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 Trade Alert - (OKTA) – SELL – TAKE PROFITS
SELL the Okta, Inc. (OKTA) September 2019 $105-$110 in-the-money vertical BULL CALL spread at $5.00 or best
Closing Trade
9-3-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Okta, a security cloud play, has done nothing but rise since we executed a call spread when the stock was trading around $122.
Today, the stock is trading well above $129 and my screen is flashing prices of $5.
It might take you 2 extra cents through a limit order to get it filled or if you don’t want to do that, you would need to wait until September 20th and bet that the stock won’t drop more than 16% from current prices which is over a 90% certainty.
How did we get to this point?
A guidance downgrade was enough to crush the stock almost 9%.
This was a great entry point into the stock.
Okta, Inc. provides identity solutions for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally.
That means they protect passwords and develop the technology behind it.
Okta earnings and revenue for the second quarter beat estimates, while October quarter bottom-line guidance missed Wall Street targets, the company reported Wednesday. The Okta earnings news sent shares in the cybersecurity firm down in extended trading.
Okta (OKTA) said it lost 5 cents per share, narrowing its loss from a year earlier. Revenue climbed 49% to $140.5 million, handily topping estimates. Analysts expected Okta to report a loss of 11 cents a share on sales of $131.2 million for the period ended July 31.
Hackers often target employees or management with administrative access to company computer systems. Okta's software monitors and manages privileged accounts. Companies are focusing more on internal security threats using Zero Trust products from Okta and others.
This is a great long-term play, equity players should hold shares long term.
Here are the specific trades you need to execute this position:
Sell 24 September 2019 (OKTA) $105 calls at…………......………$24.95
Buy to cover short 24 September 2019 (OKTA) $110 calls at….$19.95
Net Proceeds:……………………..…….………..…......................….....$5.00
Profit: $5.00 - $4.10 = $0.90
(24 X 100 X $0.90) = $2,160 or 21.60%
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.
