Yesterday, I recommended you buy call options on Cabela’s (NYSE: CAB) to benefit from the company’s winter uptrend. I also said to be prepared for the possibility that Bass Pro Shops pops up as a potential suitor for Cabela’s.
Well, after the market closed, reports surfaced that Cabela’s was entertaining bids from private equity firms … and that Bass Pro Shops had hired JPMorgan to explore a potential bid for Cabela’s. The shares surged in after-hours trading yesterday, and now our options are approaching a 100% gain in only a day.
This is a great example of why I recommend setting a limit order to sell half your position for 100% when you first enter a trade. Options have a habit of moving in quick fashion, and I want you to benefit from the quick moves.
I just want to make sure everyone who is in this trade has, in fact, set the appropriate order. Options move quickly and I want you to benefit if they hit or exceed the 100% mark. So if you haven’t entered your limit order to sell half of your position for 100%, I recommend doing that now.
Here’s a recap of the trade details:
Action to take: Set a Good ‘Til Canceled limit order to sell to close half of your position in the CAB March 2016 $40 call option (CAB160318C00040000) at $10.
As a reminder, you can place your limit order at a price based on your own entry price (which may differ slightly from the model portfolio). Some of you may have gotten in below our official price of $5 per contract, so you may be able to collect a 100% gain at a lower price.
And since this stock is on the upswing as part of a potential corporate takeover, let’s go ahead and get another limit order in there so that we can collect 200% on the last half of this trade. Takeover actions can cause shares to move sharply. This way, we can easily collect an impressive gain on another jump in the stock price.
Action to take: Set a Good ‘Til Canceled limit order to sell to close half of your position in the CAB March 2016 $40 call option (CAB160318C00040000) at $15.
Before I Go, a Quick Note…
Many of you were wise and decided to join me for a lifetime subscription. So you will have access to trades like this for the rest of your life. That’s great!
However, if you are currently a one-year subscriber, I want to encourage you to do something: Lock in your lifetime subscription today. See, the CEO of our company feels like we are giving it away for that additional $3,000 (after all, that is the retail cost of a one-year subscription).
He wants to raise the price to $10,000 as soon as next week, given that some people are basically recouping their entire investment in this service in just one trade. So, I can see his logic. However, if you email a colleague of mine — John Wilkinson — at email@example.com, he or one of his team members will get you locked in for a lifetime subscription for that additional $3,000. Just include your phone number and the best time to reach you, so that he can call you back. There is no risk in taking the lifetime subscription because you still get the 100% full refund guarantee.
Just wanted to get you that quick note so you have chance to grab a lifetime subscription before the price goes up.
Until next time, good trading…
Editor, Precision Profits