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.

Further Update to: Trade Alert -(SPY)

Buy the SPDR S&P 500 (SPY) March, 2014 $189-$192 bear put spread at $2.67 or best

Opening Trade

2-27-2014

expiration date: March 21, 2014

Portfolio weighting: 10%

Number of Contracts = 37 contracts
Let me give you my thinking here. I am a long-term bull, expecting the S&P 500 to be up 10% or more to over 2,000 by yearend, and possibly 20,000 by 2030. But yearend is a long time off (even though every year seems to go by faster).

We have just had a massive 11 point pop in the (SPY) during my two week trip to Australia. So a period of digestion is called for.

The SPDR S&P 500 March, 2014 $189-$192 bear put spread has a breakeven point of $$189.33 on the upside. If the (SPY) anywhere below this on the March 21 expiration you make money. If the (SPY) closes below $189 on that day you get to keep the entire $1,221 profit.

My (BAC) March $15-$16 bull call spread is now naked long, so a little bit of downside protection is justified. Keep in mind that this is only a partial hedge, not a full one. But the additional potential profit from this SPDR S&P 500 March, 2014 $188-$191 bear put spread does lower the breakeven price of the (BAC) position by a respectable 46 cents.

The present dynamics of the market favor this trade. All of the action is now in speculative, momentum driven names like Tesla (TSLA), Netflix (NFLX), Facebook (FB), Priceline (PCLN), and Yelp (YELP), which are not even in the (SPY) index. The big leadership names, like financials (XLF) and energy (XLE) are pretty much dead in the water. As long as this is the case, don?t expect any big moves in the (SPY).

And with a short dated March 21 expiration, we only have 15 trading days where we need to be right on this.

As a rule of thumb, don?t chase this spread trade if the price has already moved more than 2% by the time you get the Trade Alert. Just put in a limit order and if it gets done, great. If not, wait for the next Trade Alert. There will be plenty of fish in the sea.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the trade to come to you. The middle market is the halfway point between the bid and the offered prices that you see on your screen with your online broker.

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 especially on expiration months farther out.

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

Buy 37 March, 2014 (SPY) $192 puts at??.????$7.24

Sell short 37 March, 2014 (SPY) $189 puts at??..?..$4.57
Net Cost:????????.???????..??....$2.67

Profit at expiration: $3.00 - $2.67 = $0.33

(37 X 100 X $0.33) = $1,221 or 1.22% profit for the notional $100,000 portfolio.

Time to Add Some Downside Protection

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.

Further Update to: Trade Alert -(BAC)

Buy the Bank of America (BAC) March, 2014 $15-$16 bull call spread at $0.86 or best

Opening Trade

2-24-2014

expiration date: 3-21-2014

Portfolio weighting: 10%

Number of Contracts = 116 contracts

Bank of America (BAC) certainly was the chief whipping boy of the financial crisis. Since 2008, it has paid out more than $50 billion in fines and lawsuit settlements for every transgression under the sun.

After getting a bail out from the US Treasury, it was forced to cut its dividend payment to a token one cent. Do any Google search on the company and you are inundated with a flood of bad news.

All that is now ancient history. The entire banking industry is now moving into the sweet spot in the economic cycle. This is because rising interest rates mean that they will be able to charge more for leans, while their cost of funds (deposits and equity) remains low. This rising spread falls straight to the bottom line.

With the 30 year bull market in bonds now at an end, substantially higher rates in the near future are now included in virtually every economic forecast out there. Since the beginning of 2014 the ten-year Treasury yield has rocketed from 3.05% to as high as 2.58%, pummeling bank shares.

What happens next? They go from 2.58% back up to 3.05%, then a lot more. Bank shares will ride on the back of this bull.

The jungle telegraph is now ringing with the prospect of a dividend hike by the company, from a penny to five cents. The implications of such a move are broad.

For a start, the company would have to get the permission of the Federal Reserve to do so. If it pulls this off, it is only because of renewed confidence by the government in the improved financial condition of the country. After several capital raises and the liquidation of the wreckage of the 2008 crash, US banks are now the healthiest in history, with balance sheets of bedrock stability.

If (BAC) can get this first dividend hike through, more will follow. To get the dividend yield on the shares up to industry standard of 2.5%, the company really needs to raise its dividend to 40 cents. If certainly has the cash flow to do this. In 2013, (BAC) reported net income of $11.4 billion, more than four times to amount needed to cover such a payout.

Needless to say, this is all great news for the share price. The prospective return of increasing amounts of capital to shareholders should suck in new and wider classes of shareholders. It won't be just about hedge fund punters anymore.

Take a look at the charts below, and it is clear that such a move is setting up. (BAC) is reaching the end of a classic triangle formation, which traditionally resolves itself to the upside. You can find more dry powder in the chart for the Financials Select Sector SPDR ETF (XLF), which clearly rejected a complete breakdown at long term trend support in early February.

Finally, take a gander at the chart for the S&P 500. New life from the financials will be the adrenaline shot this market needs to break it out of its current low volume sideways consolidation, taking it to new highs.

This is why I popped out the trade alert to buy the (BAC) March $15-$16 call spread on Monday. Thanks to the denial of service attack on our email provider, AWeber Communications, it has taken me until now to get this update out.

It is all another reason to sign up for the Mad Hedge Fund Trader's text alert service, which readers around the world received within an incredible ten seconds of the original issue of the Trade Alert. I saw it work its magic when I was in Australia, and it is a sight to behold.

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 further out.

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

Buy 116 March, 2014 (BAC) $15 calls at.............$1.64
Sell short 116 March, 2014 (BAC) $16 calls at.....$0.78

Net Cost:.......................................................$0.86

Potential Profit: $1.00 - $0.86 = $0.14

($0.14 X 100 X 116) = $1,624 - 1.62% for the notional $100,000 model portfolio

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. Read more

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. Read more