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 that has had a significant sell off this year and appears to be turning.
That stock is DineEquity, Inc. (DIN).
DIN traded as high as $84 in November of 2016 and now trades around $40. It has been cut in half.
What I am going to suggest is purchasing calls that expire in December.
The December $40 call is quoted at $2.30 to $2.60, with the last trade at $2.40.
Buy to Open The December $40 call at $2.40.
Limit the trade to a 4 lot or a 1% allocation of the nominal portfolio. This is a small risk based on limiting the entry size.