Trade Alert - (SHOP) December 18, 2020 - TAKE PROFITS-EXPIRATION
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 - Shopify Inc. (SHOP) - EXPIRATION
EXPIRATION of the Shopify Inc. (SHOP) December 2020 $950-$955 in-the-money vertical BULL call spread at $5.00
Closing Trade
12-18-2020
expiration date: December 18, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This options call spread does not expire for one more day, but I am just giving readers a heads up.
I used a 5-6% dip in Shopify (SHOP) to take a stab at a short-term bullish trade and it worked out perfectly.
It just so happens that Shopify is up 10% in just the past two trading days.
This was a short-term trade that underlying shares of Shopify Inc. (SHOP) would stay above $955 by the December 18th expiration date and provided the underlying stock doesn’t drop 20.1% or 240 points by tomorrow’s expiration, our trade will expire with maximum profits.
I believed Shopify shares would benefit from positive headlines about the domination of their ecommerce business going into 2021 and I was correct.
With (SHOP) being the Canadian e-commerce market share leader, it has been the biggest beneficiary of the shelter-at-home trend which we are seeing again with the virus spreading like wildfire across the continental U.S.
SHOP had been trending sideways the past month and I successfully bet that shares would hold up in the short-term through the holiday season and I used a short-term dip in shares to execute a deep-in-the-money call spread on Shopify.
As it turns out, (SHOP) exploded to the upside validating my thesis.
Shopify has been a darling of the entire tech sector with its Teflon business model and this was a specifically defined trade with proper risk control.
Well done and onto the next trade.
You don’t have to do anything with this expiration – just watch it expire at tomorrow’s close and reap maximum profit.
Your broker (are they still called that?) will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, December 21 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Here are the specific trades you need to exit this position:
Expiration of 23 December 2020 (SHOP) $950 calls at………….………$246.45
Expiration of 23 December 2020 (SHOP) $955 calls at…….........…….$241.45
Net Proceeds:……………………..…….………..……......................................$5.00
Profit: $5 - $4.25= $.75
(23 X 100 X $.75) = $1,725 or 17.25% in 9 days
