Trade Alert – (IBM)- TAKE PROFITS
SELL the IBM (IBM) May, 2017 $150-$155 in-the-money vertical bull call spread at $4.90 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
4-24-2017
expiration date: May 19, 2017
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Yes, it is possible to make an 18.93% profit on a single position in four trading days.
I know, because I just did it with the IBM (IBM) May, 2017 $150-$155 in-the-money vertical bull call spread.
Moderate former investment banker Emmanuel Macron’s substantial win in the French presidential election sent all markets rocketing this morning.
Nationalist Marine La Pen has gone down in flames. She has no chance of winning the run off in two weeks.
We have gone from “RISK OFF” to “RISK ON” in a heartbeat.
However, options prices are a little squirrelly this morning, and somewhat out of touch with reality.
I don’t believe the $4.97 price on the screenshot below. In fact, I’ve seen prints as high as $5.10 this morning.
So I’m going to give you all the way down to $4.90 to get this trade done.
If you didn’t do the options and bought the shares instead, keep them. There are a couple more bucks of upside.
Well done, and on to the next trade. This is going to be an interesting year!
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of OptionsHouse.
If you are uncertain about how to execute this options spread, please watch my training video “How to Execute a Vertical Bull Call Spread”.
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 farther month expirations.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
Paid subscribers, be sure you’ve signed up for our FREE text service for Trade Alerts. When seconds count, this feature offers a definite trading advantage. In today’s volatile markets, individual investors need every advantage they can get.
Here Are the Specific Trades You Need to Execute This Position:
Sell 24 May, 2017 IBM $150 calls at…….……………$12.00
Buy to cover short 24 May, 2017 IBM $155 calls at……….$7.10
Net Proceeds:………………………………………………$4.90
Profit: $4.90 – $4.12 = $0.78
(24 X 100 X $0.78) = $1,872 or 18.93% profit in four trading days.
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ABOUT THE AUTHOR
The Diary of a Mad Hedge Fund Trader is written by John Thomas, one of the founding fathers of the modern hedge fund industry.
Seeing the incredible inefficiencies and severe mis-pricing offered by the popping of multiple bubbles during the Great Crash of 2008, and missing the adrenaline of the marketplace, he returned to active hedge fund management. With The Diary of a Mad Hedge Fund Trader, his goal is to broaden public understanding of the techniques and strategies employed by the most successful hedge funds so that they may more profitably manage their own money.
John graduated from the University of California at Los Angeles (UCLA) with a degree in biochemistry and a minor in mathematics in 1974. He moved to Tokyo, Japan to join a Japanese securities house as a research analyst, becoming fluent in Japanese. In 1976 he was appointed the Tokyo correspondent for The Economist magazine and the Financial Times. For the next seven years he published thousands of articles about the economies, companies, and leaders of Asia. He was one of the first American correspondents to cover China during the Cultural Revolution.