July 2020: ULTA $190 – $195 Bull Call Spread

Stock

ULTA

Trade Structure

$190 - $195 Bull Call Spread

Trade Date

07/09/2020

Price Paid

$250

Expiration Days

08/7/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

This is a very simple trade based on a well established Support level of $190ish (you can always argue that support is at $188 or $193 but it is an imaginary line so it is always approximate). See my video about support/resistance here: https://25koptionschallenge.com/technical-analysis-3-support-resistance-post-earnings-trades/ This video will be useful for you since we are entering earnings season and you will soon see me posting post-earnings trades. My support/resistance trades don't use any fancy indicators as explained in the video. The drop today was due to the small pullback in the market. In fact ULTA recently had an analyst upgrade from Barclays, so that bolsters my confidence that the stock should bounce back up as time marches on.

Trade Selection Criteria

Overall market movement

The market has been going up non-stop for a week, and we got a minor pullback today, when DOW dropped more than 300 points today.

No Earnings or Significant News

Next earnings are on 9/3

Bollinger Bands outside Keltner Channels

This trade is based on support/resistance. BB/KCs don’t apply here. Please see trade rationale above. If you are a paying member you can see how I find these support/resistance trades using technical analysis: https://25koptionschallenge.com/training-videos/

RSI Analysis

This trade is based on support/resistance. BB/KCs don’t apply here. Please see trade rationale above.

ADX Analysis

This trade is based on support/resistance. BB/KCs don’t apply here. Please see trade rationale above.

Trade Analysis

After taking this trade, ULTA shot up almost immediately into the $200s. However, it came back down and kept trading near our strikes. I was forced to close the trade today for a measly $30 profit because expiration is only 3 days away.

Trade Outcome

SCRATCH

Profit/Loss

$30

Beginning Account Balance

$5,028

Ending Account Balance

$5800

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