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.
I mentioned this morning that I would be looking to close the call side of the DVA trade.
As you know, DVA got a sharp bounce off their earnings yesterday.
Quite frankly, this was a move that no one could anticipate, but this is what can happen with earnings.
I am going to suggest you close the calls.
Here is how you do it.
Sell to close (3) November 15th - $57.70 call for $12.60
Buy to close (3) November 8th - $61.50 call for $8.10
Keep the long $55 puts that expire next week in place.
Even if the puts expire worthless, there will be a small profit on the overall position.
Considering this trade was structured with a bearish bias, the outcome is tolerable.
