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 has been seriously oversold. The stock is McDermott Intl, Inc. (MDR).
Two months ago, MDR traded around $20 per share and a few days ago, hit a low of just under $7.
MDR does not have weekly options, but the November monthly expiration is next Friday.
My suggestion is to buy MDR at the market, which is $9.31.
Then Sell to Open (1) November $10 call for every 100 shares you buy.
The November $10 call can be sold for $0.25.
Based on the nominal portfolio, I will suggest a 400 share buy in which is 3.7% of the portfolio.
