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.
I am going to suggest you unwind the MDR position. Part of the reason is because the overall market is pulling back, and the other reason is that we have three open positions in this sector.
I would like to limit that to only two open positions.
As a result, here is what I suggest:
Buy to Close February $10 call for $0.10.
After you close the short call, sell the shares at the market which is $8.71.
Based on the 40 cents in option premium you should have collected and the selling price of $8.71, the net loss will be limited to 20 cents per share.
The overall cash loss is $80 if you used the suggested 400 share buyin.
