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 a suggestion on a stock that I think has more room on the downside.
That stock is Zendesk, Inc (ZEN).
As I write this, ZEN is trading about $3.60 to the downside.
And today's price action has Zen trading under the midband on its daily chart.
I am going to suggest an uneven strangle on ZEN.
And because I am biased to the downside, I am not going to suggest you buy a lot of time.
Here is the trade set up:
Buy to Open (1) January $55 call @ $2.30
Buy to Open (2) January $50 Put @ $1.60
Each strangle will total $550.
Limit the position to a 3 lot which would be a total cash investment of $1,650.
Based on the suggested trade size, the risk will be 1.6% of the nominal portfolio.
