Trade Alert - (PANW) December 17, 2024 - SELL - 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.
Tech Alert - Palo Alto Networks, Inc. (PANW) – TAKE PROFITS
SELL Palo Alto Networks, Inc. (PANW) December 2024 $170-$175 in-the-money vertical BULL CALL spread at $4.98
Closing Trade
12-17-2024
expiration date: December 20, 2024
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Attention: PANW 2-for-1 Stock Split – Automatic Adjustment in Number of Contracts and Strike Price
Palo Alto Networks decided to do a 2-for-1 stock split, which is one of the most common. That means for every one share of PANW that existed at the close of the bell last Friday, two shares of PANW exist today and the same goes for option contracts. Yet because there are double the number of shares, each share or option contracts is worth half as much as it was before the split.
Therefore, our new strike prices are $170 and $175. Our new contract amount becomes 24 from 12.
Your contracts and strike prices should automatically adjust inside your trading platform. If it doesn’t, get on the phone and call your broker.
The stock has done really great since I executed this trade and we have a cushion of about 13% heading into the last few days before expiration.
The risk versus reward of holding this to expiration is minimal although traders will most likely expire in the money if they do nothing.
PANW is a great buy-the-dip trade and I don’t see that stopping anytime soon.
Here are the specific trades you need to exit this position:
Sell to Close 24 December 2024 (PANW) $170 calls at………….………$32.18
Buy to Close 24 December 2024 (PANW) $175 calls at………........….$27.20
Net Proceeds:……………………..…….………..……...................................$4.98
Profit: $4.98 - $4.175 = $.805
(24 X 100 X $.805) = $1,932 or 19.28%
If you are uncertain about 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.