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Aug 2020: ROKU $150 – $155 Bull Call Spread

Stock

ROKU

Trade Structure

$150- $155 Bull Call Spread

Trade Date

08/06/2020

Price Paid

$250

Expiration Days

9/4/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

This is another post-earnings trade which is slightly different from my usual post-earnings trades. Sometimes, a stock will have a run-up before earnings for no reason. Leaked news? Insider Trading? It is anyone's guess. What I am looking for is pullbacks to previously established support after earnings. That is exactly what happened with ROKU. Earnings weren't as bad as expected and ROKU still pulled back nicely to a previous support at $150. This gave us an opportunity to get in on a $150-$155 Bull Call Spread.

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 8/5

N/A

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

This trade worked out as expected and we were able to close it on 9/1 for our full profit target.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$5,300

Ending Account Balance

$$5,650

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

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