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.
The XLE seems to have found support at the 65.63 level and is making a push up today.
Based on that, I would like to recommend an oil stock.
The stock is actually a limited partnership and is a pipeline.
That stock is Energy Transfer Equity, LP (ETE).
It is up just over 7% today.
With November monthly options expiring this Friday I am going to use this as an opportunity to do a short term covered call.
Buy ETE at the market, which is $19.50 as I write this.
Then Sell to Open (1) November $20 call for every 100 shares you buy.
The November $20 calls are quoted at $.50 to $.70, so you should be able to sell them for $.60.
If the calls are assigned this Friday, the return will be 5.6% for 5 days.
Use a full allocation or 500 shares.
