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)-TAKE PROFITS
Sell the Russell 2000 iShares (IWM) April, 2015 $116-$120 deep in-the-money vertical call spread at $3.80 or best
Closing Trade
3-20-2014
expiration date: April 20, 2015
Portfolio weighting: 10%,
Number of Contracts = 31 contracts
You can sell this vertical bull call spread anywhere within a $3.70-$3.80 range and make an outstanding two day profit.
As predicted in this space, the Russell 200 did run to a new all time high in the wake of the Wednesday Fed announcement.
No ?patience? means ?RISK ON? in my world.
Well done for you. You have earned a 16.7% profit on this position in only two days, or $1,674. Have fund spending it this weekend.
Welcome to trading.
At this point we have captured 73% of the potential profit for the Russell 2000 iShares (IWM) April, 2015 $116-$120 deep in-the-money vertical call spread. The risk/reward is no longer favorable to continue on for another full month just to capture the last 27%
In these volatile, violent, and tempestuous market conditions, those who take the money and run are being rewarded.
If you don?t sell on the up days, then you don?t have the dry powder to play with on the down days. Taking profits here puts my model trading portfolio up 10% on the year, a result almost all other traders would kill for.
If you managed to buy the less leveraged Russell 2000 (IWM) outright, or the ProShares Ultra Russell 200 2X leveraged ETF (UWM), sell for a short term trade, but hold if you are a long term investor. These will all be much higher by the end of 2015.
Please click here at http://www.proshares.com/funds/uwm.html for the precise details of the leveraged ETF.
There is no doubt that a major, multi year upside breakout is taking place in US small cap stocks. Check out the chart below for the iShares Core S&P Small Cap ETF (IJR).
Small cap stocks are the bigger beneficiaries of cheap oil. They are also immune to currency translation losses from a strong euro. 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.
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:
Sell 31 April, 2015 (IWM) $116 calls at?????$9.70
Buy to cover short 31 April, 2015 (IWM) $120 calls at..??.$5.90
Net Proceeds:??????????????????.....$3.80
Profit: $3.80 - $3.26 = $0.54
(31 X 100 X $0.54) = $1,674 or 1.67% profit for the notional $100,000 portfolio.
