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) – BUY
BUY the Palo Alto Networks (PANW) October 2022 $130-$140 vertical BULL CALL spread at $8.80 or best
Opening Trade
9-27-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
If you can’t do options, buy the stock. My long-term target for (PANW) is $300, up from today’s $163.17.
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 have 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 have an equally rare opportunity to get into the spread with a Volatility Index (VIX) at a sky-high $33.
Therefore, I am buying the Palo Alto Networks (PANW) October 2022 $130-$140 vertical BULL CALL spread at $8.80 or best.
Don’t pay more than $9.40 or you will be chasing.
This is a bet that the (PANW) will not fall below $140.00 by the October 21 options expiration in 19 trading days.
Here are the specific trades you need to execute this position:
Buy 12 October 2022 (PANW) $130 calls at………….………$34.00
Sell short 12 October 2022 (PANW) $140 calls at……….…$25.20
Net Cost:…………………………...............………..………….….....$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440 or 13.63% in 19 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.
