February 26, 2018 - MDT Alert (VIPS)

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 company that we traded a few years ago. That company is Vipshop Holdings Ltd. (VIPS).

VIPS reported the middle of this month, so you don't have to worry about a surprise in that regard.

VIPS is trading around $17.19 as I write this.?? And next week's $17.50 call carries a premium of $1.60, which I find too attractive to pass up.

My suggestion is to buy VIPS at the market, which is $17.19.

Then Sell to Open (1) March 9th - $17.50 call for every 100 shares you buy.

The March 9th-$17.50 calls are quoted at $1.60 to $1.75.?? Try and sell them for $1.65.?? If you don't get filled at $1.65, you can lower your offer.?? Even if you end up selling the calls for $1.20, you will still earn close to 9% for a week and one half.

These are the calls that expire a week from this Friday.

Limit the stock purchase to 400 shares, which would a 6.9% allocation based on the nominal portfolio.

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