As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert - (GILD) - EXPIRATION
Expiration of the Gilead Sciences (GILD) February, 2015 $87.50 - $92.50 deep in-the-money vertical bull call spread at $5.00
Closing Trade
2-23-2015
expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 23 contracts
My bet that the Gilead Sciences (GILD) shares would go up, sideways, or down small this month proved correct.
As a result, the Gilead Sciences (GILD) February, 2015 $87.50 - $92.50 deep in-the-money vertical bull call spread expired at $5.00, its maximum possible expiration value.
This trade shows perfectly the value of the call spread strategy. We made a quick 13.6% on the position in only 11 trading days, while risking only 10% of our capital. That works out to 1.38% added to our notional $100,000 model trading portfolio.
We got an assist from one of the most ferocious stock market rallies in history. Despite all of the violence in the markets, the volatility of our vertical call spread plunged.
It also helped that ten year Treasury bond yields rocketed from 1.62% to 2.15%, which is always beneficial for financial shares, which have a heavy index weighting.
You don?t have to do anything to close out this position, as it is all done automatically these days. Your short position is automatically cancelled out by your long.
Your broker should credit the full profit for this position in you account this morning, and release the margin requirement. If they don?t, you should get on the phone immediately. Mistakes happen.
The next thing to do is to pat yourself on the back for a trade well done, and then figure out how to spend the money.
On to the next trade.
Here is the profit and loss calculation that applies to this transaction:
long 23 X February, 2015 (GILD) $87.50 calls at?????$15.11
short 23 X February, 2015 (GILD) $92.50 calls at..??.$10.51
Net Cost:??????????????????.....$5.00
Profit at expiration: $5.00 - $4.40 = $0.60
(23 X 100 X $0.60) = $1,380 or 1.38% profit for the notional $100,000 portfolio.
