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. The stock is Docusign, Inc. (DOCU).
DOCU is trading at $74.72 as I write this.
I am going to suggest a trade using the February monthly options. DOCU does not have weeklies, and the February monthlies will allow enough time to see if the stock continues to run.
My suggestion today is this:
Buy to Open February 21st - $75.00 call @ $2.45
Sell to Open February 21st - $80.00 call @ $0.70
Net debit is $1.75 per spread with a maximum gain of $3.25 per spread if DOCU trades above $80.00 by February 21st.
Based on the nominal portfolio, limit the trade to 5 spreads or 0.8% 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
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
Dollar General (DG) has made a nice run since I recommended it 8 days ago and is now trading around $160.
Our calls are now deep in the money and this will allow us to pull the trade off early. The expiration I suggested was January 31st, which is two weeks from now.
Let's close the trade and book the profit. This is how you do it.
Sell to Close January 31st - $152.50 call @ $8.00
Buy to Close January 31st - $155.00 call @ $5.60
The net credit will be $2.40 per spread. The debit when the trade was placed was $1.20 per spread, so this results in a $1.20 per spread profit, or a 100% return for the 8 days the position was held.
If we held for another two weeks, it would only increase the profit 10 cents per spread, so I would prefer to close the deal early.
The cash gain will be $720 if you traded the suggested 6 lot.
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 the 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
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