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
DOCU has made a nice run since since the position was initiated a week ago and it is now a bit overbought in the short term.
I suggest you close the position into the strength.
Here is how you close the position:
Sell to Close February 21st - $75.00 call @ $4.10
Buy to Close February 21st - $80.00 call @ $1.35
Net credit will be $2.75 per spread. The position was initiated with a debit of $1.75 per spread, so the cash profit will be $500 in total if you traded the suggested 5 lot.
The return works out to 71% for a week.
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 debit spread and on a stock we traded in the past.
That stock is Cloudflare Inc. (NET).
The last time I suggested NET, the trade was structured as a cover call.
This time, it will be a different structure that ties up less cash.
And that is with the debit spread.
NET is trading around $18 as I write this.
My suggestion is this:
Buy to Open the February $17.50 call for $1.45
Sell to Open the February $20.00 call for $0.55
The net debit will be $0.90 per spread. The maximum gain would be $1.60 if NET will trade above $20 by February 21st.
The maximum return would be 178%.
Limit the buy in to 6 spreads based on the nominal portfolio. This is a risk of 0.5% of the total portfolio. Suggested position size is reduced because of the recent market action.
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
When I look around at the carnage from the last two days, there are two stocks that actually look like buys.
And both of them we traded in the past.
Those stocks are UNIT and DG.
I have always like Uniti Group Inc. (UNIT), because of the yield and the fact that it has weekly options.
Because of this, I am going to suggest a weekly covered call on UNIT.
Buy UNIT at the market, which is $6.78.
Then Sell to Open (1) January 27th - $7.50 call for every 100 share you buy.
You should be able to sell them for $.30.
As for DG, I am holding off for now, but will issue a separate alert if I do suggest a position.
Because of the recent pullback, my suggestion is to limit the shares to a 500 share buy-in or 3.4% of the portfolio.
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
US Steel has not shown signs of consolidating, so I am going to suggest you close the position.
At this point, I suggest you close the position and move on.
Sell X at the market, which is $9.40
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