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.
Trade Alert - (GS)
Buy the Goldman Sachs Group, Inc. (GS) April, 2014 $160 - $165 bull call spread at $4.25 or best
Opening Trade
3-6-2014
expiration date: April 18, 2014
Portfolio weighting: 10%
Number of Contracts= 25 contracts
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the trade to come to you. The middle market is the halfway point between the bid and the offered prices that you see on your screen with your online broker.
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 especially on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 25 April, 2014 (GS) $160 calls at??.????$14.35
Sell short 25 April, 2014 (GS) $165 calls at??..?..$10.10
Net Cost:????????.???????..??....$4.25
Profit at expiration: $5.00 - $4.25 = $0.75
(25 X 100 X $0.75) = $1,875 or 1.86% profit for the notional $100,000 portfolio.
