Legged Spread With AbbVie Delivers Quadruple-Digit Gains
Last week, some War Room members locked in profits ranging from 1,350% to 3,700%.
That wasn’t a fluke…
It was the result of a unique type of trade that you may never find anywhere else. It’s called a “legged spread”…
Sounds weird, I know…
But hear me out…
A couple of months ago, I recommended members buy long-term equity anticipation securities (LEAPS) on AbbVie (NYSE: ABBV). The recommendation was for the $77.50 calls. Members bought in for $4.60. A couple of days later, AbbVie moved up about 5%.
Members’ LEAPS jumped by 20% to 30%…
This is what I told members in The War Room:
I have two recommendations for you (one for those of you who want to enter a spread and one for those of you who don’t). Please observe the limits or you’ll basically ruin it for everyone else. There is no rush here. If you get $0.05 or $0.10 more or less, that is fine too. But try to get the higher price first before making adjustments.
1) If you don’t want to enter a spread, SELL TO CLOSE the ABBV Jan 2021 $77.50 calls (ABBV JAN 2021 $77.50C) for $5.25 or higher. Please post your fills (the current bid is $5.45, but it’s weak. Still try to go between the bid and offer to start and work your way lower).
2) I will post the spread trade soon. I am waiting for more bids to line up.
This was the second time in a matter of weeks that members cashed in on AbbVie…
But this time, I wanted to shoot for a bigger target, and that target opened up within a few minutes of the post above. Here’s what I said:
For those of you who want to remain in the position via a spread, SELL TO OPEN THE ABBV JAN 2021 $80 (ABBV JAN 2021 $80C) calls at $4.60 OR HIGHER, good for the day. This will give us a zero-cost free ride on the position! TAKE YOUR TIME. We will follow the spread position in the portfolio only after today.
I recommended selling the $80 calls against the $77.50 calls that members already owned…
This is called a spread…
A spread is the distance between two points – in this case, the distance between two strike prices. What is unique about this trade is that members entered the spread after the trade was already in play, which is called a legged spread. A normal spread would be entered into at the time of the first trade.
As you can see from this member’s post, that’s exactly what he did:
“ABBV Filled at $4.60. I now have 5 Cents in the trade.” – Christopher S.
On November 8, the same War Room member wrote this:
“Placed a GTC $1.65 and will patiently wait for the price to come back to me.” – Christopher S.
And on November 12:
“I sold my position for $1.65.” – Christopher S.
Here’s what another War Room member had to say:
“ABBV stock finally filled at $1.35, hahaha, ohh well:)… so no cost trade filled @ $13.5, I don’t even know how to calculate that! 1,350% gain???” – Michael E.
(The moderator pointed out that the gain for this member’s trade was actually 2,700%!)
Here was the setup:
We had $0.05 at risk to make a maximum of $2.50 (the spread between $77.50 and $80). That’s a potential gain of 5,000% (if we held on for another 15 months).
Last week, AbbVie rallied sharply on the back of great earnings and more new drug approvals. The profit from the spread reached about $1.85. That was good enough for me!
Why wait another year or so for an extra $0.75, when the bulk of the gains are in the bag?
So I issued the order to close the spread. And members were able to cash in gains of up to 3,700%…
Some members are still holding on for more!
Action Plan: We have another quadruple-digit gain waiting to go with our Bunge Limited trade. These are the types of trades I shoot for in The War Room when I recommend trading LEAPS.
You could be there for the next quadruple-digit gain by joining me in The War Room now!