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) – BUY
BUY Netflix, Inc. (NFLX) January 2022 $570-$575 in-the-money vertical BEAR PUT spread at $4.20
Opening Trade
1-12-2022
expiration date: January 21, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This is a tactical trade in tech as big tech has bounced back with the likes of Google, FB, and Apple showing resiliency in price action, but NFLX seems to be the odd one out and I am betting the 9-day upside to NFLX is limited.
We got another high inflation number this morning and big tech has shown positive reversals and I am willing to execute a deep in the money bear put spread on NFLX shares that bets that NFLX will stay below $570 per share in the next 9 days.
I will take profits on any meaningful move lower, this is a volatile market in a rising rate environment that calls for having a tight stop on all positions.
Readers should avoid all growth techs right now and only consider tech companies with strong balance sheets.
Here are the specific trades you need to execute this position:
Buy 25 January 2022 (NFLX) $575 puts at………….………$45.78
Sell short 25 January 2022 (NFLX) $570 puts at………….$41.58
Net Cost:………………...................……..…….….……..…….....$4.20
Potential Profit: $5 - $4.20 = $.80
(25 X 100 X $.80) = $2,000 or 19.04% in 9 days
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.
