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 we traded before. That company is Vipshop Holdings Ltd. (VIPS)
VIPS is trading just under $12 as I write this and it does have weekly options.
My suggestion is to buy VIPS at the market, which is $11.92.
Then Sell to Open (1) July 28th-$12 call for every 100 shares you buy.
These are the calls that expire next Friday and they can be sold for $.35. If the calls are assigned next Friday, the return will be about 3.5% for just over a week.
Limit the trade to 500 shares or a 5.9% allocation based on the tracking portfolio.