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 - Netflix, Inc. (NFLX) – TAKE PROFITS
SELL Netflix, Inc. (NFLX) April 2023 $260-$265 in-the-money vertical BULL CALL spread at $4.65
Closing Trade
3-23-2023
expiration date: April 21, 2023
Portfolio weighting: 10%
Number of Contracts = 25 contracts
This was a short-term aggressively bullish trade on media content company NFLX that NFLX would stay above $265 in the next 31 days and the stock has exploded higher by about 9% this morning.
That’s my cue to take profits and pat myself on the back.
Don’t fight the fed – that should be your mantra.
The Fed flooding the system with liquidity to stave off a western banking crisis will push tech stocks higher as well as plant the seeds for future hyperinflation.
We care more about the here and now and this lurch up will be tough to get into any quality tech name as entry points dry up like a Cypriot summer day.
So I got a move on it and executed a bullish position in NFLX before it exploded higher with the rest of tech.
This is the time to get really aggressive in technology and that will most likely hold true for the rest of March. April will most likely deliver us a whole set of new problems.
We have essentially done a 180 in terms of fiscal policy and anyone not on that roller coaster towards easy money, lower interest rates, lower US dollar and higher equities will miss out in this short-term tech rally.
NFLX is not a bad choice but it was just the vehicle that gave us a great chance to take profits before the April expiration.
Good job and on to the next trade.
Here are the specific trades you need to exit this position:
Sell to Close 25 April 2023 (NFLX) $260 calls at………….………$64.35
Buy to Close 25 April 2023 (NFLX) $265 calls at………........….$59.70
Net Proceeds:…………………….......................…….………..…….....$4.65
Profit: $4.65 - $3.90 = $.75
(25 X 100 X $.75) = $1,875 or 19.23%
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.
