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 - Facebook, Inc. (FB) – TAKE PROFITS
SELL Facebook, Inc. (FB) September 2021 $330-$335 in-the-money vertical BULL CALL spread at $4.97
Closing Trade
8-31-2021
expiration date: September 17, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a simple buy-the-dip short-term tech trade after a sharp down day in the broader market in Facebook (FB).
After I got burnt in Roku, I decided to stay away from tech growth in the short-term and migrate to higher waters like those with pristine balance sheets and it has worked like a charm.
This deep in-the-money call spread worked perfectly with FB currently trading at around $379/$380 and the risk/reward for holding the trade to maturity is now not favorable.
The party is over in the short term for the shelter-at-home darlings and there could be a rotation into big tech even with a smidgeon of higher interest rate sentiment and we definitely got confirmation of that from the cataclysmic Zoom Video sell-off on poor earnings’ guidance.
This was a bet that Facebook, Inc. (FB) stock would stay above $335 by September 17th expiration which was precisely 32 days from when we initiated the trade and after harvesting the lions’ share of the profit, we are cashing in on this one.
Investors must love the stock but hate the company.
The anti-trust hounds have been put off for a while and I expect highly profitable ad tech stocks to do well right now.
I would also throw SNAP into the mix as an up-and-coming ad tech play.
Ad tech stocks like GOOGL and FB are the most profitable because not only do they have duopolies, but they don’t need to source material to build products in an inflationary environment and they are at the vanguard of the digital economy.
What’s not to like about that?
Short-term, these dips are traders’ dreams and it’s time to strike while the iron is hot. Any equity long-term and holders should place this in their portfolio for the foreseeable future.
I am inclined to buy FB on the next dip.
Here are the specific trades you need to exit this position:
Sell to Close 23 September 2021 (FB) $330 calls at…….....………$50.45
Buy to Close 23 September 2021 (FB) $335 calls at……….......….$45.48
Net Proceeds:……………………..…….........................………..…….....$4.97
Profit: $4.97 - $4.20 = $.77
(23 X 100 X $.77) = $1,771 or 18.33%
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.