Trade Alert - (ADBE) May 27, 2020

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 - Adobe Inc. (ADBE) – BUY

BUY Adobe Inc. (ADBE) June 2020 $330-$335 in-the-money vertical BULL call spread at $4.35

Opening Trade

5-27-2020

expiration date: June 19, 2020

Portfolio weighting: 10%

Number of Contracts = 22 contracts

Tech markets are consolidating today and volatility is high.

Adobe has retraced back from $390 and I believe a call spread with the upper call strike being $335 is a good way to play this.

Tech is due for consolidation but I believe tech will be bought up before trending too much lower.

Adobe is one of my favorite cloud plays and strapping on a deep-in-the-money call spread is a favorable trade.

Do not chase and wait for it to come to you, there is a chance that consolidation in the next few days could push down prices lower. Intraday peaks and valleys are formulating in a blink of an eye, don’t panic if prices run away in seconds.

Tech has had a magnificent run-up but it's not time to bet the ranch.

We still have an open call spread and put spread in Google (GOOGL). I also am eyeing on Amazon and Salesforce which would be good for a similar type of call spread.

With the “Fed put” here to stay, investors cannot be overly bearish because of the floor set by the central bank.

If you don’t do options, stand aside.

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

Buy 22 June 2020 (ADBE) $330 call at………….………$36.30

Sell short 22 June 2020 (ADBE) $335 call at………….$32.05

Net Cost:……………………..…….……….......…….....$4.35 ($4.25 is midpoint)

Potential Profit: $5- $4.35 = $0.65

(22 X 100 X $0.65) = $1,430 or 14.30% in 23 days

To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.

If you are uncertain on how to execute an options spread, please watch my training video on 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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