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 stock that was really beaten down after their last earnings report.
That stock is Symantec Corp. (SYMC).
Pre earnings, SYMC was trading around $29 per share. It had a massive bearish gap and traded as low as $18.85 after reporting.
There are few reasons I am suggesting SYMC.
First off, it does have weekly options, which I like. And they carry a decent premium, which I like even better.
And second, it is trading under the lower band on its daily chart. This tells me that the stock is tremendously oversold. Of course, it could go lower, but I do believe that risk is small at the moment.
My suggestion is to buy SYMC at the market, which is $20.99.
Then Sell to Open (1) June 8th - $21 Call for every 100 shares you buy. These are the calls that expire next Friday.
The June 8th - $21 call can be sold for $1.40.
We could sell the $22 call and collect a decent premium, but I would rather be a bit more conservative. If they are assigned, the return will be 6.6% for a week of holding the stock.
Based on the nominal portfolio, I suggest limiting this position to 300 shares or 6.3% of the nominal portfolio.