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 – Roku, Inc. (ROKU) – SELL – TAKE PROFITS
SELL – TAKE PROFITS Roku, Inc. (ROKU) January 2023 $51-$55 in-the-money vertical BEAR PUT spread at $3.50
Closing Trade
1-12-2023
expiration date: January 20, 2023
Portfolio weighting: 10%
Number of Contracts = 29 contracts
I executed a short-term trade that underlying shares of ROKU will stay below $51.
Whispers of revenue downgrades are piling up in the tech world and at some point, the chickens will come home to roost.
Don’t forget we are still in a massive debt deleveraging process and high-octane bear market green days don’t mask the fact that there is still a lot to digest for tech shares.
Roku is down today after the CPI report didn’t meet the expectation of massive deflation and came in right at estimates on the dot.
Many traders were positioned for a lot more deflation and it didn’t come through as lagging indicators like shelter which usually lags by 1-year showed high shelter cost.
We are taking modest profits here after ROKU pretty much went against our position as soon as it was executed.
It’s better to rack up the singles than go for the home run each time.
Here are the specific trades you need to exit this position:
Sell to Close 29 January 2023 (ROKU) $55 puts at…….……$7.70
Buy to Close 29 January 2023 (ROKU) $51 puts at…..…….$4.20
Net Proceeds:……………………..…….…..............……..…….....$3.50
Profit: $3.50 - $3.30 = $.20
(29 X 100 X $.20) = $580 or 6.06%
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.
