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 the Netflix, Inc. (NFLX) October 2022 $250-$255 in-the-money vertical BEAR PUT spread at $3.90
Opening Trade
9-14-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This is a bet that floundering streaming minnow Netflix (NFLX) will stay below $250 in the next 37 days.
The hot inflation number means that we are back to sell the tech rallies as the Fed hawks will get their way. That means inferior tech stocks won’t have much upside in the short-term as inflation emerges as an accelerated risk. There is now a 25% chance of a full 1% interest rate hike to Fed Funds rate at the next Fed meeting.
The Nasdaq hasn’t priced in a hard landing yet and in the short-term, the market will need to navigate the concept of how strong the job market is since it’s the last pillar, cited by the Fed, that the economy is standing on.
One of the first discretionary services to get cut will be dreadful products like Netflix (NFLX) whose content quality has fallen off a cliff.
Someone needs to fire the content quality control over there.
I am inclined to sell every large rally in NFLX until the Fed pivot. What’s evident is that NFLX will also underperform the broader Nasdaq.
Here are the specific trades you need to execute this position:
Buy 25 October 2022 (NFLX) $255 puts at…………..………$41.50
Sell short 25 October 2022 (NFLX) $250 puts sat…….….$37.60
Net Cost:…………………….....................…….……..…..…….....$3.90
Potential Profit: $5 - $3.90= $1.10
(25 X 100 X $1.10) = $2,750 or 28.20% in 37 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.
