So many institutional geniuses are so utterly dependent on the performance of this one stock that we should expect to see it trading at least 100 points higher by year’s end.  However, yesterday’s hysterical rally implied that we are not the only ones anticipating this.  In any case, the leverage we are about to seek lies in building a spread position near the 600 strike.  Vertical bull spreads will already have become a bit pricey due to the $18 whoopee-cushion bounce off yesterday’s lows.  However, calendar spreads and butterflies should remain relative bargains for long enough that we can plan to buy a few even as the stock makes its way higher.

For now, let’s try to leg on the January (monthly) 590-600-610 call butterfly spread for ‘even’ or better.  This implies shorting two January 600 calls for as much as we have paid for a single January 590 call and a single January 610 call.  Since my intention is to make this trade accessible even to novices, we’ll want to do the ‘buy’ side of the trade first, acquiring four January 590-600 call spreads on weakness.  Once we’ve done that, we’ll be looking for a rally to get short four January 600-610 call spreads. Check out the table accompanying this tout if you want a picture of what we’ll be doing.  Bottom line is that, when we’re done, we’ll be long four January 590 calls, four January 610 calls, and short eight January 600 calls. Trust me, I’m going to make this easier for you than it sounds. If you’d like to be alerted in real time to the opportunity, be sure you’ve checked ‘E-Mail Notifications’ on your My Account page.  If you don’t subscribe to Rick’s Picks but are eager to give this trade a shot, click here for a free trial, including 24/7 access to the chat room.  _______ UPDATE (1:08 p.m. EST):  A powerful gap-up opening, followed by a steep second-wind rally, have made legging into a bull spread unappealing for the time being. Stay tuned.  _______ UPDATE (December 24, 11:37 a.m. EST):  During an impromptu webinar last week, we examined the butterfly strategy in great detail. Some of you, using spread orders, jumped on this one shortly thereafter, and so I’m going to establish tracking guidance for four butterfly spreads (i.e., long four January 590s and 6120s, short eight 600s). Although some subscribers evidently managed to put the position on for free, I’m going to use a 0.20 debit as the official price, since that seems to be about where most of you got in.   For now, I’ll suggest widening our sweet spot by acquiring the Jan 560-570-580 butterfly at no cost. Obviously, this will require legging into the spread.Please note that those who put on the 590-600-610 ‘fly for 0.20 did so via a straight bid at that price on a direct access platform.