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) – BUY
BUY the Caterpillar (CAT) December 2023 $220-$230 in-the-money vertical Bull Call spread at $9.00 or best
Opening Trade
11-15-2023
expiration date: December 15, 2023
Portfolio weighting: 10%
Number of Contracts = 11 contracts
If you don’t do options, buy the stock. My target for (CAT) next year is $400, up 50%. I expect (CAT) to hit a new all-time high in 2024.
If you are looking for a great play on falling interest rates you can’t do any better than heavy equipment maker Caterpillar. I have been following this company for 50 years.
They have great exposure to the housing market which will benefit greatly from falling mortgage rates. They have a factory in China that benefits from construction there. They are also cashing in on the pandemic stimulus still working its way through the system.
I am therefore buying Caterpillar (MSFT) December 2023 $220-$230 in-the-money vertical Bull Call spread at $9.00 or best.
Don’t pay more than $9.40 or you’ll be chasing.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and increase your bid by 10 cents with a second order.
This is a bet that Caterpillar (CAT) will not fall below $230 by the December 15 option expiration day in 21 trading days.
For more about (CAT) please click here for their website at https://www.caterpillar.com
Here are the specific trades you need to execute this position:
Buy 11 December 2023 (CAT) $220 calls at…………..………$34.00
Sell short 11 December 2023 (CAT) $230 calls at……….....$25.00
Net Cost:……………………..…….………..…………............….....$9.00
Potential Profit: $10.00 - $9.00 = $1.00
(11 X 100 X $1.00) = $1,100 or 11.11% in 21 trading days.
If you are uncertain about 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.