July 29, 2019 - MDT Alert (CHKP)

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.

Today, I would like to make a suggestion on a stock that reported the 24th. And they reported a small beat.

That stock is Check Point Software Technologies, LTD. (CHKP).

CHKP is trading around $111 as I write this.

I am going to suggest a debit spread. CHKP does not have weeklies, so I am going to suggest you trade the August monthly options.

Here is the trade:

Buy to Open August 16th - $110 call for $2.70

Sell to Open August 16th - $115 call for $0.60

The next debit will be $2.10 per spread with a maximum gain of $2.90 per spread or 140% gain.

Based on the nominal portfolio, I suggest you limit this trade to 5 spreads or a risk of about 1% of the portfolio.

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