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 we traded in the past.
That stock is UNIT.
UNIT is a rather unusual stock in that it pays a decent dividend and does have high option premiums.
Quite frankly, I cannot find many companies that fit this profile.
The only negative is that it does not have weekly options.
But with the October expiration next Friday, the monthly options are virtually weekly options.
My suggestion is to buy UNIT at the market, which is $19.35.
Then Sell to Open (1) October $20 call for every 100 shares you buy.
The October $20 calls are quoted at $.40 to $.50, with the last sale at $.45.
Try to sell them for $.45.
Assuming you sell the calls for $.40 and they are assigned next Friday, the return will be 5.7% for and a week and one half.
Based in the tracking portfolio, limit the trade to 300 share or 5.8% of the portfolio.
