Trade Alert - (GS) March 21, 2018 BUY
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 - (GS) - BUY
BUY the Goldman Sachs (GS) April, 2018 $240-$245 in-the-money vertical BULL CALL spread at $4.20 or best
Opening Trade
3-21-2017
expiration date: April 20, 2018
Portfolio weighting: 10%
Number of Contracts = 23 contracts
I am going to make the gutsy move here and buy Goldman Sachs BEFORE the Fed raises interest rates by 25 basis points in a few hours.
Of course the risk is that they won't, in which case (GS) will plummet. However, I believe the risk of that is small to the point of invisibility.
What market probably will do is to start discounting the NEXT rate rise in three months, which is positive for (GS) shares.
Banks benefits from a rising interest rate cycle as it increases their profit margins. They are also deep lagging sector in this bull market, making them one of the cheapest.
We also have decent support here at the 50 day moving average, and much stronger support at the 200-day average before at my lower $240 strike price.
Don't pay more than $4.60 for this position or you'll be chasing.
If you don't do options, close your eyes and buy Goldman Sachs shares outright. I expect the share to double over the next three years.
Here are the specific trades you need to execute this position:
Buy 23 April 2018 (GS) $240 calls at..............$24.00
Sell short 23 April 2018 (GS) $245 calls at........$19.80
Net Cost:...........................................................$4.20
Potential Profit: $5.00 - $4.20 = $0.80
(23 X 100 X $0.80) = $1,840 or 19.04% in 22 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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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.
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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 close 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.