I would like to make a suggestion on a debit spread and the stock is Zendesk, Inc. (ZEN).

ZEN is trading around $88.15 as I write this.

My suggestion is to trade the August monthly options that expire on August 21st.

This gives the stock about two weeks to make a move.

Here is how you open the position:

Buy to Open August 21st - $87.50 Call for $6.10

Sell to Open August 21st - $92.50 Call for $4.00

The net debit will be $2.10 per spread.

Based on the tracking portfolio, I suggest you limit the trade to a 6 lot or 1.2% of the portfolio.

The maximum gain on a six lot would be $1,450.

I mentioned this morning that I would be looking to close the QQQ debit spread we placed yesterday.

There are two main reasons for this.

The first is that I did not suggest you buy a lot of time.

And the second is that the QQQ is flirting with the upper band on the daily chart.

Also, the QQQ is trading around $262 as I write this, which is around the price objective I was looking for.

Here is how you close the position:

Sell to Close July 24th - $257 Call for $8.60

Buy to Close July 24th - $263 Call for $5.00

The net credit will be $3.60 per spread.

The net is a profit of $1.60 per spread or $640 if you traded the suggested 4 lot.

The overnight return is 80%.

The QQQ is trading around 257 as I write this.

I am going to suggest a short term debit spread on the index based on the fact it was so oversold.

I am going to suggest you trade next week's expiration, which is the 24th.

Here is how you close the position:

Buy to Open July 24th - $257 Call for $6.30

Sell to Close July 24th - $263 Call for $4.30

The net debit will be $2.00 per spread.

The suggestion is based on the fact that I expect a short term bounce in the QQQ.

Because I am suggesting short-dated options, limit the trade to a four lot or 0.8% of the tracking portfolio.

The maximum gain on a four lot would be $1,200.

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