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 – (XME) – BUY
BUY the S&P SPDR Metals & Mining ETF (XME) March 2021 $31-$34 in-the-money vertical Bull Call spread at $2.60 or best
expiration date: March 19, 2021
Portfolio weighting: 10%
Number of Contracts = 38 contracts
If you don’t do options, buy the stock. My target for (XME) this year is $60.
The metals have been on a tear all year and will continue to do so. With a global economic boom only months away, shortages will develop everywhere. China, the first into the pandemic and the first out, has shown us the way: pedal to the metal, full speed ahead at 100 miles per hour.
Add that on top of a Biden infrastructure budget in a few months, which will demand loads of metals, and it is off to the races.
I am therefore buying the S&P SPDR Metals & Mining ETF (XME) March 2021 $31-$34 in-the-money vertical Bull Call spread at $2.60 or best.
Don’t pay more than $2.80 or you’ll be chasing.
These sector ETFs are somewhat illiquid, so just put in a bid and hope for the best.
This is a bet that the (XME) will not fall below $34 by the March 19 option expiration day in 19 trading days.
Here are the specific trades you need to enter this position:
Buy 38 March 2021 (XME) $31 calls at……….………………$6.80
Sell short 38 March 2021 (XME) $34 calls at……..……….$4.20
Potential Profit: $3.00 – $2.60 = $0.40
(38 X 100 X $0.40) = $1,520 or 15.38% in 19 trading days.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
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.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
And She Only Had a Leaner’s Permit