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 - Datadog, Inc. (DDOG) – BUY
Buy Datadog, Inc. (DDOG) February 2024 $110-$114 in-the-money vertical BULL CALL spread at $3.00
Opening Trade
1-26-2024
expiration date: February 16, 2024
Portfolio weighting: 10%
Number of Contracts = 33 contracts
Datadog (DDOG) had a mini-dip yesterday and now I am executing a mildly bullish call spread with the upper strike price of $114.
We have about an 8% cushion and this is a trade that tech will keep running hot.
What is DDOG?
DDOG sells observability software that helps development, operations, and security teams work more productively. Its platform includes more than two dozen modules that aggregate machine data from every layer of the corporate IT stack. Its software leans on AI to help businesses prevent performance problems across critical applications and infrastructure.
Datadog is a leader in several observability software verticals, including application performance monitoring, log monitoring, and AI for IT operations.
Datadog also recently announced a performance-monitoring product for large language models and generative AI applications and a natural language copilot that accelerates incident investigation.
The consensus is that DDOG will grow sales at 26% annually over the next five years, which doesn’t make it a pure growth stock, but quite close to it.
Don’t pay more than $3.20.
Here are the specific trades you need to execute this position:
Buy to Open 33 February 2024 (DDOG) $110 calls at.….……$17.15
Sell to short 33 February 2024 (DDOG) 114 calls at………….$14.15
Net Cost:……………………..…..….......................………..…….....$3.00
Potential Profit: $4 - $3 = $1
(33 X 100 X $1) = $3,300 or 33.33% in 21 days
If you are uncertain about 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.
