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 would like to make a suggestion on a short term put debit spread. I don't suggest you trade the front week or next week's options either.
Instead, I am going to suggest you go out to the October 25th series.
The stock I am going to suggest is NFLX.
And I am going to suggest a put debit spread.
Here is the trade:
Buy to Open October 25th - $265 put for $11.50
Sell to Open October 25th - $260 put for $8.90
The net debit will be about $2.50 per spread.
Based on the nominal portfolio, limit the position to a 4 lot or 1% of the total portfolio.
The potential return is 100%.
