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 - DoorDash, Inc. (DASH) – TAKE PROFITS
SELL DoorDash, Inc. (DASH) March 2022 $130-140 in-the-money vertical BEAR PUT spread at $9.80
Closing Trade
2-18-2022
expiration date: March 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
This was a tactical trade in digital food delivery platform DoorDash (DASH) that DASH wouldn’t rise above $130 in the next 29 days.
We executed this trade when the underlying stock DASH was trading around $111 and one day later it cratered to $98 and we are taking profits and leaving a few cents on the table.
The risk-off sentiment is unnerving right now and traders shouldn’t get in front of a lorry driving full speed.
I don’t envision tech growth outperforming as we approach the 5-7 interest rate hikes that Goldman Sachs (GS) proposes are in the cards.
This year will be a hard slog for marginal tech stocks and DASH is nothing special, it’s Uber Eats without the Uber driving business and it matches drivers with restaurants to courier the food over to people’s houses.
In an era of imposing AI that will eventually wipe out DASH, one of the bigger tech companies will just use self-driving technology to root out DASH and its human driver model. It’s not like DASH has the billions or the staff to develop self-driving tech either.
Don’t buy this stock – if anything, sell the rallies for the foreseeable future.
Here are the specific trades you need to exit this position:
Sell to Close 12 March 2022 (DASH) $140 puts at………….………$73.80
Buy to Close 12 March 2022 (DASH) $130 puts at……........…….$64.00
Net Proceeds:……………………..…….………..….......................….....$9.80
Profit: $9.80 - $7.85 = $1.95
(12 X 100 X $1.95) = $2,340 or 24.84%
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.
