Trade Alert - (ROKU) January 10, 2023

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 Roku, Inc. (ROKU) January 2023 $51-$55 in-the-money vertical BEAR PUT spread at $3.30

Opening Trade

1-10-2023

expiration date: January 20, 2023

Portfolio weighting: 10%

Number of Contracts = 29 contracts

I am executing a 10-day trade that underlying shares of ROKU will stay below $51.

Whispers of revenue downgrades are piling up in the tech world and at some point, the chickens will come home to roost.

Don’t forget we are still in a massive debt deleveraging process and high-octane bear market green days don’t mask the fact that there is still a lot to digest for tech shares.

I am willing to execute a bearish trade that ROKU cannot go up 10% in the next 10 days.

There will be a time to move back your chips into tech growth stocks, but as I explained before, the great first week was mostly from bearish positioning and those shorts getting covered.

Naturally, I am willing to fade the ROKU strength.

Do not buy the stock – traders can go up to around $3.42 to make this trade work – do not chase and let the market come to you by placing a limit order.

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

Buy 29 January 2023 (ROKU) $55 puts at………….………$8.80

Sell short 29 January 2023 (ROKU) $51 puts at………….$5.50

Net Cost:……………………..…….………....................…….....$3.30

Potential Profit: $4 - $3.30 = $.70

(29 X 100 X $.70) = $2,030 or 21.21% in 10 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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