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APR 2021: STZ $220 – $225 Bull Call Spread

Stock

STZ

Trade Structure

$220- $225 Call Spread

Trade Date

4/8/2021

Price Paid

$250

Expiration Days

05/07/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

We just closed a profitable 215 -220 Call Spread on STZ just 2 days ago to avoid earnings. And here we are again with a new one. Despite an earnings beat, STZ gapped down due to lowered guidance for the next quarter. You can see that STZ has good support at approx. 219 - 220 level, which is where I entered this trade. I was also trying for 217.5 - 222.5 spread on Thursday but couldn’t get filled. STZ pulled back further on Friday and I believe some of our members did get the lower spread. Irrespective of that, STZ ended up closing at $224.15. All we are asking for is that it stays at or above $225 and we will make our money on this trade. The markets are looking very strong right now and it appears that Nasdaq is going for an all time high next week. If this is the case, you should see STZ continue to move up.

Trade Selection Criteria

Overall market movement

N/A – This is a post-earnings trade. The individual stock’s movement is more relevant for these trades compared to the overall market.

No Earnings or Significant News

This is a post-earnings trade. STZ just announced earnings so we are safe.

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

Trade was taken based on support/resistance levels
N/A

ADX Analysis

Trade was taken based on support/resistance levels
N/A

Trade Analysis

A gorgeous post earnings trade. We were able to close it in a little over 2 weeks for 94% ROI. This was also the first trade for my 13 year old daughter's 25K Challenge which I started last week. A great start!

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$10,900

Ending Account Balance

$11,500

To follow along the strategies we use in the $25K challenge, we recommend that you get the strategy book which explains the whys and wherefores of our method. Get it here=> https://amzn.to/2MUOCE5

2 Comments

  1. Jon Cohen

    Isn’t this the opposite of how you describe post-earnings trades in your book? My interpretation is that you observe the initial movement, which in this case was a gap down – wait for the pullback (move up) then buy respecting the initial movement (down)

    Reply
    • Nishant

      We take many types of trades in our private group. I have tried my best to explain as many of them in my book, but it is not possible to cover each and every scenario. When the 3rd edition comes out, I will expand on many more examples.

      Reply

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