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.
Trade Alert - (GILD) ? TAKE PROFITS
Sell the Gilead Sciences (GILD) January, 2015 $85-$90 deep in-the-money vertical bull call spread at $4.97 or best
Closing Trade
1-9-2014
expiration date: January 16, 2015
Portfolio weighting: 10%
Number of Contracts = 23 contracts
There is no money left in this baby. We caught an $8, 9% move in the stock in seven trading days. As a result, we have already captured 94% of the potential profits in this position.
This is one stock where the New Year pop did arrive.
However, we do live in a ?Take the money and run? world this year.
The only reason not to take profits now is that you are a complete tightwad and don?t want to pay your broker an extra commission. In that case, you?ll have to wait another week for the call spread to expire at its maximum value of $5.00.
As for myself, I?d rather strap on another position in a new name and take in another 2-3% profit. But that?s just me speaking.
I?ll be back to Gilead with another Trade Alert on the next dip.
For those many followers who used my last Trade Alert to buy the stock instead of the vertical bull call spread options trade, hang on. This is a stock that could double by the end of 2015.
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Sell 23 X January, 2015 (GILD) $85 calls at?????$17.23
Buy to cover short 23 X January, 2015 (GILD) $90 calls at..$12.26
Net Cost:??????????????????.....$4.97
Profit: $4.97 - $4.38 = $0.59
(23 X 100 X $0.59) = $1,357 or 1.36% profit for the notional $100,000 portfolio.
