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 - Cisco Systems, Inc. (CSCO) – SELL – TAKE PROFITS
SELL Cisco Systems, Inc. (CSCO) November 2019 $42-$45 in-the-money vertical BULL CALL spread at $2.90
Closing Trade
11-7-2019
expiration date: November 15, 2019
Portfolio weighting: 10%
Number of Contracts = 39 contracts
We have accrued 79% of the maximum profit for this trade and its time to pull the ripcord.
Cisco delivers earnings early next week and they might signal a softening of demand on top of the softening Goldman Sach’s noted that induced a sell-off a few months ago which gave us a nice entry point into this stock.
This was a trade that Cisco Systems (CSCO) will stay above $45.
The flight to quality will tear apart names that lose money and have bad business models, I don’t think Cisco is one of them.
For the past 3 months, Cisco has traded around this level and I was proved right.
Cisco is largely a bet on the internet infrastructure expanding and even though many enterprise dollars are on hold, I believe that is baked into the stock price now.
There has been major repricing of marginal tech stocks in the past few months and chip stocks were the latest victim to get hammered on the news that China and America still have a lot to do to get the first phase of the trade deal completed.
Last year, Cisco did $51.90 billion in revenue and profited $11.62 billion, these are the types of tech names you want to hold now in November 2019.
Here are the specific trades you need to execute this position:
Sell 39 November 2019 (CSCO) $42 call at…………..........………$6.90
Buy to Cover Short 39 November 2019 (CSCO) $45 call at…….$4.00
Net Proceeds:……………………..…….……….......................…….....$2.90
Profit: $2.90 - $2.53 = $.37
(39 X 100 X $.37) = $1,443 or 14.33%
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 “How to Execute a Vertical Bull Call Spread” 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.