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 - Netflix, Inc. (NFLX) – TAKE PROFITS
SELL – Netflix, Inc. (NFLX) February 2021 $510-$515 in-the-money vertical BULL call spread at $4.98
Closing Trade – NOT FOR NEW SUBSCRIBERS
2-18-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a short-term trade that software company Netflix, Inc. (NFLX) will stay above the strike price of $515 by the February 19th expiration and NFLXs underlying shares haven’t gotten close to the 50-day support level of $530.
NFLX is maturing into a real stable tech stock with less crazy selloffs than before.
That’s the beauty of the subscriber model as the volatility is stripped out when the firm’s CFO has a better idea of what future cash flows will look like.
All the company needs to do is follow up with 5-star streaming content which is harder said than done.
So, all eyes fall on the x-factor – Ted Sarandos – who serves as the co-chief executive officer and chief content officer.
This bet has been winning out as he drives NFLX to higher highs.
In the fourth quarter, Netflix blew past the 200 million subscriber mark.
Can you believe it that the picture is still bright for long-term subscription growth, even though CEO Reed Hastings warned during the Q4 earnings call that growth is expected to slow down drastically in the short term. But fewer than 40% of those subscribers live in North America. About 83% of Netflix's new paid subscriptions came from outside the U.S. and Canada in 2020, with Europe, the Middle East, and Africa accounting for 41% of new subscriptions.
As the migration to digital increases throughout the developing world, Netflix's subscriber base will soar.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
If you don’t do options, hold the stock, my 3-year target is $750.
Here are the specific trades you need to exit this position:
Sell to Close 23 February 2021 (NFLX) $510 calls at………….………$33.26
Buy to Close 23 February 2021 (NFLX) $515 calls at……….........….$28.28
Net Proceeds:……………………..…….………..…............................….....$4.98
Profit: $4.98 - $4.27 = $.71
(23 X 100 X $.71) = $1,633 or 16.63%
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.
