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 - Snap Inc. (SNAP) – SELL – STOP LOSS
SELL Snap Inc. (SNAP) September 2021 $65-$70 in-the-money vertical BULL CALL spread at $4.20
Closing Trade
9-13-2021
expiration date: September 17, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
Snap (SNAP) is an ad tech company, and this was a bet that the underlying stock would stay above $70 by September 17th expiration and the stock has plunged by 5% and I am pulling out after this quick 1% rebound to minimize losses.
SNAP's story is a good one and their revenue model appears to be maturing at an optimal time while still exhibiting many elements of explosive growth.
Why is SNAP a good stock?
Daily active users grew 23% year-over-year to 293 million — expanding revenue by 116% year-over-year to $982 million.
This outperformance reflects the momentum in SNAP's core advertising business and the positive results of their team serving ad partners helping them to generate a return on investment.
SNAP benefited from a favorable operating environment and continued success with both direct response and large brand advertisers — continue to leverage performant ad products to grow an advertiser base globally.
Adjusted EBITDA improved by $213 million compared to last year, marking the third adjusted EBITDA profitable quarter in the last 12 months as SNAP continues to demonstrate the leverage in their business as they scale.
They are also fully absorbed in making progress against revenue and Average Revenue Per User (ARPU) opportunities, which I believe will be driven by three key priorities.
The unexpected plunge of 5% this morning was an anomaly, and I still believe this is a good buy-and-hold stock for the long term.
Here are the specific trades you need to exit this position:
Sell to Close 22 September 2021 (SNAP) $65 calls at………….………$6.70
Buy to Close 22 September 2021 (SNAP) $70 calls at…........……….$2.50
Net Proceeds:……………………..…….………..…..........................….....$4.20
Loss: $4.45 - $4.20 = $.25
(22 X 100 X $.25) = $550 or 5.61%
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.
