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) – TAKE PROFITS
SELL Roku, Inc. (ROKU) July 2022 $76-$81 in-the-money vertical BULL CALL spread at $4.60
Closing Trade
7-12-2022
expiration date: July 15, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This was a short-term trade wagering that Roku, Inc. (ROKU) would stay above $81.
ROKU shot to the upside when we executed this trade but had a major selloff yesterday. The 8-day time frame meant that most of the profits we accrued were harvested via time decay as the acceleration of time decay really picks up the last 10 days before expiration.
We have some CPI numbers coming up tomorrow and we already have the White House press secretary downplaying the importance of the number and we all know what that means. It’ll most likely come in stubbornly high leading to a bunch of oral theatrics about Putin’s inflation hike or something of that nature.
As it relates to ROKU and tech growth stocks, timing the bear market rally spikes is a precarious strategy but we are doing well with it.
I do expect tech downgrades to filter through and take us lower on aggregate but at least we are past the worst of the storm.
I would sell the next big rally in tech growth.
Here are the specific trades you need to exit this position:
Sell to Close 25 July 2022 (ROKU) $76 calls at………....….………$12.40
Buy to Close 25 July 2022 (ROKU) $81 calls at……...…..........….$7.80
Net Proceeds:……………………..…….………..…......................….....$4.60
Profit: $4.60 - $4.05 = $.55
(25 X 100 X $.55) = $1,375 or 13.55%
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.
