Feb 2020: TSLA $690- $700 Bull Call Spread

Stock

TSLA

Trade Structure

$690 - $700 Bull Call Spread

Trade Date

02/06/2020

Expiration Days

03/20/2020

Trade Rationale

TSLA shot up 40% in 2 days and was the talk of the town for the last few days. Since, I missed the initial up-move, I was waiting for a pullback. And we got a nice pullback today morning. I was able to get in and buy a $690-$700 Bull Call Spread. I am risking $500 to make $500 on this trade.

Trade Selection Criteria

Overall market movement

The market just recovered from the corona virus scare. However, this was not a decision making factor for this trade.

No Earnings or Significant News

Earnings are behind us and were announced on 1/29/2020

Bollinger Bands outside Keltner Channels

This is not a normal trade by any means. But yes, the Bollinger Bands are definitely outside the Keltner Channels, which is evident by the crazy volatile moves this stock has experienced in the last 2 days.

RSI Analysis

N/A – With the kind of wild moves TSLA has experienced in the last two days, RSI is not a contributing factor for this trade

ADX Analysis

NA – With the kind of wild moves TSLA has experienced in the last two days, ADX is not a contributing factor for this trade’s decision.

Trade Analysis

This trade worked out as expected. TSLA shot up 40% in 3 days for whatever reason. It doesn't matter to us. The hind sight analysts at CNBC will call it short squeeze or whatever else. But I was waiting for a pullback after that crazy movement. And the stock did pull back all the way back to the trend line (i.e the support), and that is where I was able to get in with my trade. I was able to double my money in 14 days on this trade.

Trade Outcome

WINNER

Profit/Loss

$467

Beginning Account Balance

$19,350

Ending Account Balance

$21,250

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