While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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.
Today I would like to make a suggestion on NFLX.
NFLX is trading right around $125. ?
I am going to use the same tactic that we used on WDC, that is, to allocate 1/2 the position to the at the money options and the balance to the out of the money options.
And because I am going to suggest you use the front week options, I am going to limit this trade to a 1% allocation.
The idea would be to sell the ATM calls when they hit the strike of the OTM calls and let them run.
However, based on how NFLX trades the balance of the day and tomorrow morning, that plan maybe altered.
Here is the suggestion:
Buy to Open (2) of the August 21st - $125 call for $1.90
Buy to Open (4) of the August 21st - $127 calls for $1.13
Based on these fills, the total invested should be about $840.
