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 - (CAT) - EXPIRATION-TAKE PROFITS
EXPIRATION of the Caterpillar (CAT) December 2020 $145-$150 in-the-money vertical Bull Call spread at $5.00
Closing Trade
12-18-2020
expiration date: December 18, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This options call spread does not expire for one more day.
However, I have a record eight positions going into the Friday, December 18 options expiration so I am going to start closing these out early so as not to overload you, or my back office.
Provided that Caterpillar does not fall $29.50 over the next two days, the Caterpillar (CAT) December 2020 $145-$150 in-the-money vertical Bull Call will expire at $5.00.
You get to take home $1,380, or 13.63% in 22 trading days. Well done, and on to the next trade.
Massive infrastructure spending is about to hit all 50 states in the US. Home construction continues to break all records. A resumption of trade relations with China will lead to an increase in agricultural production.
You can’t do any of this without Caterpillar tractors.
You don’t have to do anything with this expiration.
Your broker (are they still called that?) 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, December 21 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
This was a bet that Caterpillar (CAT) will not trade below $150.00 by the December 18 option expiration day in 22 trading days.
Here is the specific accounting you need to exit this position:
EXPIRATION of 23 December 2020 (CAT) $145 calls at……..……$34.50
EXPIRATION of short 23 December 2020 (CAT) $150 calls at….$29.50
Net proceeds:………………………….………..………….…….............…....$5.00
Profit: $5.00 - $4.40 = $0.60
(23 X 100 X $0.60) = $1,380 or 13.63% in 22 trading days.
