Trade Alert - (NFLX) March 4, 2021 - SELL-STOP LOSS

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) – SELL – STOP LOSS

SELL STOP LOSS Netflix, Inc. (NFLX) March 2021 $510-$515 in-the-money vertical BULL call spread at $2.95

 

Closing Trade – NOT FOR NEW SUBSCRIBERS

3-4-2021

expiration date: March 19, 2021

Portfolio weighting: 10%

Number of Contracts = 24 contracts

This was a short-term trade that streaming company Netflix, Inc. (NFLX) would stay above the strike price of $515 in 17 days and unfortunately, the broader NASDAQ index has experienced around an 8% drop since the beginning of March.

NFLX hasn’t been immune, even though it showed strong price action around $515, and we will need to cut our losses as the broader NASDAQ trends lower.

This was not a mirage, yes, it was the same exact trade we put on last time with the same exact strike prices and Netflix’s underlying stock hovering around the same price, but the broader NASDAQ index has other short-term plans.

Tech growth is being penalized and although NFLX has shown great stability the last 6 months, shares have fallen off a cliff in the short-term.

We now are owners of one last bullish position in AMZN which I will be monitoring closely.

Why is this a great tech company to buy and hold?

In the fourth quarter, Netflix blew past the 200 million subscriber mark.

Can you believe that the picture is still bright for long-term subscription growth, even though CEO Reed Hastings warned during the Q4 earnings call that growth is expected to slow down drastically in the short term?

But fewer than 40% of those subscribers live in North America. About 83% of Netflix's new paid subscriptions came from outside the U.S. and Canada in 2020, with Europe, the Middle East, and Africa accounting for 41% of new subscriptions.

As the migration to digital increases throughout the developing world, Netflix's subscriber base will soar.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

If you don’t do options, buy the stock because my yearend target is $800.

Here are the specific trades you need to exit this position:

Sell to Close 24 March 2021 (NFLX) $510 calls at………….………$20.68

Buy to Close 24 March 2021 (NFLX) $515 calls at………..........….$17.73

Net Proceeds:………………..……...............................…..…..…….....$2.95

Loss:  $4.07 - $2.95 = $1.12

(24 X 100 X $1.12) = $2,688 or 27.52%

 

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.