Happy Thanksgiving (almost)!
We added a new feature last month called Top Trades™ (Members Only) so I thought it would be a good time to see how we’re doing as well as give a few tricks and tips to our new subscribers. Top Trade Alerts are sent out once or twice a week via EMail and Text Message from our Basic and Premium Live Member’s Chat Room. These trades are just a very small portion of what we discuss during chat each day, but hopefully a good representative sample. Let’s see how they performed so far:
We already reviewed our first Top Trade Alert™ in Thursday’s post and our first 7 ideas are already up a combined 3.7% for the month but, officially, GSK was the actual Top Trade that day, and it’s already up 6.1% for the month – a great way to get started! Also on Thursday, we checked out out 2nd Top Trade Idea for CAT and, with Friday’s 4.27% gain, the stock is already up 9% in a month but, of course, we don’t just play boring old stocks at Philstockworld – our option trade Idea was:
As a new trade on CAT, I’d sell the 2017 $80 puts for $7.30 for a very nice $72.70 net entry. That’s more than the $5.60 dividend you’d make owning the stock for 2 years and a 26% discount if put to you. That’s great as a stand-alone play or it can be paired with the $100/115 bull call spread at $5.50 and you still have a net $1.80 credit (so net $78.20 entry – 20% off) but 100% of the upside over $100 for the next two years.
As of yesterday’s close, the $80 puts were $5.70 (up 21.9%) and the bull call spread is now $7.35 for net $1.65 plus the original $1.80 credit is $3.45, up 191% in a month on the option play. Isn’t that more fun than just making 9% on the stock?
This is what we teach our Members at Philstockworld. Rather than buying 100 shares of CAT for $97.60 ($9,760) back on 10/23 and making $879 in a month (which is not terrible either), our trade idea could be used to buy, for example, 5 of the spreads for a $900 credit and now, a month later, you have a $1,725 profit. The short puts used $2,360 in margin plus the $2,750 in cash tied up in the spread vs. tying up $9,760 on the stock and the return is almost double!
Our next Top Trade Alert went out on October 27th, and that was for USO as we added a position to our $25,000 Portfolio in Member Chat. We were too early in calling the bottom as USO was at $22.50 at the time and is now $21.36 (down 5%) but our trade idea was the April $28/32 bull call spread at $2.30, which has since dropped to $1.64 – down a whopping 28.7% on the $2,300 spread.
