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.
It seems like yesterday that I made a suggestion on this company. Actually, when I went back and checked, it was actually seven months ago, to the day.
The company is Companhia Vale do Rio Doce SA (VALE).
If you recall, VALE has weekly options, which is a feature I like.
My suggestion today is to buy VALE at the market, which is $11.85.
Then Sell to Open (1) February 22nd - $12 call for every 100 shares you buy.
These are the calls that expire next Friday.
You should be able to sell them for $0.30.
If the calls are assigned next week, the return will be 3.8% for seven days.
Based on the nominal portfolio, limit the trade to 500 shares or 5.9% of the portfolio.
