Trade Alert - (FB) August 17, 2021

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 - Facebook, Inc. (FB) – BUY

BUY Facebook, Inc. (FB) September 2021 $330-$335 in-the-money vertical BULL CALL spread at $4.20

Opening Trade

8-17-2021

expiration date: September 17, 2021

Portfolio weighting: 10%

Number of Contracts = 23 contracts

This is simply a buy-the-dip short-term tech trade after a sharp down day in the broader market.

After I got burnt in Roku, stay away from tech growth in the short-term and migrate to higher waters like those with pristine balance sheet simply because growth tech is volatile in the short term after 2020 liftoff.

The party is over in the short term for the shelter-at-home darlings and there could be a rotation into big tech even with a smidgeon of higher interest rate sentiment.

This is a trade that Facebook, Inc. (FB) stock will stay above $335 by September 17th expiration which is precisely 32 days from now.

I like that we have technical support at $340 and a significant move up, will be a profit-taking opportunity.

This is a short-term technical bet and I have been waiting for an entry point to get into this one.

Investors must love the stock but hate the company.

The anti-trust hounds have been put off for a while and I expect highly profitable ad tech stocks to do well right now.

Ad tech stocks like GOOGL and FB are the most profitable because not only do they have duopolies, but they don’t need to source material to build product in an inflationary environment and they are at the vanguard of the digital economy.

What’s not to like about that?

Short-term, these dips are traders’ dreams and it’s time to strike while the iron is hot. Any equity long-term and holders should place this in their portfolio for the foreseeable future.

Here are the specific trades you need to execute this position:

Buy 23 September 2021 (FB) $330 calls at………….………$31.25

Sell short 23 September 2021 (FB) $335 calls at………….$27.05

Net Cost:…………………....................…..…….………..…….....$4.20

Potential Profit: $5 - $4.20 = $.80

(23 X 100 X $.80) = $1,840 or 19.05% in 32 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.

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