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JUL 2021: XBI $120 – $125 Bull Call Spread

Stock

XBI

Trade Structure

$120- $125 Call Spread

Trade Date

07/27/2021

Price Paid

$250

Expiration Days

8/27/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

Due to earnings season, it was very hard to find good trades the whole of July. I picked this Biotech ETF because every other stock in my watchlist had earnings coming up. This trade was picked based on the support level at $125. XBI briefly dipped below support which allowed me to enter the 120-125 spread. XBI is also trading at the bottom of its trading range, so even if it bounces back to support from here, this will become a winner.

Trade Selection Criteria

Overall market movement

This trade is a typical swing trade based on the movements of XBI. The overall market did not factor into the decision making on this trade.  

N/A

No Earnings or Significant News

XBI is an ETF. 

N/A

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside Keltner Channels.

RSI Analysis

This trade was taken based on Support/Resistance levels. RSI did not factor into the analysis.

N/A

ADX Analysis

This trade was taken based on Support/Resistance levels. RSI did not factor into the analysis.

N/A

Trade Analysis

Even though XBI fell further after putting on this trade and then stayed stuck in a sideways movement throughout the trade, I was still able to close this trade for 94% ROI. That is the beauty of debit spreads. A $5 move can double your money. If you were unfortunate enough to buy an XBI Call instead, you would have been wiped out on this trade.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$15,700

Ending Account Balance

$16,600

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