Trade Alert - (FTNT) August 25, 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.
Tech Alert - Fortinet, Inc. (FTNT) – BUY
BUY Fortinet, Inc. (FTNT) September 2020 $120-$125 in-the-money vertical BULL call spread at $4.15
Opening Trade
8-25-2020
expiration date: September 18, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This is a trade that cybersecurity cloud company Fortinet will stay above $125 by September 18th.
The company is probably my favorite cybersecurity company out of the bunch.
Why should you consider buying Fortinet? Just look at the recent bullish performance.
Fortinet's revenue was up 18% annually to $615.5 million during the quarter, while adjusted net income increased by nearly a third to $135.1 million.
The company's third-quarter guidance also turned out to be solid. Fortinet anticipates $630 million to $645 million in revenue this quarter.
A closer look at a few other metrics tells us that Fortinet should be able to sustain its impressive growth rate over the long run. For instance, the company's deferred revenue increased 24% annually to $2.3 billion during the most recent quarter -- faster than the growth of its actual revenue.
The nice bump in Fortinet's deferred revenue was driven by a strong jump in deal activity during the quarter. Deals over $1 million increased 28% year over year to 59 last quarter. The number of $50,000-plus deals increased close to 11% from the prior-year period, while deals worth $250,000 and above grew in the mid-single digits. The number of deals priced at $500,000 remained consistent year over year at 146.
More importantly, Fortinet's product mix improved during the quarter. The number of customers opting for high-end FortiGate next-generation firewall products and services increased 1.9 percentage points year over year to 35.2% during the quarter.
If you don’t do options, stand aside.
Here are the specific trades you need to execute this position:
Buy 23 September 2020 (FTNT) $120 call at……….....….………$13.65
Sell short 23 September (FTNT) $125 call at…...............……….$9.80
Net Cost:……………………..…….………..…….....$4.15 (midpoint is $3.85)
Potential Profit: $5 - $4.15 = $.85
(23 X 100 X $.85) = $1,955 or 19.55% in 24 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.