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 - (ORCL) – BUY
BUY Oracle Corporation (ORCL) December 2019 $50-$53 in-the-money vertical BULL CALL spread at $2.52
Opening Trade
12-2-2019
expiration date: December 20, 2019
Portfolio weighting: 10%
Number of Contracts = 39 contracts
This is a bet that Oracle Corporation will not drop more than 4.5% in the next 19 days.
I can’t say that this is the type of tech stock that makes me dance in the streets but the risk/reward for this trade is favorable.
The company doesn’t grow top-line and is a legacy database software company headed by old hand Larry Ellison.
Even with the legacy status firmly tattooed on their foreheads, Oracle is a massive revenue scooper and that is in vogue right now.
They profited $11 billion on $39.5 billion of revenue in the past year and possess the type of balance sheet that is extra valuable right now in the eyes of traders.
They don’t risk losing their operational license like Uber in London and their CEO doesn’t take off for Africa for 6 months like Twitter’s Jack Dorsey.
If you do equities, please avoid this one.
Here are the specific trades you need to execute this position:
Buy 39 December 2019 (ORCL) $50 call at………….………$5.77
Sell short 39 December 2019 (ORCL) $53 call at………….$3.25
Net Cost:……………………..…….………..……........................$2.52
Potential Profit: $3.00 - $2.52 = $0.48
(39 X 100 X $0.48) = $1,872 or 18.72% in 33 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.
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.
