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) February 2020 $110-$115 in-the-money vertical BULL call spread at $4.00
Opening Trade
2-7-2020
expiration date: February 21, 2020
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This is a bet that Fortinet will stay above $115 for the next 15 days.
This is one of my favorite cybersecurity stocks and the chart has gone parabolic. It’s very difficult to get into this name and I’ll try to squeeze a trade in it before it runs away.
The company is down today after an earnings report that wasn’t that bad.
The Q4 21% year over year revenue growth was fine but the mixed Q1 outlook was underwhelming.
The company needed to hit a home run because of such high expectations.
The trade is a little aggressive so we will be cutting losses if there is a big move below $115, however, the momentum in this name is unpalpable.
If you don’t do options, buy and hold.
Here are the specific trades you need to execute this position:
Buy 25 February 2020 (FTNT) $110 call at………….………$8.30
Sell short 25 February 2020 (FTNT) $115 call at………….$4.30
Net Cost:……………………..…...................….………..…….....$4.00
Potential Profit: $5 - $4 = $1.00
(25 X 100 X $1) = $2,500 or 2.50% in 15 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 on “How to Execute a Vertical Bull Call Spread” 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.
