Trade Alert - (GOOGL) April 23, 2018 TAKE PROFITS
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 - (GOOGL) TAKE PROFITS
SELL the Alphabet (GOOGL) June, 2018 $900-$950 in-the-money vertical bull call spread at $45.70 or best
Closing Trade
4-23-2018
expiration date: June 15, 2018
Portfolio weighting: 10%
Number of Contracts = 3 contracts
Risk of every sort is rising in the market, and since we strapped on this trade 10 trading days ago, Alphabet (GOOGL) has rocketed some $75 points. We are now at the top end of the recent range.
Alphabet reports its Q1 earnings after the close on Monday, and I expect them to be blockbuster, reporting quarterly revenues of more than $24.9 billion, up 20.7% YOY. Earnings per share should rise by a meteoric 19.15% to $9.70 YOY.
That annualizes out to $100 billion in sales a year, and you want to own a company that sells that amount of anything, no matter what it is.
In other words, Alphabet is one of the world's largest companies growing at a small cap growth rate
However, the earnings event usually triggers a move up or down 5% in the share price.
After the last quarterly report, the move was down 5%. There will be the usual hand wringing over declining advertising rates, even though they are selling more of them.
The other half of the online advertising duopoly, Facebook (FB) is seeing the same problem.
Further middling the picture is the fact that this will be the first reporting quarter under the new consolidated reporting system.
For us, that means it is a bird in the hand versus two in the bush. This is a buy the rumor, sell the news market. The extreme confidence of January is now a distant memory.
I am going to keep the bird in hand and cook it up for dinner on an open spit and serve it up with a nice raspberry sauce.
So I am going to seize the easy money here and sell my position in the Alphabet (GOOGL) June, 2018 $900-$950 in-the-money vertical bull call spread at $45.70 or best
By coming out here you get to take home a $1,410 profit, or 11.46% in 10 trading days.
If you are a short-term trader, take profits here, and buy it back on the next 10% dip.
If you are a long-term investor keep (GOOGL). It is going much higher over time, and you'll probably be too frightened to buy the next fear driven market plunge.
And Alphabet's expansion of cloud-based revenues promises to be an absolute winner. It is in effect getting ahead of the cloud.
Here are the specific trades you need to exit this position:
Sell 3?June 2018 (GOOGL) $900 calls at...........................$182.00
Buy to cover short 3?June 2018 (GOOGL) $950 calls at....$136.30
Net Proceeds:....................................................................$45.70
Profit: $45.70 - $41.00 = $4.70
(3 X 100 X $4.70) = $1,410 or 11.46% in 10 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.
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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.