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) – BUY
BUY AstraZeneca PLC (AZN) February 2021 $46.50-$49.50 in-the-money vertical BULL CALL spread at $2.50
Opening Trade
1-27-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 39 contracts
This is a short-term trade that AstraZeneca PLC (AZN) will stay above $49.50 in 23 days.
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.
Its European roots mean that the vaccine supply is largely headed towards the European Union but bottlenecks have ensued.
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.
"Discussions with AstraZeneca today resulted in dissatisfaction with the lack of clarity and insufficient explanations. EU Member States are united: vaccine developers have societal and contractual responsibilities they need to uphold," EU Health Commissioner Stella Kyriakides said on Twitter.
AZN has such a high volume of back orders that they are starting to stiff their buyers, this means they will be in the vaccine business for quite a foreseeable time and I am using this sudden dip in shares to execute a deep in the money call spread on AZN.
Moderna, Inc. (MRNA) is also a company to look at short-term but the stock is running away from us this morning up 2.5%.
My target on AZN is $65 but I rather play it with options for this particular trade.
Here are the specific trades you need to execute this position:
Buy 39 February 2021 (AZN) $46.50 call at……..........……$6.50
Sell short 39 February 2021 (AZN) $49.50 call at………….$4.00
Net Cost:……………………..…….……….......................…….....$2.50
Potential Profit: $3 - $2.50 = $.50
(39 X 100 X $.50) = $1,950 or 20.00% 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 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.
