Trades for tonight:
Our BHI trade was a Top Trade Idea on 11/18 with the 2017 $57.50/70 bull call spread at $6, paid for by selling the $55 puts for $4.50. HAL was $50 at the time and they offered 1.12 shares of their stock + $19 in cash but it was the $3.5Bn break-up fee that got me excited as BHI is only a $24Bn company (at $56) so that's 15% of their market cap as a break-up fee (3 years of profits).
So this deal is just as good for BHI if it doesn't go through as if it does. Meanwhile, HAL has dropped to $39 and 1.12 x $39 is 43.50 + $19 is $62.50 and BHI is down to $56. Also fortunate for us is the VIX is much higher now so now we can go this way:
- 20 2017 $50/65 bull call spreads at $6.25 ($12,500)
- 10 short 2017 $52.50 puts at $8 ($8,000)
That's net $4,500 on $30,000 worth of spreads with a potential upside of $25,500 (566%) and the worst case is owning 1,000 shares of BHI for net $57, basically where it is now. TOS says the margin on the trade is just $7,250, so very margin efficient.
In the LTP, we already sold 10 2017 $55 puts for $5.35 (now $9.25) so we won't change those but we do want to invest $3.50 to roll our 2017 $57.50 calls ($9) down to the 2017 $50 calls ($12.50) - anything under $4 is worth it.
So the 20/10 spread is as a new entry but we're already in it so we're just going to spend $3,500 to improve our position a bit.
Now, on to our 2015 Trade of the Year. Once again it's AAPL and I hate having the same trade of the year 3 years in a row but here's our 2013 Trade of the Year:
That one is up the full 614% already and our 2014 Trade of the year was AAPL and there we said:
- 10 2016 $450/600 bull call spreads at $65
- 10 short 2016 $450 puts for $41
Those are already at $112,700 - up 369% from net $24,000 and well on the way to the full 525% gain (AAPL needs to stay over $85.71).
