August 23, 2019 - MDT Alert (FDX)

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.

Time to close out the FDX spread. Because of the overall sell-off, FDX may continue to drop, but the longer we hold the position, the more the time premium will erode.

This is a trade-off when you hold options that expire the same day.

I would rather capture more time.

Here is how you do it:

Sell to Close August 23rd - $155 Put for $1.70

Buy to Close the August 23rd - $152.50 Put for $0.40

The net credit will be is $70 per spread.

Based on the suggested 10 lot, the sale will net $700 or just over a 100% return for a few days.

If you do not enter the closing position as a spread, be sure you close the short $152.50 put.

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.