As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert – (AIG)
Sell the (AIG) February, 2013 $32-$35 Bull Call Spread at $2.97 or best
expiration date: 2-15-2013
Portfolio weighting: 10% = 40 Contracts
There’s nothing left in this trade as we have maxed out the profit. Since January 3, this spread has risen from $2.54 to $2.97. It is not worth running it for two more weeks for the last three cents, or 12 more basis points. Let’s call grabbing 94% of the potential profit a win and move on to the next one.
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 buy the legs individually or you will end up losing much of your profit up front. If you don’t get filled, then just wait for the next Trade Alert. There will be many fish in the sea.
The same applies if, for any reason, you don’t understand this trade. Better to watch this strategy unfold on paper in the model portfolio before you try it with real money.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this profitable position:
Sell 40 X (AIG) February, 2013 $32 Calls at……………………..…. $6.67
Buy to cover short 40 X (AIG) February, 2013 $35 calls at………….-$3.70
Net Proceeds………………………………………….……..………. $2.97
Maximum profit at expiration = $2.97 – $2.54 = $0.43
($0.43 X 100 X 40) = $1,720, or 1.72% for the notional $100,000 model portfolio