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JAN 2021: VMW $130- $135 Bull Call Spread

Stock

VMW

Trade Structure

$130 - $135 Call Spread

Trade Date

1/13/2020

Price Paid

$250

Expiration Days

02/19/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

VMW gapped down to $130 suddenly after the announcement that their CEO is joining Intel. This extreme drop is an exaggerated market reaction which gives us trading opportunities. Companies which work at the scale of VMW are not dependent on a single person running the show. Companies like VMW have achieved the massive scale by having 100s of very smart employees working together towards a common vision. If you look at the technicals, the stock has solid support at $135, followed by support around $130 and $125. This trade was purely done based on support/resistance levels.

Trade Selection Criteria

Overall market movement

There is no extreme movement in Nasdaq. This was a trade done on the extreme movement on this particular stock

No Earnings or Significant News

Earnings are behind us and were announced on 11/24

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

N/A This trade was done based on Support/Resistance

ADX Analysis

N/A This trade was done based on Support/Resistance

Trade Analysis

The trade worked out beautifully as expected. We took advantage of the knee jerk reaction from the market on irrelevant news. This trade was a no-brainer and closed with 11 days still remaining to expiration.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$10,200

Ending Account Balance

$13,084

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