Trade Alert - (TWLO) September 10, 2019 - 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 Trade Alert - (TWLO) – SELL – TAKE PROFITS

SELL Twilio Inc. (TWLO) September 2019 $95-$100 in-the-money vertical BULL CALL spread at $4.78 or best

Closing Trade

9-10-2019

expiration date: September 20, 2019

Portfolio weighting: 10%

Number of Contracts = 25 contracts

Twilio (TWLO) opened down big again just like yesterday and cratered to $108 before an almost $8 swing took the stock past $115.

The more than 9.5% spike up from the morning bottom is my exit out of this ultra-volatile stock.

Growth stocks are getting pounded and the implied volatility is out the roof making prices advantageous if implied volatility calms down after purchasing the spread.

Pricing is all over as well and limit orders are necessary or you will be absolutely gouged on the wide spread.

This trade is not for the weak.

The call spread went from $3.90 at today’s bottom then up in a straight line to $4.40 and then $4.78 in a matter of minutes and I will take the tidy profit.

This is a great buy and hold company as Twilio and its software has wriggled its way into the backend of many revenue happy tech companies.

Ironically, the FANGs are enjoying a rather stable time of it with anti-trust concerns sliding off of their back like water.

The second tier sphere of tech growth will go down the most in a global slowdown but there are opportunities from the short and long side here.

Anyone risk-adverse should just buy and hold Twilio, it’s a great company and please continue to read to understand why.

Twilio Inc. provides a cloud communications platform that enables developers to build, scale, and operate communications within software.

Twilio doesn’t get as much PR as it should because making sure the back-end communication channels are executing at optimum levels is not exactly a sexy part of tech with shiny smartphones and wearable gadgets.

This company produces software and are good at what they do.

Many of you might not have even heard of them but I am sure you have heard of companies such as Uber, Lyft, and Airbnb.

This trio of unicorns is all powered by Twilio’s communication technology that is best of breed in their genre of cloud software.

More specifically, Twilio is a platform as a service (PaaS) firm offering programmatic phone call functions, can automate sending and receiving text messages, and performs other communication functions using its web service APIs.

When your shaggy-haired Uber driver calls asking you to reveal yourself out of a concrete apartment block or your lavish gated community, this is all facilitated by Twilio’s technology.

At the 2018 Twilio Signal Conference in San Francisco, Twilio indicated that its latest “call center in a box” product called Flex was up and running after announcing in March last year.

Prior to Twilio’s roll-out, this type of call center functionality was only reserved for the Fortune 500 companies that could afford expensive software to serve its minions of customers.

The small guy was left out in the cold, as usual.

Twilio has reshaped the call center and, at $1 per hour or $150 per month, has made itself a gamechanger for SMEs who don’t have the manpower or capital to fund exorbitant back-end operations.

Twilio is really going after anyone with light or bulky-shaped wallet as you see from their all-star lineup of customers. U-Haul, real estate website Trulia, and data analytics firms Scorpion and Centerfield are just a few of their customers proving the incredible flexibility and inclusive nature of the software.

Sell 25 September 2019 (TWLO) $95 calls at………….…..........……$20.13

Buy to cover short 25 September 2019 (TWLO) $100 calls at…….$15.35

Net Proceeds:……………………..…….………..……................................$4.78

Profit: $4.78 - $4.28 = $0.50

(25 X 100 X $0.50) = $1,250 or 12.50%

 

 

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.