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 Trade Alert - Micron Technology, Inc. (MU) – BUY
BUY Micron Technology, Inc. (MU) September 2019 $47-$50 in-the-money vertical BEAR PUT spread at $2.50 up to $2.60
Opening Trade
8-8-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Micron is levered to China Inc. procuring 51% of revenue from mainland China.
This is a bet that Micron won’t break out to August 2018 levels before they hit a rough patch and the trade war went into overdrive.
The recent sell-off has destroyed all technical support levels and to think that Micron will lead the way out of this mess without a partial or full trade deal is bonkers.
I am willing to make a short-term bet that Micron won’t break out.
Consumer devices such as smartphones are saturated and MU produces DRAM chip which are used for smartphones.
The tariffs directly hurt Micron and the company has been part of some IP disputes claiming that local Chinese companies have indulged in their knowhow.
Don’t pay more than $2.60.
Here are the specific trades you need to execute this position:
Buy 40 September 2019 (MU) $50 put at………….………$8.15
Sell short 40 September 2019 (MU) $47 put at………….$5.65
Net Cost:……………………..…….……................…..…….....$2.50
Potential Profit: $3.00 - $2.50 = $.50
(40 X 100 X $.50) = $2,000 or 20%
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.
