Trade Alert - (LEN) April 6, 2015

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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.

Trade Alert - (LEN) - BUY

Buy the Lennar Homes (LEN) May, 2015 $45-$49 deep in-the-money vertical call spread at $3.45 or best

Opening Trade

4-6-2015

expiration date: May 15, 2015

Portfolio weighting: 10%

Number of Contracts = 29 contracts

 

I am going to use this $1.60, or 3% drop in the shares of Lennar Homes (LEN) today to dip my toe into the booming housing sector.

You can buy this vertical bull call spread anywhere within a $4.35-$4.65 range and have a reasonable expectation of making money on this trade by the May 15 expiration.

If you can't do spreads, buy the stock outright of a medium term hold.

The markets should move back into a solidly ?RISK ON? environment from here. The Iran nuclear deal is a huge positive that has yet to be discounted by the markets.

On April 15, the US government swings from being a net taker to a net provider of funds to the financial system, as taxpayers begin to receive refund checks in large numbers, much of which ends up in the stock market.

Did I mention that April is the most positive month of the year for stocks?

The great thing about this spread is we have to decisively break to 50 day moving average at $49 in the next month to lose money, a rare event.

Lennar is based in Miami, Florida, and is a national builder of single-family homes, with major operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Virginia.

During the nineties, they particularly focused on converting decommissioned military basis into large, low end housing estates, such as at the Marine Corps Air Station at El Toro, March Air Force Base, Treasure Island, Mare Island, and Hunters Point, all in California.

At the peak of the last housing bubble in 2006, they were the second largest homebuilder in the United States, and were considered one of the best run companies in the country.

During the crash, Lennar suffered a near death experience, losing $2.4 billion in two years. New discipline, streamlined costs, and deleveraging have since restored the firm to profitability.

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.

If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.

Here are the specific trades you need to execute this position:

Buy 29 May, 2015 (LEN) $45 calls at?????$7.35

Sell short 29 May, 2015 (LEN) $49 calls at..??.$3.90
Net Cost:??????????????????.....$3.45

Potential Profit: $4.00 - $3.45 = $0.55

(29 X 100 X $0.55) = $1,595 or 1.60% profit for the notional $100,000 portfolio.