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.
Last time I suggested a trade on FCX, it was a short term debit spread which we closed out for a one day profit.
This time I would like to suggest a different structure.
And that will be a weekly covered call.
FCX is trading at 12.74 as I write this.
My suggestion is to buy FCX at the market.
Then Sell to Open (1) March 15th - $13 call for every 100 shares you buy.
These are the calls that expire a week from Friday and they can be sold for $0.24.
If they are assigned next Friday, the return will be a shade under 4% for a week and one half.
Based on the nominal portfolio, I am going to suggest you limit the buy in to 400 shares or 5% of the total portfolio.
