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.
BioTech Trade Alert - AstraZeneca PLC (AZN) – TAKE PROFITS
SELL – AstraZeneca PLC (AZN) February 2021 $46.50-$49.50 in-the-money vertical BULL CALL spread at $2.98
Closing Trade – NOT FOR NEW SUBSCRIBERS
2-17-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 39 contracts
This was a short-term trade that AstraZeneca PLC (AZN) would stay above $49.50 in 23 days and the risk of holding it to expiration is no longer favorable, so we are taking profits.
This company is mostly known in 2021 as one of the few biotech companies selling a vaccine.
AstraZeneca plc is a British-Swedish multinational pharmaceutical and biopharmaceutical company with its headquarters in Cambridge, England. AstraZeneca has a portfolio of products for major disease areas including cancer, cardiovascular, gastrointestinal, infection, respiratory, and inflammation.
They can’t make enough of the vaccine in the short-term and although we are headed for a vaccine glut, this was just a short-time trade that worked out well for us.
The European Commission's second round of discussions with the pharmaceutical firm on delays in vaccine deliveries ended in "dissatisfaction with the lack of clarity and insufficient explanations", the Commission said.
EU Member States are united: vaccine developers have societal and contractual responsibilities they need to uphold," said EU Health Commissioner Stella Kyriakides. AZN is having fulfillment problems but their product is clearly desirable in large amounts around the world.
AZN has such a high volume of backorders that they are starting to stiff their buyers, this means they will be in the vaccine business for quite a foreseeable time and I used a sudden dip in shares to execute a deep in the money call spread on AZN and we are taking profits.
Moderna, Inc. (MRNA) is also a company to look at short-term.
My 3-year target on AZN is $70.
Here are the specific trades you need to exit this position:
Sell to Close 39 February 2021 (AZN) $46.50 calls at.….………$5.00
Buy to Close 39 February 2021 (AZN) $49.50 calls at….……….$2.02
Net Proceeds:………………....................……..…….………..…….....$2.98
Profit: $2.98 - $2.50 = $.48
(39 X 100 X $.48) = $1,872 or 19.20%
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 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.
