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.
Trade Alert – (SPY)
Expiration of the SPDR S&P 500 (SPY) March, 2013 $140-$145 bull call spread
Closing Trade-not for new subscribers
expiration date: 3-15-2012
Portfolio weighting: 20%
Number of Contracts = 45 contracts
I didn’t want to sent out these closing Trade Alerts on the March 15 options expirations, because you never know when there is going to be a flash crash. So here we go.
This expiration of the SPDR S&P 500 (SPY) March, 2013 $140-$145 bull call spread is a major home run, adding a chunky 3.01% to our annual performance. To reach our maximum position value of $5.00, the (SPY) had to rise to $145 or higher by today. As it turned out, we cleared that hurdle by miles, or some 10 points.
There were two serious attempts to shake me out of this position during market selloffs. I didn’t buy it for two seconds. With infinite faith in my own forecast of the unfolding and underappreciated strength of the stock market this year, I held on. You, as the reader, have thus profited nicely.
Out of the thousands that put this position on, only a couple of readers got exercised the night before, getting hit with the quarterly dividend. Such is the luck of the draw.
You need to take no action to come out of this position. The long and short calls will cancel each other out, one getting exercised to meet the other. The margin will be freed up in your account on Monday, and the profit added to you cash account. Such is the wonder of in-the-money-call spreads.
This is the 16th consecutive closing position of the Mad Hedge Fund Trader’s Trade Alert Service. We have three more open positions on the books, taking us to 22. That means I only have four more successful trades until I break last summer’s record of 25 winners in a row.
On with the next one.
Here are the expiration values of the options.
long 45 March, 2013 (SPY) $140 calls at……………$15.83
Short 45 March, 2013 (SPY) $145 calls at ………….$10.83
Profit: $5.00 – $4.33 = $0.67
($0.67 X 100 X 45) = $3,013 – 3.01% for the notional $100,000 model portfolio.