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.
As I have been mentioning in the daily updates, the pipeline stocks have been in the midst of a selling climax recently.
And today, the XLE is actually experiencing a dead cat bounce.
Furthermore, KMI just announced they slashed their dividend by 75% and the stock is up over 8%.
I would like to use this as an opportunity to get back into ETE.
The last time we traded ETE is was around $20 per share and today it is under $15 per share, trading for $14.05 as I write this.
I am going to suggest a 1/2 allocation, which based on $5,000 would mean a buy of 400 shares rounded up.
Buy ETE at the market, which is $14.05.
Then Sell to Open the December $15 calls at $.30.
These calls expire next Friday, so if they are assigned, the return will be 8.5% for a week an one half.
If ETE does slide more, I will add to this position and continue to sell calls.
