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) – BUY
BUY Roku, Inc. (ROKU) July 2022 $76-$81 in-the-money vertical BULL CALL spread at $4.05
Opening Trade
7-7-2022
expiration date: July 15, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This is an 8-trade wagering that Roku, Inc. (ROKU) will stay above $81.
I am going into the dumpy growth tech right now because they usually bounce the hardest when this type of “good news is bad news” starts.
Why? Because they’ve been destroyed on the way down the greatest.
How do I know of this new sentiment change?
US Central Bank Governor Jerome Powell, according to the minutes released yesterday, is continuing the hawkish rhetoric about needing to contain rampant inflation which means that the tech market expects him to put the economy into a recession faster than expected.
This ultimately means interest rate drops will occur faster than first thought and the market is sniffing this out which is great for equities and great for tech stocks.
Let me get this out there, the US economy is in no way in good shape. Consumers are starting to really pull back purchases due to hyperinflation in everyday items.
Here are the specific trades you need to execute this position:
Buy 25 July 2022 (ROKU) $76 calls at…………..………$14.65
Sell short 25 July 2022 (ROKU) $81 calls at………….$10.60
Net Cost:……………………..…….………..……...................$4.05
Potential Profit: $5 - $4.05 = $.95
(25 X 100 X $.95) = $2,375 or 23.46% in 8 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.
