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FEB 2021: REGN $450- $455 Bull Call Spread

Stock

REGN

Trade Structure

$450- $455 Call Spread

Trade Date

2/23/2021

Price Paid

$250

Expiration Days

04/01/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

REGN has been stuck in a downward channel for some time and I have been waiting for while to put on a trade on this. The problem is when do you know the downward momentum has lost steam. In this case, I had to rely on RSI dropping below 30 indicating REGN was in oversold territory. And then RSI popping out of it which usually indicates a trend reversal. In addition DI- is now flattening out, providing more support to my directional bias.

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 flattening out, giving us further conviction about this trade.

Trade Analysis

Although, REGN mostly traded sideways during our trade window, we still ended up making our full 94% profit target on this trade. Another reason why I like spreads so much. If you had bought plain Calls here, you would have lost all your money due to Time Decay.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$13,500

Ending Account Balance

$10,100

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

3 Comments

  1. Mark

    Can I ask how your beginning balance is higher than ending account balance

    Reply
    • Nishant

      My account balance is affected by all positions that I have open in an expiration cycle. All the positions add up to it. In this case, FEB and MARCH were affected by the 12% correction in Nasdaq. As I document more trades, you will see that I had some losers in March due to the correction.

      Reply
  2. Andy Feerst

    Nishant-
    I just finished your wonderful book.
    I will re-read it on the flight home
    Thanks so much for putting this all together.
    I will be signing up for the full service!

    Reply

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