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 suggest on a stock I have been following for some time. And I think it has now bottomed out. Ordinarily, when I see a stock trying to bottom, I tend to suggest covered calls until, hopefully they turn and start moving. But this stock carries fairly cheap options. Cheap enough that I do not want to suggest that structure. Instead, I am going to suggest a longer term debit spread. I am going to suggest you go out three months. So, the suggestion today is this: Buy to Open (1) August $15 call for $.75 Sell to Open (1) August $17 call for $.35 The net debit will be $.40 or $40 for each spread you put on. The maximum return for each spread will be $1.60 or $160. Based on the nominal trading portfolio, I am going to limit this trade to a 12 lot, or a $480 investment. This works out to less than .5% of the nominal porfolio.