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 Trade Alert - Twitter, Inc. (TWTR) – BUY
BUY Twitter, Inc. (TWTR) November 2020 $37-$40 in-the-money vertical BULL CALL spread at $2.65
Opening Trade
11-6-2020
expiration date: November 20, 2020
Portfolio weighting: 10%
Number of Contracts = 37 contracts
This is a short-term trade that social media tech firm Twitter (TWTR) will stay above $40 in the next 14 days. The maximum profit in this trade will net you $1,295.
Twitter stock plunged to close down more than 21% on October 30th after the company reported disappointing user growth but beat analysts’ expectations on profit and revenue. Twitter grew its total monetizable daily active users by just 1 million people from last quarter to 187 million users, falling shy of analysts’ expectations of 195 million mDAUs for the third quarter. The company attributed last quarter’s growth in large part to shelter-in-place orders around the world.
The stock has rebounded and is steadily trending up since the sell-off and I am going in for a short-term trade estimating that the upward trend will stay intact.
The company benefits from its scarcity value and there simply is nothing in the tech universe that serves the purposes in the media world.
If you don’t do options, take a pass on this one.
Here are the specific trades you need to execute this position:
Buy 37 November 2020 (TWTR) $37 calls at………….………$6.20
Sell short 37 November 2020 (TWTR) $40 calls at………….$3.55
Net Cost:…………….....................………..…….…….…..…….....$2.65
Potential Profit: $3.00 - $2.65 = $.35
(37 X 100 X $.35) = $1,295 or 12.95% in 14 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.
