While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to the six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
I have not recommended a short term covered call in a while but today I would like to change that.
I am going to suggest a short term covered call on a stock we have traded in the past.
That stock is Teva Pharmaceutical Industries Ltd. (TEVA).
TEVA is trading around $9.78 as I write this.
My suggestion is to buy TEVA at the market, at $9.78.
After you buy the stock, then Sell to Open (1) December 20th-
$10 call for every 100 shares you buy for $0.26.
Based on the nominal portfolio, I suggest you limit the trade to 600 shares or about 5.8% of the portfolio.
If the calls are assigned in two weeks, the return will be 5% for those two weeks.
