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 stock that appears to be ready to bounce.
The stock is Citrix Systems, Inc. (CTXS).
I am going to suggest a debit spread, but I will suggest using short-dated options.
Here is the trade:
Buy to Open July 12th - $138.00 call @ $3.40
Sell to Open July 12th - $142.00 call @ $2.05
The net debit will be $1.35 per spread, with a maximum gain of $2.65 per spread.
Based on the nominal portfolio, limit the trade to 6 spreads or about .8% of the portfolio.
I am suggesting you limit the buy in to less than 1% of the nominal portfolio because the expiration date is only two and one-half weeks away.
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
With the short week coming up next week, I would like to make a suggestion on a weekly covered call.
The stock is Mosiac Co. (MOS).
As I write this, MOS is trading around $11.52.
My suggestion is to buy MOS at the market.
Then Sell to Open (1) May 29th - $12 call for every 100 shares you buy.
You should be able to sell them for $.25.
If these calls are assigned next Friday, the return will be 6.3% for one week.
Based on the nominal portfolio, limit the stock buy in to 500 shares or 5.7% of the portfolio.
Assuming you buy 500 shares, you will sell 5 of the May 29th - $12 calls.
As I mentioned this morning in the daily update, there are two positions that expire today.
The first position is HOG and as I write this it is trading around $23.10 or slightly above the strike price. Leave this position alone for now and lets wait to see where it
settles at the close today.
The second position is the short $18 call on OSTK.
My suggestion is to buy back the May 22nd call for $.20.
After you close the position that expires today, then Sell to Open (1) May 29th - $18 call for every 100 shares you own.
The May 29th - $18 call can be sold for $1.25.
You pick up a gain of 35 cents per share on the call that expires today and another $1.25 per share for the calls that expire next Friday.
Of course, this alert only applies to you if you bought shares in OSTK.
As a reminder, all markets are closed this Monday for the Memorial Day Holiday here in the States.
Enjoy your holiday weekend!
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 am going to suggest you book the profit on the AMN debit spread.
We can close the position after two days and capture just over 50% of the maximum profit on the position.
The cash return for the two days will be 50%.
Here is how you close the trade.
Sell to Close July 17th - $45.00 call @ $4.20
Buy to Close July 17th - $50.00 call @ $2.10
The net credit will be $2.10 per spread. The debit when the trade was initiated was $1.40.
This results in a profit of $70 per spread. If you traded the suggested 8 lot, the total cash gain will be $560 for two 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
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 one more suggestion and it is on a stock that has been oversold but has held support of the lower band on its daily chart.
The stock is AMN Healthcare Services, Inc. (AMN).
It is trading just above the lower band on its daily chart, which is $37.83 and as I write, AMN is trading for $43.32.
I am going to recommend a debit spread,
Here is the trade.
Buy to Open July 17th - $45.00 call @ $2.90
Sell to Open July 17th - $50.00 call @ $1.50
The net debit will be $1.40 per spread, with a maximum gain of $3.60 per spread.
Based on the nominal portfolio, limit the trade to 8 spreads or about 1.1% of the portfolio.