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.
I would like to adjust the NCR position again.
Yesterday, NCR sold off on news that Blackrock's takeover discussions where in peril.
As a result, the stock sold off about $2.
My suggestion is to Buy to Close the January $32 call for $.45.
Based on a fill of $.45, you will make $.50 per share on closing the short position.
Then Sell to Open (1) January $29 call for $1.00 for every January $27 calls you own.
The net result is that the debit is reduced to $.70 per spread.
The maximum gain is reduced to $2.00.
In other words, the maximum value of this position will be $2.00, with a risk of $.70.? Almost a two to one return.
But, more importantly it brings the maximum risk down to under $450.
