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 stock that I believe should continue to get a bounce and follow through to the upside.
The stock is Kirby Corp.(KEX).
I would like to use the same structure as the trade we just closed
out on NTAP.
That is the unequal straddle.
KEX does not report until April 30th, so there is no scheduled earnings event in the near future.
KEX is trading around $75 as I write this.
The suggestion will be an unequal straddle with a bullish bias.
The idea will be buy 2 calls for every 1 put.
Buy to Open (2) March 20th - $75.00 calls @ $2.60. The 2 calls will cost $5.20.
Buy to Open (1) March 20th - $75.00 put @ $3.10
The total debit will be $8.30 per position.
Based on the nominal portfolio, limit the trade to a 2 lot or a total of $1,660. This is a 1.6% risk based on the nominal portfolio.
The end result if you trade the suggested position size is that you will own (4) March 20th - $75 calls and (2) March 20th - $75 puts.
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
Because NTAP does report next week and the stock had the bounce that I expected, I am going to suggest you take the profit on the trade.
I don't want to run the risk of it pulling back and we can always put the trade back on if it does.
Sell to Close (2) February 14th - $54.50 calls @ $3.10. The 2 calls will net $6.20
Sell to Close (1) February 14th - $54.50 put @ $1.38. The put will net $1.38.
If you traded the suggested 2 lot allocation, the total gross will be about $1,516.
With a cost of $1,240, the trade will net $276 for one day.
The return for that day will be 22%.
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 suggested a short term debit spread on NET and with the way the market has been trading, I want to close this position quickly.
Because I did not suggest a lot of time when I suggested the position, I feel it is better to close the trade out and take a small loss.
Here is how to close the trade.
Sell to Close the February $17.50 call for $1.20
Buy to Close the February $20.00 call for $0.55
The net loss will be a nominal $30 overall, if you traded the suggested 6 lot.
Today, I would like to make a suggestion on a stock that, like a lot of stocks recently, is oversold. That stock is NetApp Inc (NTAP).
NTAP is trading right at the extreme lower band on its 60 minute chart which is $54.32.
As I write this, it is trading around $54.47 or just above this level.
NTAP does report the 12th, after the close.
The suggestion will be an unequal straddle with a bullish bias.
The idea will be buying 2 calls for every 1 put.
This trade benefits if the stock bounces ahead of earnings. And an additional benefit could be IV expansion as it trades closer to the earnings date.
We will give the trade a few days to see if it does move and if it doesn't, I will close this quickly.
Buy to Open (2) February 14th - $54.50 calls @ $2.07. The 2 calls will cost $4.14
Buy to Open (1) February 14th - $54.50 put @ $2.06
Based on the nominal portfolio, limit the trade to a 2 lot or a total of $1,240. This is a 1.2% risk based on the nominal portfolio.
The end result if you trade the suggested position size, is that you will own (4) February 14th - $54.40 calls and (2) February 14th - $54.50 puts.
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