April 30, 2018 - MDT Alert (TEVA)

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.

TEVA reports this Thursday before the open. And today it is trading almost 60 cents to the upside. It is trading around $18.41 as I write this.

I would like to use this as an opportunity to sell weekly call options.

The front week call options carry an implied volatility of over 90%, which means they are expensive.

So, my suggestion today is the Sell to Open (1) May 4th - $18.50 call for every 100 shares you own.

The May 4th - $18.50 calls are quoted at $.73 to $.77. You should be able to sell them for 75 cents.

Assuming a sale at 75 cents, it will mean you will collect $1.10 per share in call premium against the position.

The sale offers 75 cents of downside protection.

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