October 28, 2015 - MDT

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.

I'm banking on the fact that I believe a short term bottom is in for oil.

Based on that, I am going to make a suggestion on an oil company.

The company is Apache Corp. (APA).

APA is trading around $45.85 as I write this.

I like the fact that APA has weekly options.

So, here is my suggestion.

Buy to Open the April 2016 $45 calls.? They are being quoted at $4.95 to $5.30, with the last trade at $5.25.

Based on a 2% allocation to this position, for tracking purposes, I will assume you buy 4 of them.

Try and buy them for $5.00.

Once you are filled, then Sell to Open (1) November 6th-$48 calls against your long position.

For tracking purposes, I will sell 4 of these.

The November 6th-$48 calls are quoted at $.42 to $.52.
Try and sell them for $.45.

Assuming you sell them for $.45, you will have recouped almost 10% of the cost of the long position.

As a summary, here is the trade:

Buy to Open April 2015-$45 calls for $5.00

Sell to Open November 6th - $48 calls for $.45

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