While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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.
Today I would like to make another suggestion on Facebook (FB).
Unlike the last time I suggested FB, this will not be a longer term option.
Instead, this will be a short term trade.
This is for two reasons. The first is that I am expecting a bounce in the markets due to the oversold condition.
And the second reason is that if the entry is correct, FB should bounce in the next few days. And with the bearish trend in the market, I am not looking at this as a long term trade.
My suggestion today is this:
Buy to Open December 28th - $144 call for $2.48
Sell to Open December 28th - $147 call for $1.21
The net debit will be $1.27 per spread, with a maximum gain of $1.73 per spread.
Because I am suggesting a short term position, limit the risk to a five-lot or .63% of the nominal portfolio.
