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 a stock that is really oversold.
That stock is Berry Plastics Group Inc. (BERY). BERY peaked out at over $61 per share back in January.
And last week, it hit a low of $47.30.
It also traded under the lower band on the daily chart and is now just above it.
I am going to suggest a trade structure similar to the APA alert. And that is an
uneven strangle.
Here is the suggestion:
Buy to Open September $50 call for $2.70
Buy to Open September $47.50 put for $1.50
Based on the $100,000 portfolio, I suggest a 6 lot on the callside and a 3 lot on the putside.
Based on the suggested trade size, the total invested is just over $2,000 or about 2% of the nominal portfolio.
The September strike gives us about three months to see if the stock can move higher.
As a reminder, markets are closed this coming Monday.