Feb 2020: AMZN $2000- $2030 Bull Call Spread

Stock

AMZN

Trade Structure

$2000 - $2030 Bull Call Spread

Trade Date

02/03/2020

Expiration Days

03/20/2020

Trade Rationale

After announcing blow out earnings and beating analyst estimates, AMZN gapped up to $2055 the next day. However, due to the ongoing coronavirus scare, DOW tanked 700 points the very next day, taking many stocks down with it including AMZN. I used this opportunity to buy a $2000 - $2030 Bull Call Spread. I am risking $1495 to make $1495 here. Also, note that I am giving the market 45 days to recover from the coronavirus scare.

Trade Selection Criteria

Overall market movement

DOW dropped a crazy 700 points due to the ongoing corona virus scare, taking down many stocks with it including AMZN. 

No Earnings or Significant News

Earnings are behind us and the next earnings will be after our expiration cycle. 

Bollinger Bands outside Keltner Channels

This is a post-earnings trade, so my usual indicators don’t apply here.

N/A

RSI Analysis

This is a post-earnings trade, so my usual indicators don’t apply here.

N/A

ADX Analysis

This is a post-earnings trade, so my usual indicators don’t apply here.

N/A

Trade Analysis

As noted earlier, I put on this trade after a pullback after the initial earnings euphoria. My bet on the stock continuing upward did play out in my favor. I made a handsome profit in just 19 days almost doubling my money in such a short period.

Trade Outcome

WINNER

Profit/Loss

$1,225

Beginning Account Balance

$16,200

Ending Account Balance

$$21,400

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