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 a stock that does not report until the end of this month. And it appears to be down at a level of support.
That stock is Dollar Tree, Inc. (DLTR).
DLTR is trading around $102.97 as I write this.
DLTR does have weekly options and I am going to suggest you trade the August 16th options. This will give us a bit of time to see if it moves in our direction.
And DLTR does have $1 increment options.
I am going to suggest a debit spread.
Here is the trade:
Buy to Open August 16th - $102 call for $2.35
Sell to Open August 16th - $107 call for $0.40
The next debit will be $1.95 per spread with a maximum gain of $3.05 per spread or a 300% gain.
Based on the nominal portfolio, I suggest you limit this trade to 5 spreads or a risk of about 1% of the portfolio.
