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 - (BAC) – BUY
BUY the Bank of America (BAC) December 2021 $39-$42 in-the-money vertical Bull Call spread at $2.70 or best
Trade Date: 11-30-2021
Expiration Date: December 17, 2021
Portfolio weighting: 10%
Number of Contracts = 37 contracts
If you don’t do options, buy the stock. My target for (BAC) next year is $55.
Fed governor Jay Powell said in testimony in front of the Senate Banking Committee today that inflation is no longer “transitory”, implying that hotter inflation numbers are to come. Finally, a nod to reality!
Stocks tanked 600 points on the comment. Bonds should crash but strangely are holding up. Watch this space. The news could give us a tradable bottom for all asset classes, especially with the Volatility Index (VIX) back up to $29.
I told you I’d be back in this name.
We are entering the golden age of banking, which could last a decade, for the following reasons:
*Interest rates are rising
*Rising interest rates increase bank profit margins
*A recovering economy means default rates are collapsing
*Thanks to Dodd-Frank, banks are overcapitalized
*Banks shares are cheap relative to other stocks
*The bank sector has underperformed for a decade
*With rates rising value stocks like banks make the perfect rotation play out of technology stocks.
*Cryptocurrencies will create opportunities for the best-run banks.
Bank shares have been joined at the hip with interest rates for the past eight months, and I believe that both rates and bank shares have much higher to go. With trillions in new government spending about to be approved, but not funded, it can’t go any other way.
I believe that banks shares could keep rising until long term US interest rates hit 2.0%, up from the current 1.48%, whenever that it.
I am therefore buying the Bank of America (BAC) December 2021 $39-$42 in-the-money vertical Bull Call spread at $2.70 or best
Don’t pay more than $2.80 or you’ll be chasing.
That has given us a gift. (BAC) is one of the top players in the global banking sector.
I believe that massive government borrowing and spending will drive US interest rates up through the roof and the value of the US dollar (UUP) down.
This is a bet that Bank of America (BAC) will not fall below $42 by the December 17 option expiration day in 13 trading days.
Here are the specific trades you need to enter this position:
Buy 37 December 2021 (BAC) $39 calls at………….………$6.00
Sell short 37 December 2021 (BAC) $42 calls at………....$3.30
Net Cost:……………………...........…….………..………….….....$2.70
Potential Profit: $3.00 - $2.70 = $0.30
(37 X 100 X $0.30) = $1,110 or 11.11% in 13 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.
