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 – (BAC)
Buy the Bank of America (BAC) February, 2015 $14-$15 deep in-the-money vertical bull call spread at $0.85 or best
expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 118 contracts
This is the second leg of the roll down of strikes from the Bank of America (BAC) February, 2015 $15-$16 in-the-money vertical call spread to the Bank of America (BAC) February, 2015 $14-$15 in-the-money vertical call spread, that will push your breakeven point down by a full dollar.
You can buy this put spread anywhere within the $0.85-$0.90 range and have a reasonable expectation of making money on this trade.
If you can?t do spreads buy here for the long term.
Warning! With a low price and a large number of contracts, this trade is particularly sensitive to your commission rate. So if you are overpaying your broker, now is the time to have a conversation with them and negotiate your rates down. It?s easier than you think, especially on spread trades.
The $15 strike also make this a nice set up on the charts, just below the one year low for the stock.
Keep in mind that the options market is highly illiquid now, so don?t hold me to these prices. They are ballpark estimates, at best.
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.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Buy 118 February, 2015 (BAC) $14 calls at?????$2.21
Sell short 118 February, 2015 (BAC) $15 calls at..??.$1.36
Potential Profit: $1.00 – $0.85 = $0.15
(118 X 100 X $0.15) = $1,770 or 1.77% profit for the notional $100,000 portfolio.