Trade Alert - (CRM) March 13, 2020 - BUY
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.
Trade Alert - (CRM) – BUY
BUY the Salesforce (CRM) March 2020 $115-$120 vertical Bull Call spread at $4.30 or best
Opening Trade
3-13-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
With the Dow Average down a staggering 9,000 points in three weeks, of course, you can only look at long plays today.
With the Volatility Index (VIX) at a sky-high $78, the risk/reward of going back into a call spread has been greatly improved.
I believe that Salesforce shares will reach $200 sometime in 2021, out the other side of the Corona pandemic. The shares have just dipped by $30 to $136 and then bounced back hard.
The lesson of the Corona pandemic so far is an enormous acceleration in the movement of commerce online where Salesforce dominates.
Salesforce is the leading player in the cloud space, offering customers very large database and marketing services. Everything a large corporation does online can be integrated in a single Salesforce platform. It just announced healthy earnings and doesn’t have any direct Corona exposure.
In other words, you don’t get a better long side entry point than this.
Not only that, with the Mad Hedge Market Timing Index at 3 level, down from 95, its 2020 low, we are at the bottom end of an eight-month range.
I am therefore buying the Salesforce (CRM) March 2020 $115-$120 vertical Bull Call spread at $4.30 or best. Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Do not pay more than $4.70 or you will be chasing.
This is a bet that Salesforce (CRM) will not trade below $120 by the March 20 option expiration day in 5 trading days.
If you don’t do options, BUY THE SHARES for a great long-term investment.
Here are the specific trades you need to execute this position:
Buy 23 March 2020 (CRM) $115 calls at………….………$30.00
Sell short 23 March 2020 (CRM) $120 calls at………….$25.70
Net Cost:……………………..…….………..……….......….….....$4.30
Potential Profit: $5.00 - $4.30 = $0.70
(23 X 100 X $0.70) = $,610 or 16.27% in 5 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
