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JAN 2021: BLK $730 – $740 Bull Call Spread

Stock

BLK

Trade Structure

$730- $740 Call Spread

Trade Date

1/15/2020

Price Paid

$500

Expiration Days

02/19/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

We are smack in the middle of Earnings Seasons, which means most of the trades for the next month will be post earnings trades. BLK kicks off our first post-earnings trade. Coming back to our trade, I have lost count of how many times this post-earnings trade setup shows up over and over again. This is the exact setup - The stock has a nice run-up before even earnings are announced. Don’t ask me why it happens. Leaked news, insider trading. Who knows why? What we do know is that when this setup happens, more often than not you will see profit taking immediately after earnings are announced even when the earnings were good. Our goal is to take a trade, when the stock falls to the levels that it was trading before the pre-earnings run up started. The stock doesn’t always fall down to that level and in those cases, we skip those trades. In this case, the stock did fall to pre-earnings levels. There is also clear support at $720, so the stock might fall to $720 before turning back up. If this happens, you will get more opportunities to enter this trade at lower strike prices. This is also a reminder that the trading style which I teach involves taking it slow and steady and fitting it in with your life in general. There is no panic, greed or sudden windfall profits in my trading style. It is a slow paced method with clear rules in place. Also, I encourage you to read my trade alerts, consult your own charts and develop a feel if the trade sounds right to you before jumping in. I post a lot of trades and I want you to develop your own judgement about when a trade feels right. More often than not, waiting for a trade will give you better entry points at lower strike prices.

Trade Selection Criteria

Overall market movement

N/A Post-earnings trades are very different. We rely on the stock’s price movement rather than the overall Market.

No Earnings or Significant News

This is a post earnings trades. We find these trade setups right after earnings are announced.

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

N/A Post-earnings trades are done based on Support/Resistance as all other indicators are lagging indicators and they take time to catch up to the sudden knee jerk Earnings reaction.

ADX Analysis

N/A Post-earnings trades are done based on Support/Resistance as all other indicators are lagging indicators and they take time to catch up to the sudden knee jerk Earnings reaction.

Trade Analysis

The markets have been in a pullback for last 10 days. BLK got trapped in a side ways consolidation pattern right after putting on this trade. It briefly spiked up for a day to 730ish in the last few days of the expiration cycle, giving lot of our members a chance to close it at break-even. But my own trade turned out to be a loser. You can't win them all. We had 1 winner and 1 loser this week, ending this week for a scratch. Last week we had 10 winners and only 1 loser.

Trade Outcome

LOSER

Profit/Loss

$500

Beginning Account Balance

$10,170

Ending Account Balance

$12800

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