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 - (NLY) – BUY
BUY the Annaly Capital Management (NLY) December 2023 $15-$16 in-the-money vertical Bull Call spread at $0.88 or best
Opening Trade
11-8-2023
expiration date: December 15, 2023
Portfolio weighting: 10%
Number of Contracts = 100 contracts
If you don’t do options, buy the stock. My target for (NLY) this year is $35, up 100%.
For long-term followers of Mad Hedge, this is a new name.
Given that the long-term top in interest rates and the bottom in fixed income prices are in, I am looking for leveraged plays on falling interest rates. Annaly Capital Management (NLY) fits the bill nicely.
Annaly's principal business objective is to generate net income and optimize its returns through prudent management of its diversified investment strategies. Its portfolio includes securities, loans, and equity in the mortgage finance market. It is in effect a leveraged long REIT, or real estate investment trust.
This strategy is designed to achieve durable risk-adjusted returns over various interest rates and economic cycles by pairing shorter-duration or floating-rate credit securities with our longer-term, fixed-rate agency portfolio.
It is the perfect falling interest rate play.
I am therefore buying the Annaly Capital Management (NLY) December 2023 $15-$16 in-the-money vertical Bull Call spread at $0.88 or best.
Don’t pay more than $0.93 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 it and enter a new order 2 cents higher.
This is a bet that Annaly Capital Management (NLY)) will not fall below $16 by the December 15 option expiration day in 26 trading days.
For more about (NLY) please click here for their website at https://www.annaly.com
Here are the specific trades you need to execute this position:
Buy 100 December 2023 (NLY) $15 calls at………….………$2.50
Sell short 100 December 2023 (NLY) $16 calls at………....$1.60
Net Cost:……………………..…….………..………….…................$0.88
Potential Profit: $1.00 - $0.88 = $0.12
(100 X 100 X $0.12) = $1,200 or 13.63% in 26 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.
