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 a stock beaten down in the materials sector.
That stock is US Steel (X).? X is trading right around $14 as I write this.
X has sold off rather substantially and as a result I suggest you use a 1/2 allocation.
If it drops futher, I would add the other 1/2.
The other factor I like about X is that it has weekly options.
I am going to suggest you purchase X at the market, which is $14.? Based on a 1/2 allocation, you could buy 357 share, so I suggest you round it up to 400 shares.
Then Sell to Open (1) September 25th $14 call for every 100 shares you buy.?
The September 25th $14 call are quoted at $.53 to $.55.
Try and sell them for $.54.
If the calls are assigned next week, the return will be 3.8% for about a week and one half.