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.
Trade Alert - (PYPL) - BUY
BUY the PayPal (PYPL) April 2019 $90-$95 in-the-money vertical BULL CALL spread at $4.40 up to $4.70
Opening Trade
3-22-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 23 contracts
QE is Back!
That is the obvious conclusion of Fed governor Jay Powell’s comments yesterday. Not only will there be no interest rate hikes this year, the Fed balance sheet unwind will end sooner than expected. The net effect is to inject $2.7 trillion into the financial system completely out of the blue. That is equivalent to two surprise interest rate cuts.
In fact, the entire world is moving back to QE as the global economy slows, including ours.
What happens when QE comes back? You buy the QE beneficiaries of old. That includes fintech technology stocks, especially PayPal (PYPL).
Therefore, I am buying the PayPal (PYPL) April 2019 $90-$95 in-the-money vertical BULL CALL spread at $4.40 or best.
Don’t pay more than $4.70 or the risk-reward will turn against you.
I know I’m a little bit late on this one, so deep in-the-money with only 15 days to expiration is the way to go. I’ve never seen a Fed that flip flops so dramatically as this one. We can always take another bite of (PYPL) next month.
This is a bet that PayPal (PYPL) will not trade below $95 by the April 18 option expiration in 15 trading days.
If you don’t do options, buy the stock outright.
(PYPL) easily has a double in it over the next three years. It is rapidly gaining market share in the burgeoning Internet cloud at the expense of legacy banks.
I have another six stocks like this that I will be issuing trade alerts for the next time the market gives us a substantial dip.
Here are the specific trades you need to execute to obtain a $10,000 position.
Buy 23 April 2019 (PYPL) $90 calls at…………...………$12.00
Sell short 23 April 2019 (PYPL) $95 calls at……….…….$7.60
Net Cost:………………………….………..……...….........….....$4.40
Potential Profit: $5.00 - $4.40 = $0.60
(23 X 100 X $0.60) = $1,380 or 13.63% in 15 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, 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 Vertical Call and Put Debit Spreads by clicking here.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
