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.
The sector is the oil refiners and the company I like is Holly Frontier Corp. (HFC).
HFC traded as high as $53 a scant year ago and now trades under $25.
I do believe it is bottoming, but there is no guarantee it can't head lower.
Because of that, I will recommend a debit spread.
And because HFC does have weekly options, I will suggest selling short dated options against the longer term calls.
So, my suggestion today is this:
Buy to Open September $23 Call @ $2.30
Sell to Open July 15th $24.50 Call @ $.40
The net will be $1.90 per spread.
Based on the nominal portfolio, limit the trade to a 10 lot or a total of $1,900.
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