November 1, 2018 - MDT Alert (KMI)

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 stock we have traded in the past.

That stock is Kinder Morgan Inc. (KMI).

KMI is trading around $17.13 as I write this. And I am not going to suggest you buy the stock, instead I will recommend a different strategy.

And I don't want to buy a lot of time with this trade. The trade is based on expecting a move in the short term, therefore, I will not be going to suggest a long term position.

My suggestion today is a one-half hedge position. This way if KMI does move higher, we offset some of the loss on the long puts.

My suggestion today is to ...

Buy to Open (1) November 23rd - $17.50 call @ $.20

Buy to Open (2) November 23rd - $17.00 put @ $.40

Each position in total will be a debit of $1.00.

Limit the trade to a 10 lot. Based on the fills above, a 10 lot position will cost $1,000 or 1% of the nominal portfolio.

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