October 6, 2017 - MDT Alert (KR)

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 Kroger Co. (KR).

KR has been in a prolonged sell off and is now sitting at it's 200 ema on the weekly chart.? This level also happens to be the lower extreme bollinger band on the daily chart.

The fundamental reason to get long KR is that they recently announced a $500 Million dollar buyback.

I am going to suggest a longer term debit spread.

My suggestion today is as follows:

Buy to Open January $30 Call for $1.30

Sell to Open January $33.75 Call for $.25.

The net debit will be just over $1.00, with a maximum return of $3.75.

Limit the trade to a 1.5% allocation or a 15 lot based on the nominal portfolio.

Dollar risk is about $1,500 with a return of over $4,000.

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