Trade Alert - (X) September 27, 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 - (X) - BUY
BUY the US Steel (X) October, 2017 $22-$23 in-the-money vertical bull call spread at $0.87 or best
Opening Trade
9-27-2017
expiration date: October 20, 2017
Portfolio weighting: 10%
Number of Contracts = 115 contracts
I believe that while the stock market will keep going up for the rest of 2017, the sector leadership will change.
The FANG's will slowdown, while buying will rotate over to laggard financials, transports, energy, and industrials.
A recently strengthening US dollar confirms this trend.
I am therefore taking on a position in the US Steel (X) October, 2017 $22-$23 in-the-money vertical bull call spread.
This is a bet that (X) will not trade below $23 by the October 20 options expiration in 17 trading days.
Do not pay more than $0.92 or you will be chasing.
US Steel is the largest steel producer in the United States, and the 15thlargest in the world.
For the last three decades, its big headache has been China, which has rapidly taken over the bulk of the world steel market, thanks to a highly aggressive discount pricing strategy (see chart below).
Belief that harsh anti Chinese policies would become the company's savior in the wake of the Trump election win caused the shares to more than double in November.
The shares then gave back the entire gain when it became clear than no Trump economic policies would be implemented in 2017.
In the meantime, China voluntarily cut its steel exports to the US by 29% YOY. The impact on US steel earnings will be dramatic.
Also making (X) attractive is the fact that the shares are moving off of very solid long-term support on the charts. Today is the upside breakout day.
So if we get another stock market correction, the downside risk in (X) shares will be very limited.
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 on How to Execute a Vertical Bull Call Spread by clicking here.
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 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.
Here are the specific trades you need to execute this position:
Buy 115 October, 2017 (X) $22 calls at........................................$3.50
Sell short 115 October, 2017 (X) $23 calls at...............................$2.63
Net Cost:...................................................................................
Potential Profit: $1.00 - $0.87 = $0.13
(115 X 100 X $0.13) = $1,495 or 14.94% in 17 trading days.
