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FEB 2021: HD $255 – $260 Bull Call Spread

Stock

HD

Trade Structure

$255 - $260 Call Spread

Trade Date

2/24/2021

Price Paid

$250

Expiration Days

04/01/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

HD slightly beat earnings. Nothing special to write home about. But got punished anyway. The stock fell from $283 to $250 for no real reason. We are already seeing a green candle and just like with many other trades, things should snap back. All we are asking for is a slight recovery in the market next week.

Trade Selection Criteria

Overall market movement

N/A this is a post earnings trade. The individual stock’s price action is more important for these trades.

N/A

No Earnings or Significant News

This is a post earnings trade. Earnings were announced a few days ago.

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

Although, this is a post earnings trade, RSI is now beginning to show some signs of a recovery

ADX Analysis

DI- is pointing down, giving us further conviction about this trade.

Trade Analysis

HD got dragged down further all the way down to $246 giving many of our members way better entry points than my own trade. But it quickly turned around to make a dramatic recovery. March was a brutal month for Nasdaq, and all these other trades that we took in stocks like HD, REGN, LOW etc gave us a helping hand in handling the correction.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$13,400

Ending Account Balance

$10,250

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

2 Comments

  1. Jonathan Cohen

    I have a question re: scaling. I believe you said that you prefer to have multiple small accounts versus a large account. When you put on trades, do you duplicate the trades across your small accounts? For example, if you put on 4 trades for the month and have 3 accounts? Thanks in advance. I thoroughly enjoyed your book!

    Reply
    • Nishant

      I don’t duplicate trades. I cycle between my accounts. So, I will take trades in 1 account, and if my allocation for that week is taken up, I will move on to the next account and so on. You can use this calculator to figure out allocations: https://25koptionschallenge.com/trade-allocation-calc/

      Reply

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