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 - (IWM)
Buy the Russell 2000 iShares (IWM) February, 2015 $107-$112 deep in-the-money vertical call spread at $3.80 or best
?Opening Trade
1-6-2015
expiration date: February 20, 2015
Portfolio weighting: 10%,
Number of Contracts = 26 contracts
This is the second leg of the ROLL DOWN of the Russell 2000 iShares (IWM) February, 2015 $113-$118 deep in-the-money vertical call spread that we just stopped out of.
You can buy this vertical bull call spread anywhere within a $3.80-$4.30 range and have a reasonable expectation of making money on this trade.
If you don?t like how the call spread sets up, your can buy the Russell 2000 (IWM) outright, or the ProShares Ultra Russell 200 2X leveraged ETF (UWM). Please click here at http://www.proshares.com/funds/uwm.html for the precise details of the leveraged ETF.
Another more aggressive alternative is to buy only the March, 2015 (IWM) $120 calls at $2.00 with no short side hedge for a potential double.
This way I am rolling back the strike prices of my old Russell 2000 iShares (IWM) February, 2015 $107-$112 deep in-the-money vertical call spread, which I just stopped out of at a loss. This gives you an extra $5 more in downside and still make money on the position.
Small cap stocks are the bigger beneficiaries of cheap oil, low interest rates, and domestic US growth. Therefore, I expect the (IWM) to lead the market in early 2015, handily outperforming the big cap S&P 500, which is being dragged down by the energy sector and weakness in Europe and Asia.
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 26 February, 2015 (IWM) $107 calls at?????$9.37
Sell short 26 February, 2015 (IWM) $112 calls at..??.$5.57
Net Cost:??????????????????.....$3.80
Potential Profit: $5.00 - $3.80 = $1.20
(26 X 100 X $1.03) = $3,120 or 3.12% profit for the notional $100,000 portfolio.
