Trade Alert - (PINS) April 16, 2021 - BUY
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 - Pinterest, Inc. (PINS) – BUY
BUY Pinterest, Inc. (PINS) May 2021 $60-$65 in-the-money vertical BULL CALL spread at $3.77
Opening Trade
4-16-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 26 contracts
This is a short-term trade that Pinterest, Inc. (PINS) will stay above $65 by May 21st expiration.
Pinterest is an internet photo-sharing and publishing service that allows users to “Pin” pictures they like and upload their own recommendations to their “pinboards.” Users can visit other pinboards, 're-pin' images to their own pinboards, or ‘like’ photos.
They earn revenue by largely selling digital ad on their site.
Beware that the earnings call for PINS is on April 27th which explains the cheaper pricing in this trade.
Remember that cheap pricing usually means high implied volatility which gets factored into the end price.
That being said, I like PINS, it was an outsized winner of the pandemic and is a stock I have wanted to get into for quite a while now albeit with cheaper pricing.
Lately, the stock has outgrown valuations and this around 7-8% pullback will offer a timely entry point with a nice cushion.
I do expect PINS to report great numbers and offer optimistic guidance for the rest of 2021.
There have been rumblings that 2021 could be the start of the “roaring 20s” and digital companies that sell ads like PINS, Facebook, and Google will rake in the dough this year as the digital ad budgets blossom into something massive.
I believe the bullish rhetoric will follow through into the earnings call and at these prices, a short-term Bull call spread option trade with a May expiration is a good way to play it. Traders who want to be more aggressive, move up the strike prices by $5. We are seeing unusual activity with huge buyers getting into near-dated PINS calls at strike prices $70, $78, $80, and $81.
If you do not use options, my end-of-year target for PINS is $100.
If you do not trade options, pass on this trade.
Here are the specific trades you need to execute this position:
Buy 26 May 2021 (PINS) $60 calls at………….………$19.20
Sell short 26 May 2021 (PINS) $65 calls at………….$15.43
Net Cost:………………..........……..……...………..…….....$3.77
Potential Profit: $5 - $3.77 = $1.23
(26X 100 X $1.23) = $3,198 or 32.63% in 35 days
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.
