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 would like to make a suggestion on a stock that?has weekly options.
That stock is Pandora Media, Inc. (P).? Pandora gapped?up about a week ago on some positive news and has?come back to fill the gap.
My suggestion is to buy P at the market, which is $13.38?as I write this.
Then Sell to Open (1) January 8th – $14 call for every?100 share you buy.
The January 8th – $14 calls are quoted at $.34 to $.39.
Try and sell them for $.35.
Use a 1/2 allocation on this position, which for tracking?purposes would be 400 shares rounded up to an?even lot.
If the calls are assigned next Friday, the return will be?7.2% for about a week and one half.