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 – (OXY) – STOP LOSS
Sell the Occidental Petroleum (OXY) February, 2015 $70-$75 in-the-money vertical call spread at $3.09 or best
Closing Trade
1-14-2015
expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Oil and the energy sector is getting too tough to trade here. Since we put on this position on January 2, Texas tea has plunged by a gob smacking $10, or 20%.
While we are probably close to a bottom, I want to control my risk, limit my losses, and protect he profits that I have made on short positions elsewhere.
(OXY) stock has held up magnificently in the face of this onslaught. But it has fallen below the upper $75 strike in this spread, and that is the magic number that puts it on the short list for a bail.
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.
Here are the specific trades you need to execute this position:
Sell 24 February, 2015 (OXY) $70 calls at……………$6.05
Buy to cover short 24 February, 2015 (OXY) $75 calls at..…….$2.96
Net Cost:…………………………………………………..$3.09
Loss: $4.20 – $3.09= -$1.11
(24 X 100 X -$1.11) = -$2,664 or -2.66% loss for the notional $100,000 portfolio.
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