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 company that I believe has bottomed. That company is Sally Beauty Holdings Inc. (SBH).
SBH is trading around $19.20 as I write this.
SBH does not have weekly options, only monthlies and the July expiration is next Friday.
They do report at the beginning of August, so I am going to suggest you sell the front month calls.
My suggestion is to buy SBH at the market, which is $19.20.
Then Sell to Open (1) July $20 Call for every 100 shares you buy. The July $20 Call can be sold for $.30.
Limit the trade to 300 share or 5.7% of the nominal portfolio.
If the calls are assigned next Friday, the return will be 5.7% for about one and half weeks.
