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 - Micron Technology, Inc. (MU) – TAKE PROFITS
SELL – TAKE PROFITS Micron Technology, Inc. (MU) April 2021 $72.50-$77.50 in-the-money vertical BULL CALL spread at $4.98
Closing Trade
4-1-2021
expiration date: April 16, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
Micron (MU) is a 5G play and this was a trade that the underlying stock will stay above $77.50 by April 16th expiration which was precisely 17 days from when we initiated the trade.
The stock popped pre-market and is now up over 6% right out of the opening - we are now taking 96.2% of the maximum profits.
MU announced earnings yesterday and they convincingly beat expectations and offered strong projections for 2021 revenue. This is exactly what I thought was going to happen which is why we initiated the trade.
After a period of consolidation in tech shares, we dipped our toe back in the market with a deep in-the-money bull call spread on Micron Technologies, one of the pre-eminent DRAM chip makers in the world, and it worked like magic.
2021 could turn out to be a blockbuster year for Micron's mobile business as sales of 5G smartphones are expected to explode.
The chipmaker estimates that 500 million 5G smartphones could be consumed in the new year, as compared to 200 million units in 2020.
Micron is strategically placed to take advantage of this accelerating growth.
Micron CEO Sanjay Mehrotra boasted that Micron “achieved a record number of design wins in fiscal Q4.”
Micron is poised to win in the 5G era as a supplier to all the major smartphone manufacturers, with an outstanding portfolio of industry-leading low-power DRAM and managed NAND solutions.
If you do not trade options, I have recommended this stock before when it was $10 cheaper. My end-of-year target is $125 so buy and hold the stock. We are in the middle of a short squeeze in DRAM supply because of meager inventory which will force chip prices to skyrocket in the short-term. We are getting reports that this supply shock could last more than 3 years.
Here are the specific trades you need to execute this position:
Sell to Close 22 April 2021 (MU) $72.50 calls at………….………$20.28
Buy to Close 22 April 2021 (MU) $77.50 calls at…….........…….$15.30
Net Proceeds:……………………..…….….....................……..…….....$4.98
Profit: $4.98 - $4.47 = $.51
(22 X 100 X $.51) = $1,122 or 11.41%
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.
