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.
Let's close the CASY debit spread. This will be a 2-day hold.
Here is how you close the position:
Sell to Close January 17th - $155.00 call for $4.70
Buy to Close January 17th - $160.00 call for $2.10
The net credit will be $2.60 per spread.
The spread cost $2.10, so the profit is $0.50 per spread.
If you traded the suggested 4 lot, the cash return is $200. And the overall return for two days is 24%.