June 1, 2016 - MDT Alert (DNR)

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 lower price oil stock.

That stock is Denbury Resources, Inc. (DNR).

DNR is trading around $4.20 as I? write this and has just moved into an uptrend on the daily chart.? For that matter, the XLE did as well, which tells me there should be some more upside to this run.

DNR does not have weekly options, but the June monthly option is only two and one half weeks until expiration.

Because of the stock price, the premium is not that high.

Based on the stock price of $4.20, my suggestion is to buy 1,500 shares, which works out to 6.3% of the nominal portfolio.

Then Sell to Open (1) June $4.50 call for every 100 shares you buy.

You should be able to sell them for $.18.

If the calls are assigned on June 17th, the return will be about 9% for less than three weeks.

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