level, such as laptops, smartphones, servers, and sensors.
CrowdStrike uses artificial intelligence, machine learning, and behavioral analytics to power its threat detection system.
Each new business that joins the platform helps CrowdStrike's threat detection system become more intelligent, thereby strengthening the defense of everyone on the network.
They are no slouch with revenue expanding 86% year over year to $232.5 million in the third quarter, driven by strong customer gains.
Runway for growth is long. With the number of IoT devices set to explode to 75 billion by 2025, demand for CrowdStrike's endpoint security services should continue to grow unfettered which makes it such an attractive stock to appreciate.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Buy to Open 23 February 2021 (CRWD) $255 puts at….………$45.72
Sell to Open 23 February 2021 (CRWD) $250 puts at………….$41.40
Net Cost:………..........................……………..…….………..…..….....$4.32
Potential Profit: $5 - $4.32 = $.68
(23 X 100 X $.68) = $1,564 or 15.74% in 22 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 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.
