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 - Datadog, Inc. (DDOG) – TAKE PROFITS
SELL Datadog, Inc. (DDOG) February 2024 $110-$114 in-the-money vertical BULL CALL spread at $3.93
Closing Trade
2-12-2024
expiration date: February 16, 2024
Portfolio weighting: 10%
Number of Contracts = 33 contracts
Datadog (DDOG) had a mini-dip and I executed a mildly bullish call spread with the upper strike price of $114.
DDOG has really had a nice run and sits pretty today at around $136 a day before its earnings report and now is the time to cash out on this position.
The secondary cloud stocks have done exceptionally well lately pulling strength from the generative AI narrative.
It’s not only Nvidia that has benefited and DDOG is one to keep your eye out for.
What is DDOG?
DDOG sells observability software that helps development, operations, and security teams work more productively. Its platform includes more than two dozen modules that aggregate machine data from every layer of the corporate IT stack. Its software leans on AI to help businesses prevent performance problems across critical applications and infrastructure.
Datadog is a leader in several observability software verticals, including application performance monitoring, log monitoring, and AI for IT operations.
Datadog also recently announced a performance-monitoring product for large language models and generative AI applications and a natural language copilot that accelerates incident investigation.
The consensus is that DDOG will grow sales at 26% annually over the next five years, which doesn’t make it a pure growth stock, but quite close to it.
Here are the specific trades you need to exit this position:
Sell to Close 33 February 2024 (DDOG) $110 calls at…………...……$27.33
Buy to Close 33 February 2024 (DDOG) $114 calls at……….......….$23.40
Net Proceeds:……………………..........................…….……......…..….....$3.93
Profit: $3.93 - $3 = $.93
(33 X 100 X $.93) = $3,069 or 31.00%
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.
