While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to 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 stock that reported and that stock is PulteGroup, Inc. (PHM).
PHM reported and had a beat and is trading about 8% higher today.
And on a day when the S & P 500 was down as much as 65 points, this is a good sign.
The other reason I like PHM is that it is trading under the lower extreme bollinger band. If this is not the absolute bottom, it is certainly close.
Finally, PHM does have weekly options which is a feature I like as well.
Here is the suggestion today.
Buy PHM at the market which is $22.49.
Then Sell to Open (1) November 2nd - $23 call for every 100 shares you buy.
These are the calls that expire next week.
The November 2nd - $23 calls can be sold for $.55 and I suggest you collect the premium.
If the calls are assigned next week, the return will be 2.5% for a week and one half.
Based on the nominal portfolio, I will use a 300 share buying for a risk of 6.7%.
