Trade Alert - (GS) #2 August 17, 2017
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 Goldman Sachs (GS) - BUY
BUY the Goldman Sachs (GS) September, 2017 $235-$240 in-the-money vertical bear put spread at $4.45 or best
Opening Trade
8-17-2017
expiration date: September 15, 2017
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am going to strangle up my position in Goldman Sachs (GS) by adding a September, 2017 $235-$240 in-the-money vertical bear put spread to my existing position in the September, 2017 $205-$210 in-the-money vertical bull call spread.
This creates a hedge on top of a hedge.
Not only does it give us a cushion against (GS) breaking down, it is also hedged by our other long positions in (GDX), (ABX), (AAPL), and (TLT).
The combined bull call and bear put position is a bet that (GS) will not trade below $210 or above $235 by the September 15 expiration in 20 trading days.
This combination is known among option professionals as an Iron Condor.
The options market is more illiquid than usual today given all the political uncertainty, so trading spreads are wide. Don't pay more than $4.60 for the new put spread or you'll be taking on too much risk.
If you can't buy options I think it's pretty safe to buy the stock on a medium to long-term view. I think this is a stock that could double three years, and bond yields take off, an inevitability.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video o How to Execute a Vertical Bear Put Spread by clicking here http://members.
You must be logged into your account to view the video.
Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 with only days left to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
Here are the specific trades you need to execute this position:
Buy 23 September, 2017 (GS) $240 puts at..........................................................$18.45
Sell short 23 September, 2017 (GS) $235 puts at .................................................$14.00
Net Cost:........................................................................................................................
Potential Profit: $5.00 - $4.45 = $0.55
