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Buy the Gilead Sciences (GILD) January, 2015 $85-$90 deep in-the-money vertical bull call spread at $4.38 or best
expiration date: January 16, 2015
Portfolio weighting: 10%
Number of Contracts: 23
Buy a great performing stock in the best performing sector for the New Year pop in prices.
You can buy the Gilead Sciences (GILD) November, 2014 $85-$90 deep in-the-
money vertical bull call spread all the way up to $4.60 and still clock a nice three week profit for the January.
If you want to be more aggressive and take a longer view, only buy the (GILD) March, 2015 $110 calls at $2.50 or better. If we break to a new all time high by the March 20 expiration, as I expect, you could score a 3-5 bagger for these options.
More research to follow shortly.
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.
Here are the specific trades you need to execute this position:
Buy 23 X January, 2015 (GILD) $85 calls at……………$12.40
Sell short 23 X January, 2015 (GILD) $90 calls at………$8.02
Potential Profit at expiration: $5.00 – $4.38 = $0.62
(23 X 100 X $0.62) = $1,426 or 1.43% profit for the notional $100,000 portfolio.