Jan 2020: AAPL $320- $325 Bull Call Spread

Stock

AAPL

Trade Structure

$320- $325 Bull Call Spread

Trade Date

01/30/2020

Expiration Days

02/21/2020

Trade Rationale

As mentioned in my book, I don't participate in earnings because they are binary events with unpredictable outcomes. However, I have my own way of participating in earnings. Instead of trading before earnings, I wait for earnings to be over. In AAPL example, AAPL beat analysts and had a great earnings announcement. The stock initially rocketed to $328, but pulled back today to $320. I used this opportunity to buy a $320 - $325 Bull Call Spread. The rationale being that the stock will go back up towards and continue keep going up due to positive earnings. The only thing different I would have done about this trade was give it more time to work in my favor. Notice that I chose Feb 21st expiration. Usually, I prefer 30 days or more. Anyway, we will see how it plays out.

Trade Selection Criteria

Overall market movement

DOW dropped 200 points today due to the ongoing corona virus scare. Because of this all the stocks (even the ones which announced great earnings got pulled back along with the market.

No Earnings or Significant News

Earnings are behind us and were announced on 1/28

Bollinger Bands outside Keltner Channels

N/A – This is not a mean reversion trade but is a bet on the stock continuing its upward momentum. 

N/A

RSI Analysis

N/A – This is not a mean reversion trade and we don’t use RSI for these post earnings trades.

N/A

ADX Analysis

N/A – This is not a mean reversion trade and we don’t use our regular indicators for these post earnings trades

N/A

Trade Analysis

Analysis will be updated, when we close the Trade

Trade Outcome

Pending

Profit/Loss

$N/A

Beginning Account Balance

$16,300

Ending Account Balance

$

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