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 - (BAC) ? STOP LOSS
SELL the Bank of America (BAC) February, 2015 $14-$15 deep in-the-money vertical bull call spread at $0.83 or best
Closing Trade
1-21-2015
expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 118 contracts
My bet that rising bond yields would enable banks stocks to lead another leg up on the stock market has clearly failed.
This risk control measure allows me to get out of the Bank of America (BAC) February, 2015 $14-$15 deep in-the-money vertical bull call spread near cost. That is after taking the earnings disappointment hit last week that had the stock down a full $1 in only two days.
I don?t want to spend the next month levitating above my upper strike in a world that is chock a block with black swans and uncertainty.
You can sell this put spread anywhere within the $0.80-$0.85 range and limit your losses.
If you bought the stock outright sell at market rate.
Keep in mind that the options market is highly illiquid now, so don?t hold me to these prices. They are ballpark estimates, at best.
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:
Sell 118 February, 2015 (BAC) $14 calls at?????$1.47
Buy to cover short 118 February, 2015 (BAC) $15 calls at..$0.64
Net Cost:??????????????????.....$0.83
Loss: $0.85 - $0.83 = -$0.02
(118 X 100 X -$0.02) = -$236 or 0.24% loss for the notional $100,000 portfolio.
