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 - (BLK) – EXPIRATION AT MAX PROFIT
EXPIRATION of the Blackrock (BLK) October 2021 $770-$790 vertical bull call spread at $20.00
Closing Trade - NOT FOR NEW SUBSCRIBERS, YOUR TURN WILL COME
10-13-2021
expiration date: October 15, 2021
Portfolio weighting: 10%
Number of Contracts = 6 contracts
I am going to run the P&L on this position so I don’t overwhelm you and my staff with seven closing trade alerts on Friday. My bet that interest rates would soar, taking financial stocks with them, has proved wildly successful. That has left us with a record seven positions that expire at max profit on Friday.
Blackrock announced blockbuster earnings this morning causing the shares to go ballistic, up $39.00. I think it is therefore safe to call this position a win, even though the actual October 15 options expiration is not for two more trading days.
Some $98 billion in net customer inflows took total assets under management up to a staggering $9.5 trillion. Over the past 12 months, net inflows reached $450 billion. Organic asset growth continues at 5% annually. Revenues grew by 16%.
Since we added this position, shares of the Blackrock (BLK) have rocketed by $26.00. That is miles away from the nearest 790.00 strike price for this position
It also helped that we caught the top of the move in the Volatility Index (VIX) at a $25-$29 top when we added this position. Today the (VIX) is only at $20.
Therefore, we get to take home the maximum profit in this position, such is the magic of vertical bull call debit spreads. That means you get to take home $2,400, or 25.00% in 18 trading days.
The wall of money is still there, and in fact, it is growing.
Well done and on to the next trade!
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning October 18 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Blackrock is the world’s largest fund manager and is managed by my old friend Larry Fink.
Originally a bond fund manager, it is now involved in every corner of the financial markets, even bitcoin. I have watched it grow from a niche firm to the dominant player since 1988.
Blackrock is one of the big three managers in addition to Vanguard and State Street. CEO Larry Fink is one of the smartest people in the business. He has built the perfect money-making machine.
And here is the play. If stocks are going to rise for the next decade, so will Blackrock’s fee income. And as it gathers more assets in a rising market, there is a leveraged hockey stick effect on earnings.
In addition, with a 31% implied volatility in the Blackrock options market, compared to 19% for the S&P 500, this is a very attractive spread to add with only an 18-trading day view to the October 15 options expiration.
This was a bet that Blackrock (BLK) would not trade below $790 by the October 15 option expiration day in 18 trading days.
Here is the specific accounting you need to close out this position:
Expiration of 6 October 2021 (BLK) $770 calls at…………..………$92.31
Expiration of short 6 October 2021 (BLK) $790 calls at………....$72.31
Net Proceeds:………..…………...………..................……..…….….....$20.00
Profit: $20.00 - $16.00 = $4.00
(6 X 100 X $4.00) = $2,400, or 25.00% in 18 trading days.
