July 11, 2017 - MDT Alert (SBH)

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 I believe has bottomed. That company is Sally Beauty Holdings Inc. (SBH).

SBH is trading around $19.20 as I write this.

SBH does not have weekly options, only monthlies and the July expiration is next Friday.

They do report at the beginning of August, so I am going to suggest you sell the front month calls.

My suggestion is to buy SBH at the market, which is $19.20.

Then Sell to Open (1) July $20 Call for every 100 shares you buy. The July $20 Call can be sold for $.30.

Limit the trade to 300 share or 5.7% of the nominal portfolio.

If the calls are assigned next Friday, the return will be 5.7% for about one and half weeks.

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.