Tech Alert - (ROKU) October 3, 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) October 2023 $76-$81 in-the-money vertical BEAR PUT spread at $4.10

Opening Trade

10-3-2023

expiration date: October 20, 2023

Portfolio weighting: 10%

Number of Contracts = 24 contracts

I am executing a trade that underlying shares of video conferencing company Roku (ROKU) that wagers that ROKU will stay below $76 in the next 17 days.

The macro picture appears to have deteriorated with US 10-year treasuries threatening 4.8% and the Japanese yen blowing past 150 yen to $1.

Volatility is here in the short term.

In the Mad Hedge Tech portfolio, we still have 2 long positions in large cap tech and I’d be a fool not to layer those positions with protection.

The tech picture for small cap tech looks bleak in the short-term and today’s price action has been nothing short of terrible with the first lurch up sold violently down with the Nasdaq decelerating to -2% in the morning.

I believe making a tactical short-term bet to short ROKU is a good trade right here with a 17-day time horizon.

Don’t pay more than $4.23.

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

Buy 24 October 2023 (ROKU) $81 puts at………….………$11.20

Sell short 24 October 2023 (ROKU) $76 puts at….……….$7.10

Net Cost:…………………….....................…….………..…….....$4.10

Potential Profit: $5- $4.10 = $.90

(24 X 100 X $.90) = $2,160 or 21.95% in 17 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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