November 26, 2018 - MDT Alert (FB)

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, we are getting a decent dead cat bounce in the markets. As I write this, the S & P 500 is trading about 37 points higher.

I would like to suggest a trade on a former market leader.

That stock is Facebook (FB).

FB peaked at about $219 per share in July. And a few days back, it hit a low of $127.

It is trading back above the lower band on the daily chart and this to me suggests the stock should bounce.

My suggestion today is this:

Buy to Open February $135 Call for $10.60

Sell to Open February $145 Call for $5.90

The net debit will be $4.70 per spread with a maximum return of $5.30 per spread.

Based on the nominal portfolio, limit the position size to a four lot.

Based on a four lot, the total cost will be $1,880 or just under 2% of the portfolio.

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.