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 – Zoom Video Communications, Inc. (ZM) – BUY – DOUBLE UP
Buy Zoom Video Communications, Inc. (ZM) May 2023 $67-$72 in-the-money vertical BEAR PUT spread at $4.50
Opening Trade
4-28-2023
expiration date: May 19, 2023
Portfolio weighting: 10%
Number of Contracts = 22 contracts
I am executing a trade that underlying shares of video conferencing company Zoom (ZM) will stay below $67 in the next 21 days.
I am doubling up after the initial vertical bear put spread has been going our way.
I just don’t see where the incremental buyer comes from in the short term.
There is no reason to buy ZM. Growth is growing, capital markets are frozen, and minimal profitability.
Close-up on a 1-month chart, and it looks terrible. Every mini move up was a great entry point for sellers to dump more ZM stock and I don’t believe that momentum has a chance of reversing in the next 21 days.
After Microsoft (MSFT) posted better-than-expected earnings, the hollowing of the tech sector is real and I don’t believe growth stocks have a strong short-term future.
In fact, the whole ARKK complex like the ROKU’s and DOCU’s are stocks that might have trouble performing in the short term.
Here are the specific trades you need to execute this position:
Buy 22 May 2023 (ZM) $72 puts at………….………$10.60
Sell short 22 May 2023 (ZM) $67 puts at…….…….$6.10
Net Cost:……………………....…….……......…..…….....$4.50
Potential Profit: $5- $4.50 = $.50
(22 X 100 X $.50) = $1,100 or 11.11% in 21 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.
