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)
Sell the Gilead Sciences (GILD) $67.50 - $70 bull call spread at $2.48 or best
Closing Trade
1-14-2014
expiration date: 1-17-2014
Portfolio weighting: 10%
Number of Contracts = 47 contracts
My bet that Obamacare would drive the health care sector to become a huge outperformer came good, delivering another 1.56% profit in our Gilead Sciences (GILD) $67.50 - $70 bull call spread in just two weeks. I can?t believe how much money I was able to take in on this trade in such a short time period.
This position also highlights the beauty of the bull call spread. Despite the fact that the stock was virtually unchanged during this period, we came close to our maximum profit point. All of the money was made on time decay. The only reason I am coming out here and leaving 9 basis points of profit on the table is because of the heightened risk backdrop going into the Friday, January 17 expiration.
I continue to believe that health care will be one of the top performing stock sectors of 2014. The older Obamacare gets, the better it becomes, as greater numbers of consumers sign up, and the numerous glitches and unforeseen implications are sorted out.
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months further out.
Here are the specific trades you need to execute this position:
Sell 47 January, 2014 (GILD) $67.50 calls at????.???.$7.23
Buy to cover short 47 January, 2014 (GILD) $70 calls a???$4.75
Net Proceeds:??????????????....??..?.......$2.48
Profit: $2.48 - $2.15 = $0.33
($0.33 X 100 X 47) = $1,551 ? 1.56% for the notional $100,000 model portfolio.
