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 am going to suggest you trade the front week options.
The stock is WDC. Here is the trade.
Buy to Open October 25th - $58.50 put at $0.95
Sell to Open October 25th - $56.00 put at $0.27
Each spread will cost $0.68 or $68 in total.
Because I am suggesting the front week options, I suggest you limit the trade to a 8 lot or about 5% of the nominal portfolio.
The maximum value of the spread will $182 per spread, if WDC drops under $56 by Friday.
Maximum return will be 268%.