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 want to make one more suggestion. This will be a different structure than the covered call I suggested earlier.
The stock is Chevron Corp (CVX).
CVX is trading around $150 as I write this.
My suggestion will be a debit spread.
Here is the set up:
Buy to Open January 18th $105 Call for $1.10
Sell to Open January 18th $108 Call for $0.25
The net debit will be $0.85 per spread. And the total return if CVX moves above to $108 strike price will be $2.15.
Based on the nominal portfolio, limit the trade to a 10 lot or $850.
