Aug 2020: ANET $210 – $220 Bull Call Spread

Stock

ANET

Trade Structure

$210- $220 Bull Call Spread

Trade Date

08/13/2020

Price Paid

$500

Expiration Days

9/18/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

This is an interesting one. And experience helps with these kind of trades too. One of our members pinged me about a potential trade on ANET on 8/10. On that date, it had this huge first red candle and it appeared that the stock could be ready for a mean reversion trade. ANET is not a stock that I trade, so this was a tricky one. Practice does make perfect and I am sorry to throw the "I didn't feel the trade" bomb at you. I told our member that the red candle seemed so strong that we should wait until we see at least some signs of the downward movement slowing down. I had not expected that it would go down all the way to do $210 frankly. But $210ish is when I saw the first signs of the downward momentum losing steam. And that is when I posted the trade alert.

Trade Selection Criteria

Overall market movement

This is a post-earnings trade. My usual mean reversion parameters don’t apply here. These trades are based on Support/Resistance only

N/A

No Earnings or Significant News

Earnings are behind us and were announced on 08/04

Bollinger Bands outside Keltner Channels

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

RSI Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

ADX Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

Trade Analysis

Analysis will be updated when we close this trade.

Trade Outcome

PENDING

Profit/Loss

$N/A

Beginning Account Balance

$6,200

Ending Account Balance

$Pending

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