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

We were able to sell the $4 call on MFA that expires this coming Friday for $0.65.

And today, we can close it for $0.10.

Ordinarily, I would leave the position alone and hold until expiration.

But MFA reports this Thursday and we can capture 85% of the profit on the call that was sold.

My suggestion will be to close the short calls.

Here is how you do it.

Buy to Close June 19th - $4 call for $0.10.

Close the entire short call position. So, if you followed the alert, you would be buying back 10 calls.

Of course, this alert only applies if you sold the June $4 calls.

If you did sell the 10 calls, the cash profit is $550.

If the stock makes a run into earnings, I will suggest you sell more call options.

Today, I would like to make a suggestion on a position we just swing traded.

But this time, I am going to suggest a covered call.

The stock is ProAssurance Corp (PRA).

PRA is trading at $14.10 as I write this.

My suggestion is to buy PRA at the market.

Then Sell to Open (1) June 19th - $15 call for $0.40 for every 100 shares you buy.

Based on the nominal portfolio, limit the stock buy in to 400 shares or 5.6% allocation.

If you buy 400 shares, you will then sell 4 calls.

The return for one week, if the calls are assigned, will be 9.2%.

With the sell off today and the fact that I suggested short dated options on the MKC trade, I am going to suggest you close the position and recoup some cash.

Here is how you close the trade on MKC.

Sell to Close June 19th - $175.00 call @ 1.50

Buy to Close June 19th - $180.00 call @ $.40

The credit will be $1.10 per spread. With a small allocation when I suggested the trade, the cash loss is limited to $160 if you traded the suggested 4 lot.

Better to close and move at this point.