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.
I would like to make a suggestion on a longer term position.
The stock is NCR Corporation (NCR).
As I write this, NCR is trading around $27.50.
I am going to suggest a longer term debit spread.
Buy to Open January 15, 2016 $27 call @ $3.00
Sell to Open January 15, 2016 $32 call @ $1.30
Net debit of about $1.70.
The spread of $5 less our debit of $1.70 would reap a profit of $3.30 or almost a double if NCR trades above $32 come January 2016.
Use an allocation of 1%, which would mean a total of six spreads based on the nominal portfolio of $100,000.?