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 - Lyft, Inc. (LYFT) – BUY
BUY Lyft, Inc. (LYFT) May 2020 $32.50-$37.50 in-the-money vertical BEAR put spread at 3.73
Opening Trade
4-15-2020
expiration date: May 15, 2020
Portfolio weighting: 10%
Number of Contracts = 26 contracts
This is a short-term trade that Lyft, Inc. (LYFT) won’t rise above $32.50 – this is a short term trade that shares will trade sideways to down and is a bet that I am willing to make.
If you have read the Mad Tech Letter, you know that I believe rideshare business models will never become profitable.
Uber CEO Dara Khosrowshahi told investors that ride volume has gone down by as much as 60%-70% in the hardest-hit cities like Seattle, and that’s before you consider the pauses in some of its services, and the dubious distinction of becoming one of the earliest proof-of-concepts of just how spreadable this virus really is.
But Khosrowshahi also told investors in an update that the company believes it is “well-positioned” to ride the troubles out even in the worst-case scenario of rides down by 80% for the year. And even as rides for passengers are down, it is also considering leveraging its network for delivering other things, such as medicine or basic goods.
So imagine how it is for the inferior version of Uber with no “other” businesses like Uber Eats, leading me to conclude that this massive retracement in shares must just be a bear market rally.
Finding entry points to short growth stocks is an imprecise endeavor but I do believe that poor revenue reports in the upcoming earnings report is going to cap this bear market rally in Lyft’s shares.
This is not for the faint of heart and more conservative traders should stay on the sidelines.
I recommended taking profits on the first big gap down.
This is not the time to bet the ranch – capital preservation is the phrase of the day.
If you don’t do options, stand aside.
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 26 May 2020 (LYFT) $37.5 put at………….……..…$8.98
Sell short 26 May 2020 (LYFT) $32.50 put at………….$5.25
Net Cost:………………..............……..…….………..…….....$3.73
Potential Profit: $5 - $3.73 = $1.27
(26 X 100 X $1.27) = $3,302 or 33.02% in 31 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.
