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

I would like to make a suggestion on a debit spread on a stock we traded before.  That stock is Harley Davidson Inc.(HOG).

HOG is trading around $26.30 as I write this.

HOG reported already, so we do have to be concerned with an earnings release.

My suggestion is to trade the September 4th weekly options.

This gives the stock about three weeks to make a move.

Here is how you open the position:

Buy to Open September 4th - $26.00 Call for $1.70

Sell to Open September 4th - $29.50 Call for  $0.45

The net debit will be $1.25 per spread, with a maximum gain of $2.25 per spread.

Based on the tracking portfolio, I suggest you limit the trade to an 8 lot or 1% of the portfolio.

The maximum gain on a five lot would be $1,800.

CLVS is just not performing as I would have anticipated. The stock is in an uptrend on its daily chart but continues to slowly drift lower.

And with call premium being so low, it does not make sense to continue with that strategy.

As a result, I am going to suggest you close the position.

Sell CLVS at the market, which is $5.92.

If you factor in the three rounds of calls sold against the position, the cash loss, if you traded the suggested 500 share lot is $295.

The loss is 8% if you add in the call premium collected.

I am going to suggest you sell the front week $7.50 call on the stock.

Here is the trade:

Sell to Open (1) June 26th - $7.50 Call for every 100 shares you own.

You should be able to sell them for $.25 per every option.

This will bring the call premium collected on this position to 50 cents per share.

If the calls are assigned this Friday, the return will be 9.4% for less than a month.

Of course, this alert only applies to you if you own shares in CLVS.

I would like to make a suggestion on a debit spread and the stock is Citrix Systems, Inc. (CTXS).

CTXS reported on the 23rd with an earnings beat, so we do have to be concerned with an earnings release.

CTXS is trading around $140 as I write this.

My suggestion is to trade the August monthly options that expire on August 21st.

This gives the stock about two weeks to make a move.

Here is how you open the position:

Buy to Open August 21st - $140.00 Call for $4.50

Sell to Open August 21st - $145.00 Call for $2.20

The net debit will be $2.30 per spread.

Based on the tracking portfolio, I suggest you limit the trade to a 5 lot or 1.1% of the portfolio.

The maximum gain on a five lot would be $1,080.