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 - PayPal Holdings, Inc. (PYPL) - BUY
BUY PayPal Holdings, Inc. (PYPL) November 2020 $170-$175 in-the-money vertical BULL call spread at $4.45
Opening Trade
11-9-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 22 contracts
News that Pfizer (PFE) has discovered a Covid-19 vaccine that is 90% effective has sent PayPal (PYPL) into a tailspin down 6% this morning.
I do believe PayPal is still part of the global growth story because it’s an international fintech company and not only levered to a “shelter-at-home” trade.
I am using this dip to execute a short-duration call spread.
This trade will be profitable if it stays above $175 in the next 12 days.
Saying tech shares are volatile would be an understatement but the risk-reward to this trade is quite favorable.
If you don’t do options, pass on this trade.
Here are the specific trades you need to execute this position:
Buy 22 November 2020 (PYPL) $170 calls at………...………$20.90
Sell short 22 November 2020 (PYPL) $175 calls at………….$16.45
Net Cost:………………......................……..…….………...…….....$4.45
Potential Profit: $5 - $4.45 = $.55
(22 X 100 X $.55) = $1,210 or 12.10% in 12 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 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.
