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 - Alphabet Inc. (GOOGL) - BUY
BUY the Alphabet Inc. (GOOGL) June 2020 $1,280-$1,285 in-the-money vertical BULL call spread at $3.45
Opening Trade
5-11-2020
expiration date: June 19, 2020
Portfolio weighting: 10%
Number of Contracts = 28 contracts
Monday morning in our world of tech shares is a microcosm of the bifurcation going on in the stock market.
We were deep in the red in the pre-market almost piercing the -1%, then tech shares opened up slightly down but a torrent of buying now sees the Nasdaq in the green for the day while the Dow and S&P lag.
Unsurprisingly, Facebook, Google, Amazon, and Apple are all up today and weaker business models like Lyft, Yelp, Grubhub, Pinterest down big.
This is not only becoming a tale of two economies but fast becoming a tale of two tech worlds.
This is a nice opening into Google who I still think has more value to the upside along with Facebook.
However, any sign of disorder and we will cut it loose as capital preservation is the order of the day and we have worked hard to be up 4% YTD.
Amazon has gone parabolic along with other tech companies like Fortinet, Twilio, PayPal, and Teladoc Health.
The deep-in-the-money bull call spread is not a layup and I plan to layer this trade with short call spreads to protect it. The low hanging fruit has been plucked from the orchard and there is still a meaningful risk of a pullback.
We currently have a bull call spread on cloud company Akamai (AKAM) that is performing well.
There is no chance we are holding this position until expiration; the market is just too uncertain, and we are trending back to all-time highs.
Do not buy the stock here, this is a short term trade. The mid-point spread of this trade at $3.45 is a good price, don’t chase into the $3.60s. I will be looking for some hedges to protect us from the downside in non-Fang names. This is not the time to bet the ranch.
We have recently taken in a raft of new subscribers and welcome to the beginning of your trading journey in the strongest sector the public markets have to offer.
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 28 June 2020 (GOOGL) $1,280 call at………….………$125.20
Sell short 28 June 2020 (GOOGL) $1,285 call at….……….$121.75
Net Cost:…………………….........................…….…..…..…….....$3.45
Potential Profit: $5 - $3.45 = $1.55
(28 X 100 X $1.55) = $4,340 or 43.40%
To see how to enter this trade in your online platform, please look at the order ticket above, 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.
