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.
Today, I would like to make a suggestion on a company that I suggested about a month ago.
That stock is GrubHub, Inc. (GRUB)
GRUB is trading around $64.46 as I write this.
I am going to suggest a short term option spread.
Here is the trade:
Buy to Open June 7th - $64.50 call for $2.00
Sell to Open June 7th - $69.50 call for $0.40
The net debit will be $1.60 per spread with a maximum gain of $3.40 per spread.
Because I am suggesting a short-dated spread, limit the total buy in to no more than 5 spreads or a risk of 0.8% of the nominal portfolio.
