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 - (C) – EXPIRATION AT MAX PROFIT
EXPIRATION of the Citigroup (C) October 2021 $62-$65 in-the-money vertical Bull Call spread at $3.00
Trade Date: 10-15-2021
Expiration Date: October 15, 2021
Portfolio weighting: 10%
Number of Contracts = 37 contracts
I am going to run the P&L on this position now, so I don’t overwhelm you and my staff with seven closing trade alerts at the close.
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 today.
Citigroup announced blockbuster earnings this morning. Q3 profits soared an eye-popping 47.6% to $4.6 billion.
I think it is therefore safe to call this position a win, even though the actual October 15 options expiration is not until 4:15 PM EST.
We are so far in the money that we have an ample cushion going into expiration.
Since we added this position, shares of the Citigroup (GS) have rocketed by $3.00. That is $8 from the nearest $65.00 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 $16.
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 $1,110 or 11.11% in 9 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.
If you don’t do options, buy the stock. My target for (C) this year is $80, up 14%.
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.
The current debt ceiling crisis gave us a great entry point for financial longs.
That has given us a gift. (C) 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. Banks love high-interest rates because they vastly improve profit margins.
This was a bet that Citigroup (C) would not fall below $65.00 by the October 15 option expiration day in 9 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of 37 October 2021 (C) $62 calls at……......………$10.39
EXPIRATION of short 37 October 2021 (C) $65 calls at………....$7.39
Net Proceeds:……………………..…….………..........……………..….....$3.00
Profit: $3.00 - $2.70 = $0.30
(37 X 100 X $0.30) = $1,110 or 11.11% in 9 trading days.
