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JAN 2021: SQ $215 – $220 Bull Call Spread

Stock

SQ

Trade Structure

$215- $220 Call Spread

Trade Date

1/4/2021

Price Paid

$250

Expiration Days

02/05/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

I don’t always know in advance what entry points I might take for my trades, but whenever I do, I post them in the morning announcement. SQ has clear support at $200 so I was hoping to get a $200-$205 Call Spread since 12/29. SQ did drop down to $208 and kept teasing me. It never got down to the entry point I was looking for and reversed right from there. Once I saw clear signs of a reversal followed my multiple indicators on the chart confirming this, I took a higher spread instead.

Trade Selection Criteria

Overall market movement

There are no extreme movements in the Markets in general

N/A

No Earnings or Significant News

Earnings are behind us and were announced on 11/05

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

RSI is pointing up indicating a strong upward movement

ADX Analysis

DI+ is pointing up and DI- pointing down, further confirming the upward momentum

Trade Analysis

SQ Initially shot up after putting on this trade. However, it quickly gave up all its gains and pretty much kept us guessing all throughout the trade cycle. But Debit Spreads are resistance to Time Decay, so we were able to ride out until the end and close it for a 94% ROI.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$10,600

Ending Account Balance

$12,900

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

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