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 we traded before. That stock is Valeant Pharmaceuticals, Ltd. Inc. (VRX).
Since selling off hard, VRX dropped to a low of around $11 last November and has been moving up since then.
It has weekly options, which is a feature I like.
My suggestion today is to buy VRX at the market, which is $16.40.
Then Sell to Open (1) April 6th - $16.50 call for every 100 shares you buy. The April 6th - $16.50 can be sold for $.50.
We could sell the $17 call and collect slightly less, but I would rather be conservative here and sell the strike closer to the money.
These calls expire in a week and one half.
For the tracking portfolio, I am going to assume you buy 400 shares or 6.5% of the tracking portfolio.