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 does have weekly options.
That stock is Companhia Vale do Rio Doce SA or VALE for?short.?
VALE is trading around $13.05 as I write this.
My suggestion is to buy VALE at $13.05.
Then Sell to Open (1) July 27th $13.50 call for every 100 shares?you buy.
The July 27th- $13.50 calls can be sold for $.21
Limit the trade to 400 shares based on the nominal portfolio.
This will limit the risk to 5.2% of the portfolio.
If the calls are assigned next Friday, the return will be 5% for?about a week and one half.