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.
Trade Alert - (PANW) – TAKE PROFITS
SELL the Palo Alto Networks (PANW) October 2022 $130-$140 vertical BULL CALL spread at $9.70 or best
Closing Trade
10-11-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Palo Alto Networks is the class act in the cybersecurity space. Virtually every manager I know either has the stock or is trying to get into it.
Its total addressable market is a staggering $75 billion. As I never tire of pointing out to followers, hacking never takes a break, is always growing, and is recession-proof.
We had a rare opportunity to get into the stock down 25% from its all-time high. (PANW) is one of the toughest stocks to buy in the market. Everyone wants it. We also had an equally rare opportunity to get into the spread with a Volatility Index (VIX) at a sky-high $33.
Therefore, I am selling the Palo Alto Networks (PANW) October 2022 $130-$140 vertical BULL CALL spread at $9.70 or best.
As a result, you get to take home $1,080, or 10.23% in 10 trading days. Well done and on to the next trade.
This was a bet that the (PANW) would not fall below $140.00 by the October 21 options expiration in 19 trading days.
Here are the specific trades you need to exit this position:
SELL 12 October 2022 (PANW) $130 calls at……….….……....…$35.00
Buy to cover short 12 October 2022 (PANW) $140 calls at...…$25.30
Net Proceeds:………………………….…………..……...........…….….....$9.70
Profit: $9.70 - $8.80 = $0.90
(12 X 100 X $0.90) = $1,080, or 10.23% in 10 trading days.
If you are uncertain about 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.
