Trade Alert - (AMZN) June 8, 2021 - SELL-TAKE PROFITS
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 - Amazon.com, Inc. (AMZN) – SELL – TAKE PROFITS
SELL TAKE PROFITS Amazon.com, Inc. (AMZN) June 2021 $3,000-$3,010 in-the-money vertical BULL call spread at $9.81
Closing Trade
6-8-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I am using this bump in AMZN shares to exit our short-dated Bull Call Spread.
This was a short-term bet that Amazon.com, Inc. (AMZN) would stay above $3,010 by June 18th and price action hasn’t been stellar but it’s been good enough as the Nasdaq has shown some short-term strength.
This has allowed us to take profits in our other bullish call spreads and we are having a good month in the tech trading portfolio.
We decided to put this on because Amazon has experienced sturdy, resilient price action relative to the rest of tech and I bet that Amazon would be a strategic place to hide out as tech consolidates.
Even Apple hasn’t done much this year and hopefully, that will change with a tsunami of share buybacks.
AMZN’s underlying stock has mastered going sideways in a range the past 6 months and this was a bet that any downside selloff won’t break the southern limit of that range which was correct and now we are harvesting the profits because the risk/rewards to holding this trade to expiration doesn’t make sense.
If you own the stock, then hold as I said in March that my end-of-year target was $3,400 and AMZN surged past that in the beginning of May. I do believe the stock will finish the year more than 8-10% higher from the current price. This ecommerce stock should be the cornerstone of any technology portfolio and held long-term.
Here are the specific trades you need to exit this position:
Sell to Close 12 June 2021 (AMZN) $3,000 calls at………….………$237.58
Buy to Close 12 June 2021 (AMZN) $3,010 calls at…….........…….$227.77
Net Proceeds:……………………..…….……...........................…..…….....$9.81
Profit: $9.81 - $8.65 = $1.16
(12 X 100 X $1.35) = $1,392 or 13.41%
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.