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 Salesforce.com, Inc. (CRM).
CRM does not report until the 20th of this month, so we do not need to be concerned with an earnings event this week.
CRM is trading around $157 as I write this.
I am going to suggest a weekly debit spread using the front week options.
Here is the trade ...
Buy to Open November 8th - $157.50 call for $1.86
Sell to Open November 8th - $160.00 call for $0.86
The net debit will be $1.00 per spread.
If CRM moves above $160 by Friday, the maximum value of the spread will be $2.50 per spread.
The return would be 150% at the maximum value.
Because I am suggesting a short term weekly trade, I suggest limiting the position size to a 6 lot or 0.6% of the nominal portfolio.