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 believe we will get another upleg in this run. Especially now that the S & P 500 has crossed into an uptrend on its 60 minute chart.
I am going to suggest a short term debit spread. And I am going to suggest it on Mastercard (MA).
MA is trading around $274.00 as I write this.
It has sold off the past two days and is now sitting right at the lower band on its short term 10 minute chart.
Also, based on my projections, it is oversold.
My suggestion is this:
Buy to Open September 20th - $272.50 Call for $5.30
Sell to Open the September 20th - $277.50 Call for $3.05
The net debit will be $2.25 per spread, with a maximum value of $5.00 per spread, assuming that MA trades above $277.50 by next Friday.
If MA breaks under the lower band, I will suggest you close the position so the risk should be relatively small.
Based on the nominal portfolio, I assume a total of 3 spreads or just under 0.7% of the portfolio
