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.
Trade Alert - (BLK) – EXPIRATION AT MAX PROFIT
EXPIRATION of the Blackrock (BLK) February $640-$660 vertical bull call spread at $20.00
Closing Trade – NOT FOR NEW SUBSCRIBERS
2-19-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 6 contracts
This option call spread does not expire until the end of today. However, we are now a generous $62.15, or 9.41% above the upper $660 strike price.
Since we added this position, (BLK) has appreciated by $12.51. As a result, you get to take home $1,800 or 17.64% in 13 trading days as long as (BLK) does not fall by more than $62.15 by end of today.
You don’t have to do anything with this expiration.
Your broker (are they still called that?) will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, February 22 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
I wanted to use up my last 10% of cash to introduce you to a new name. Blackrock is the world’s largest fund manager, with an astounding $8.64 trillion in assets under management.
Originally a bond fund manager, it is now involved in every corner of the financial markets, even bitcoin. I have watched it grow from a niche firm to the dominant player since 1988.
Blackrock is one of the big three managers in addition to Vanguard and State Street. CEO Larry Fink is one of the smartest people in the business.
And here is the play. If stocks are going to rise for the next decade, so will Blackrock’s fee income. And as it gathers more assets in a rising market, there is a leveraged effect on earnings.
In addition, with a 28% implied volatility in the options market compared to 22% for the S&P 500, this was a very attractive spread to add with only a 13-trading day view to the February 19 options expiration.
This was a bet that Blackrock (BLK) would not trade below $660 by the February 19 option expiration day in 12 trading days.
Here are the specific trades you need to close out this position:
EXPIRATION of 6 February 2021 (BLK) $640 calls at………….....………$82.15
EXPIRATION of Sell short 6 February 2021 (BLK) $660 calls at……....$62.15
Net Proceeds:………..…….………..………………….........……........…….….....$20.00
Profit: $20.00 - $17.00 = $3.00
(6 X 100 X $3.00) = $1,800 or 17.64% in 13 trading days.
