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 - Pinduoduo Inc. (PDD) – BUY
BUY the Pinduoduo Inc. (PDD) May 2022 $44-47 in-the-money vertical BEAR PUT spread at $2.40
Opening Trade
4-25-2022
expiration date: May 20, 2022
Portfolio weighting: 10%
Number of Contracts = 38 contracts
This is a tactical trade in Chinese internet platform Pinduoduo Inc. (PDD) that PDD will not rise above $44 in the next 25 days.
I don’t think the lockdowns are over in China and they are menacing to PDD's business model as Chinese consumers can’t earn a paycheck that goes into PDD products.
The 4.8% of Chinese growth is just a dog and pony show, under the hood, there are many economic problems there and we just got news of more covid cases in Beijing which has triggered panic buying.
This stock is highly volatile, and the Nasdaq is going through fits and starts, anybody risk-adverse should take a seat on the sideline for now.
I do believe that today’s positive price action is more of a result of a short-term macro reprieve than anything to do with China. Revenue projections are falling fast in China and this ecommerce growth company will be hit hard by it.
Another Chinese tech stock worth shorting is Baidu (BIDU).
Here are the specific trades you need to execute this position:
Buy 38 May 2022 (PDD) $47 put at………….………$12.40
Sell short 38 May 2022 (PDD) $44 put at………….$10.00
Net Cost:……………………..…..........….………..…….....$2.40
Potential Profit: $3 - $2.40 = $.60
(38 X 100 X $.60) = $2,280 or 25% in 25 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.
