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.
Salesforce.com, Inc. has already reported for the last quarter so there is no expected news announcement to content with this week.
I am going to suggest a front week debit spread.
Here is the trade:
Buy to Open June 28th - $155 call for $3.20
Sell to Open June 28th - $160 call for $1.00
The net debit will be $2.20 per or $220.
Based on the nominal portfolio, limit with trade to a 4 lot, or about 0.9% of the portfolio.
The maximum gain will be $2.80 per spread.
I am also going to suggest a partial hedge on the position in case we are early on the entry.
You do this by Buying to Open .5 - June 28th - 152.50 puts
at $0.70.
In other words, if you buy 4 of the call spreads, you hedge with 2 long puts.
Any questions, please feel free to email me.
