Trade Alert – (USO) October 9, 2012

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 – (USO)

Buy the United States Oil Fund (USO) December $32.50-$35 bear put spread at $1.03 or best

Opening Trade

10-10-2012

expiration date: 12-21-2012

Portfolio weighting: 5%

($5,000/100/$1.03) = 49 Contracts

Keep in mind that these are ball park prices at best. The best execution can be had by placing your bid in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these 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. The will be many fish in the sea. To execute this trade:

Buy 49 December, 2012 (USO) $35 puts at………..….$2.10
Sell short 49 December, 2012 (USO) $32.50 puts at…$1.07
Net Cost:…………………………………………..……$1.03

Maximum Profit at expiration: $2.50 – $1.03 = $1.47

($1.47 X 100 X 49) = $7,203, or 7.20% for the notional $100,000 model portfolio.

Suddenly, Oil is not Looking so Hot!

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