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.
BUY the Walt Disney Co. (DIS) January, 2016 $100-$105 in-the-money vertical bull call debit spread at $4.25 or best
expiration date: January 15, 2016
Portfolio weighting: 10%
Number of Contracts = 23 contracts
You can pay all the way up to $4.60 for this spread and it still makes sense.?
Extended update with the fundamentals to follow shortly.
If you can?t do options, you can buy the stock outright or you can buy the Consumer Discretionary Sector Select SPDR ETF (XLY) (click here for a description: https://www.spdrs.com/product/fund.seam?ticker=XLY). Its three largest components are Amazon (AMZN), Home Depot (HD), and Walt Disney Co. (DIS).
Keep in mind that a basket of stocks has a lower volatility and lower risk through diversification.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here: https://www.madhedgefundtrader.com/ltt-executetradealerts/
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.
Here are the specific trades you need to execute this position:
Buy 23 January, 2016 (DIS) $100 calls at???…$14.65
Sell short 23 January, 2016 (DIS) $105 calls at?..$10.40
Potential Profit: $5.00 – $4.25 = $0.75
(23 X 100 X $0.75) = $1,725 or 1.73% profit for the notional $100,000 portfolio.