While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more
Today, I would like to make a suggestion on a covered call.
And it is on a stock we traded in the past. The stock is iQIYI Inc. (IQ).
IQ is trading around $22.40 as I write this.
My suggestion is to buy IQ at the market. Then execute this option trade.
Sell to Open one December 18th-$23 call for $.25 for every 100 shares you buy.
If these calls are assigned this Friday, the return will be 3.8% for four days.
Based on the nominal portfolio limit the stock buy in to 300 shares, or 6.7% of the tracking portfolio.
If the calls are not assigned this Friday, then I will continue to sell calls against the position.
IQ does have weekly options.
PS received a tender offer today from Vista Equity Partners.
As a result of the offer, PS is trading for $20.10 and the $17.50 calls that you sold have gone to par.
This means there is no time value left in the options.
These options expire this coming Friday.
You could just wait until Friday and have the options assigned and your stock will be automatically sold at $17.50, but I am going to suggest you close the position today and go to cash.
If you trade through a broker where your commissions may be high, you could consider just leaving the position alone.
Here is how you unravel this trade.
Buy to Close the December 18th-$17.50 call for $2.60
After you close the short call position, then sell PS at the market, which is $20.10.
As I said, you book the maximum on the position today, which is 7.4% for 13 days.
If you traded the suggested 400 share lot, the cash return is $484 for those 13 days.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more
I mentioned in this morning's update that the long $60 call on GILD expires today and as such, I would like to recoup some value on the position.
GILD is trading around $60.48 as I write this.
Because it expires today, there is no time value on the call and the value is all intrinsic value.
As such, close the position and you should be able to recoup 50 cents per call option.
Here is how you close the position:
Sell to Close December 11th - $60.00 Call for $.70
By closing at $.70, you are able to recoup over 30% of the cost on the trade, and I suggest you do that.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more