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 - DocuSign, Inc. (DOCU) – BUY
BUY DocuSign, Inc. (DOCU) April 2020 $67.50-$72.50 in-the-money vertical BULL call spread at $4.10
Opening Trade
4-3-2020
expiration date: April 17, 2020
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This is a short-term deep in the money call spread that DocuSign won’t drop below the strike price of $72.50 in 15 days – we finally have an optimal entry point into a premium coronavirus tech stock.
I have been outwardly bullish on this digital signature cloud product that has jumped to the forefront now that business is conducted on lockdown.
The price action has been nothing short of glorious (up 10% in the past month) in the era of the coronavirus and as not all tech stocks are created equal, it’s time to jump into this one considering shares have dropped 3% this morning on a bout of weakness.
Shares have come down to earth after hitting $93 and have technical support at $67.
Even though there will be expected heightened volatility because of the uncertainty and terrible unemployment numbers, as long as the coronavirus is twisting in the wind wreaking havoc in the U.S., this stock will exhibit strength.
Be considerate that as soon as there is a substantial health solution in the U.S., DocuSign will see a sell-off.
Honestly, I am shocked that the tech market has held up so well in the face of ghastly data, which is an incredibly bullish short-term signal.
If you like risk, then I would advise moving up your strike prices, but as risk control is the order of the day, this deep in the money call spread is a more conservative bet.
Be aware that DocuSign is not one of those slow burners and there is still volatility in this stock because it is considered a growth stock to many investors.
If there is a quick bump up in shares, I will take profits and I would be inclined to look for some short-side positions on any strength. We aren’t out of the woods yet.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Here are the specific trades you need to execute this position:
Buy 22 April 2020 (DOCU) $67.50 call at………….….……$14.70
Sell short 22 April 2020 (DOCU) $72.50 call at………….$10.60
Net Cost:………………...................……..…….………..…….....$4.10
Potential Profit: $5 - $4.10 = $0.90
(22 X 100 X $0.90) = $1,980 or 19.80 % in 15 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 on “How to Execute a Vertical Bull Call Spread” by clicking here at
http://www.madhedgefundtrader.com/ltt-vbpds/
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.
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.
