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 - (XLF)
Buy the Financials Select Sector SPDR (XLF) January, 2014 $19-$21 call spread at $1.73 or best
Opening Trade
11-22-2013
expiration date: January 17, 2014
Portfolio weighting: 10%
Number of contracts = 58 contracts
Please note that a basket of stocks is going to deliver half the volatility of single stocks. Therefore, we have to be more aggressive with the positioning to make any money, picking strikes that are closer to the money.
For a list of the largest components of the (XLF) ETF, please click the following link: http://www.sectorspdr.com/sectorspdr/sector/xlf/holdings . You will find that the three largest holdings are JP Morgan (JPM), Wells Fargo (WFC), and Warren Buffet?s Berkshire Hathaway (BRK/B).
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 58 January, 2014 (XLF) $19 calls at?????$2.41
Sell short 58 January, 2014 (XLF) $21 calls at..??.$0.68
Net Cost:?????????????????.....$1.73
Profit at expiration: $2.00 - $1.73 = $0.27
(58 X 100 X $0.27) = $1,566 or 1.57% profit for the notional $100,000 portfolio.
