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.
Today, I would like to make a suggestion on at stock that reported and gapped down off their earnings.
That stock is Foot Locker, Inc. (FL).
Based on the bearish gap, I believe the stock will see another leg lower and today's alert seeks to take advantage of that.
FL is trading around $35.50 as I write this and here is the suggestion.
Buy to Open September $35.50 Put for $0.90
Sell to Open September $33 Put for $0.30
The next debit is $60 per spread with a maximum value of $2,500 if FL drops under $33.
Based on the nominal portfolio, limit the trade to a 10 lot or about
0.6% of the portfolio.
