Dec 2019: AMZN $1895- $1865 Bear Put Spread
Trade Selection Criteria
Overall market movement
Overall market has been on a tear for weeks. AMZN shot up 9.5% in 1 day on news that it had a great shopping season beating previous year’s records. 9.5% on a single day without an even like earnings is extreme. On the following day we see a nice DOJI candle representing indecision between buyers and sellers. A huge up/down move followed by a DOJI is usuall a great indicator for a mean reversion. Read about DOJI here
No Earnings or Significant News
Earnings are behind us and the next earnings will be after our expiration cycle. Earnings scheduled for 01/30/2020
Bollinger Bands outside Keltner Channels
Bollinger Bands are clearly outside Keltner Channels. Perfect time for a mean reversion trade
RSI is in over-extended territory, however not showing any clear signs of trend reversal.
ADX is weak and indicates that there is no trend in place.
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Ending Account Balance