November 15, 2016 - MDT Alert (CERN)
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 company similar to the KR suggestion in that they just announced a $500 Million buyback program.
And like KR, it has been tremendously oversold.
The company is Cerner Corp. (CERN).
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Also, the out of the money call options have a lot of open interest, but the options closer to the money
are relatively thin.
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Because of this, I am going to suggest a structure similar to the KR suggestion.
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The suggestion is this ...
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Buy to Open January $50 call for $1.65
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Sell to Open January $55 call for $.40
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The net debit is $1.25, with a maximum return of $3.75or a three to one return if CERN moves above $55.
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For the nominal tracking portfolio, I will assume a 10 lot or 1.25% investment based on the total portfolio.
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