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) – SELL – STOP LOSS
SELL STOP LOSS DocuSign, Inc. (DOCU) February 2021 $260-$265 in-the-money vertical Bear Put spread at $3.65
Closing Trade – NOT FOR NEW SUBSCRIBERS
2-10-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This was a short-term trade that software company DocuSign, Inc. (DOCU) will stay BELOW the strike price of $260 in 18 days that I used as a hedge to protect my 6 bullish positions in the tech portfolio.
I am in no way bearish DOCU long term, and the position broke up to the upside meaning we need to protect our gains by cutting it here.
The remaining 6 bullish positions look like winners at this point.
The coronavirus has caused many companies to accelerate their plans to adopt new digital technology. One beneficiary of this acceleration has been DocuSign and its e-signature platform.
Over the last three quarters, the company has added 38,000 enterprise and commercial customers, increasing its base of large customers by a whopping 50%. What's exciting for investors is that these new customers are just beginning their digital transformation journey with DocuSign.
If you got a chance to buy DOCU, hold the stock because my 3-year target for DOCU is $400.
Sell to Close 22 February 2021 (DOCU) $265 put at………….………$14.60
Buy to Close 22 February 2021 (DOCU) $260 put at………........….$10.95
Net Proceeds:……………………..…….………............................…….....$3.65
Loss: $4.4 - $3.65 = $.75
(22 X 100 X -$.75) = -$1,650 or -17.04%
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 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.
