Today, I am going to suggest one more position.  And it will be a short term hedge position with a bearish bias.

The stock is Qorvo, Inc. (QRVO).

QRVO is trading around $121 as I write this.

The idea will be similar to the recent CRUS alert we just closed out.

I am going to suggest a one half hedge position on the stock.

Here is the suggestion:

Buy to Open (1) October 16th - $125 Call @ $5.70

Buy to Open (2) October 16th - $120 Puts @ $6.50

Each position will cost $1,870.

Based on the nominal portfolio, I suggest you limit this trade to a 1 lot, which will cost $1,870 or 1.8% of the tracking portfolio.

This will result in you buying 2 of the $120 puts and 1 of the 125 calls.

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a 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. Read more

Mad Day Trader - Trade Alert  - September 3, 2020 (CRUS)

It appears that the profit-taking I mentioned is starting to happen.

As a result, I do want to suggest a short term hedge position.

The stock to trade is Cirrus Logic, Inc. (CRUS).  As I write this, CRUS is trading just under $60. It is trading at $59.59.

I am going to suggest a one half hedge position on the stock.

Here is the suggestion:

Buy to Open (1) September 18 - $60 Call @ $2.10

Buy to Open (2) September 18 - $60 Puts @ $2.20

Each position will cost $650.

Based on the nominal portfolio, I suggest you limit this trade to a 2 lot, which will cost $1,300 or 1.3% of the tracking portfolio.

This will result you buying 2 of the $60 calls and 4 of the 60 puts.

The trade uses short term options, so I am looking for a follow through on the move. 

CERN has made a jump today and I am going to suggest you book the profit on the position.

This is mainly because of a technical condition.  It is right up against the upper band band on the 60-minute chart and it seems to be a great place to book the profit.

Here is how you close the position:

Sell to Close September 19th - $72.50 Call for $3.60

Buy to Close September 19st - $77.70 Call for  $.70

The net credit will be $2.90 per spread.  When the trade was initiated, the debit was $1.35 per spread, so this results in a profit of $1.55 per spread.

If you traded the suggested 8 lot, the overall cash return will be $1,240 on an investment of $1,080.

This works out to a return of 115% for about 2 weeks.