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.
Let's go ahead and close out the CVX position. The suggestion was made based on a dead cat bounce and that is exactly what we got.
Here is how to close the position:
Sell to Close January 18th $105 Call for $6.90
Buy to Close January 18th $108 Call for $4.80
The net credit will be $2.10 per spread. And with the overall gain for the two days should be $1,250.
Based on a cost of $850, the return is 147% for the two days.