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 - Dell Technologies Inc. (DELL) – TAKE PROFITS
SELL Dell Technologies Inc. (DELL) December 2024 $110-$115 in-the-money vertical BULL CALL spread at $4.80
Closing Trade
12-16-2024
expiration date: December 20, 2024
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I initiated a bullish call position in AI stock DELL on November 27th.
Dell forecasted fourth-quarter revenue and earnings below consensus despite bullish commentary from the company on AI sales growth. The PC maker reported quarterly earnings that beat expectations for earnings per share, but came up light on overall revenue.
The light revenue guide tanked the stock in the short term.
This was a trade that there would be a bounce in the underlying stock of DELL and even though I executed the trade when the underlying stock was trading at $124 per share, most of the profit is being delivered to us through time decay with the expiration in just a few days.
The underlying stock DELL is trading at around $120 per share right now and we survived a sharp dip almost to $115 so I am taking profits when this small bounce up and today is a good day to harvest the trade and move on.
The stock is now a new AI play as it has forayed into the AI server business. They deserve a higher multiple and this explains why the stock has outperformed so greatly in the past year.
Here are the specific trades you need to exit this position:
Sell to Close 23 December 2024 (DELL) $110 calls at…………$10.70
Buy to Close 23 December 2024 (DELL) $115 calls at………….$5.90
Net Proceeds:……………………..…….………..……........................$4.80
Profit: $4.80 - $4.32 = $.48
(23 X 100 X $.48) = $1,104 or 11.11%
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.
