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.
If you followed the alert from yesterday on DIN, you would be long the December $40 call.
DIN popped up this morning and is a bit overbought.
I am not going suggest you close the position, instead I am going to suggest you turn this into a debit spread.
This is how to do it.
Sell to Open (1) December $45 call for every December $40 calls you own.
You should be able to sell them for $1.15.
This reduces the cost of the December $40 calls to $1.25 and still gives us the potential to earn a 400% return.