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 - (IBKR) – BUY
BUY the Interactive Brokers (IBKR) August 2024 $110-$115 in-the-money vertical Bull Call spread at $4.40 or best
Opening Trade
7-18-2024
expiration date: August 16, 2024
Portfolio weighting: 10%
Number of Contracts = 25 contracts
If you don’t do options, buy the stock. My target for (IBKR) this year is $150, up 22%.
(IBKR) is one of the top online brokers, with a market capitalization of $52 billion. They are also one of the most profitable with 70% margins. Yet they sport a price-earnings multiple of only 19.5X. They have far and away one of the most sophisticated and conservative risk control procedures out there. If you don’t believe me, just try and sell a naked put short.
I happen to know that their options business is growing at an astonishing 35% annual rate. If I am getting gross position calls on $56 million in NVIDIA (NVDA) options, you can imagine what else is going on. I also know that CEO and founder, the Hungarian computer programmer Thomas Peterffy is one of the most predatory people on Wall Street. That is exactly the kind of person you want to go to bat for you as a shareholder. You don’t have to introduce him to your mother or sister, just buy the stock.
The Fed will certainly raise interest rates by 25 basis this September because it is already in the mail. With a $56 billion margin loan book (IBKR) will be a huge beneficiary. I did a LEAPS on (IBKR) last year and followers earned a handy 100% return in nine months. I like returning to wells that refresh me.
After that, there will be no interest rate rises for a decade. That’s when the economic data catch up with the reality that is happening right now, which is hugely deflationary.
I am therefore buying the Interactive Brokers (IBKR) August 2024 $110-$115 in-the-money vertical Bull Call spread at $4.40 or best.
Don’t pay more than $4.60 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 5 cents with a second order.
This is a bet that Interactive Brokers (IBKR) will not fall below $115 by the August 16 option expiration day in 22 trading days. For more about (IBKR) please click here for their website.
Here are the specific trades you need to execute this position:
Buy 25 August 2024 (IBKR) $110 calls at………….………$16.00
Sell short 25 August 2024 (IBKR) $115 calls at………....$11.60
Net Cost:……………………..…….………..………….................$4.40
Potential Profit: $5.00 - $4.40 = $0.60
(25 X 100 X $0.60) = $1,500 or 13.63% in 22 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.
