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 - (GS) - BUY
Buy the Goldman Sachs (GS) April, 2015 $175-$180 deep in-the-money vertical call spread at $4.38 or best
Opening Trade
3-27-2015
expiration date: April 17, 2015
Portfolio weighting: 10%
Number of Contracts = 23 contracts
You can buy this vertical bull call spread anywhere within a $4.20-$4.60 range and have a reasonable expectation of making money on this trade. Don?t hold me to these prices as they are all over the map this morning.
If we move back into a ?RISK ON? environment, bonds should sell off and interest rates rise. This is positive for financials as it increases their interest rate spread.
The great thing about this spread is we have to decisively break to 200 day moving average in the next 15 trading days to lose money, a rare event.
This trade is a bit aggressive because if we move back into a ?RISK OFF? scenario and bond prices rally, financials will take it in the kisser. I don?t think that will happen, but I am going to keep a tighter that usual stop loss point at $180 in the underlying stock.
Why Goldman Sachs among all the other belles at the ball?
They happen to have one of the largest European bond trading operations. What happens now that European quantitative easing has started, executed through sovereign and corporate bond buying? Bond trading volumes go through the roof.
That?s what happened when the US began its own QE six years ago. Think of it as a new government subsidy for the banks.
Janet Yellen will tell me if I?ve got this trade right when she speaks this afternoon.
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.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Buy 23 April, 2015 (GS) $175 calls at?????$12.80
Sell short 23 April, 2015 (GS) $180 calls at..??.$8.42
Net Cost:??????????????????.....$4.38
Potential Profit: $5.00 - $4.38 = $0.62
(26 X 100 X $0.62) = $1,426 or 1.43% profit for the notional $100,000
