Trade Alert - (JPM) August 20, 2021 - EXPIRATION AT MAX PROFIT
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 - (JPM) – EXPIRATION AT MAX PROFIT
EXPIRATION of the JP Morgan (JPM) August 2021 $125-$135 in-the-money vertical Bull Call spread at $10.00
Closing Trade - NOT FOR NEW SUBSCRIBERS, YOUR TURN WILL COME
Trade Date: 8-20-2021
Expiration Date: August 20, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Since we are a full $11.01 in-the-money with this position, I think it is safe to call this one a win. So I am going to run the P&L now so we don’t have too many positions expiring at their maximum profit points at the close.
Since we added this position, shares of JP Morgan (JPM) have rocketed by $15.58. That is miles away from the nearest $135.00 strike price for this position.
So, we get to take home the maximum profit in this position, such is the magic of vertical bull call debit spreads.
As a result, you get to take home $1,200 or 11.11% in 24 trading days.
Well done and on to the next trade!
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 August 23 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Bank shares have been joined at the hip with interest rates for the past eight months, and I believe that both rates and bank shares have much higher to go. With $10 trillion in new government spending about to be approved, but not funded, it can’t go any other way.
Beaten like a red-headed stepchild in this correction, financials will similarly soar after rates bottom and bond prices peak.
This trade benefited from huge support at the 200-day moving average at $135.89.
That has given us a gift. (JPM) is the class act in the global banking sector, and CEO Jamie Diamond is the best CEO in the country.
I believe that massive government borrowing and spending will drive US interest rates up through the roof and the value of the US dollar (UUP) down. Banks love high interest rates because they vastly improve profit margins.
This was a bet that JP Morgan (JPM) would not fall below $135.00 by the August 20 option expiration day in 24 trading days.
Here is the accounting you need to close out this position:
EXPIRATION of 12 August 2021 (JPM) $125 calls at….......…$32.43
EXPIRATION of short 12 August 2021 (JPM) $135 calls at....$22.43
Net Proceeds:………………..…..............….………..………….….....$10.00
Profit: $10.00 - $9.00 = $1.00
(12 X 100 X $1.00) = $1,200 or 11.11% in 24 trading days.
