fbpx
‪(720) 819-5927‬ support@25koptionschallenge.com

July 2020: HELE $195 – $200 Bull Call Spread

Stock

HELE

Trade Structure

$195 - $200 Bull Call Spread

Trade Date

07/14/2020

Price Paid

$250

Expiration Days

08/21/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

To participate in our live challenge and to access our online training, please click “Your Account” and upgrade to the “Live Trader” plan.

 

Trade Rationale

As you know I don't trade earnings at all. But post earnings generates some really good opportunities. You will see a chart like this repeating on every post-earnings trade. Post earnings trades are very different than our regular mean reversion trades. These are actually continuation trades. Since, earnings causes a reset in the stocks price movement and its personality, you have to respect the direction in which earnings sends the stock price and have to find trades in the same direction. We will be seeing many of these trades in the coming weeks. With HELE, look at the yellow line I have drawn. Great Earnings + Analyst upgrades gapped up the stock to $209.99 Now, in these situations you will notice there is almost always a pullback after the initial earnings spike. The key to take a trade is to wait for that pullback to happen. You usually get 2 opportunities. We got in today on the first opportunity.

Trade Selection Criteria

Overall market movement

The market has been going up non-stop for 10 days, and we got a quick pullback today, when DOW dropped more than 300 points today.

No Earnings or Significant News

Earnings are behind us and were announced on 7/9

Bollinger Bands outside Keltner Channels

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

RSI Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

ADX Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

Trade Analysis

HELE kept falling after putting on this trade and stayed down for most of our trading window. If you had a naked call during this period, you would have been wiped out completely due to time decay. However, debit spreads are resistant to Theta and we were able to close this trade for a full winner!

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$5,400

Ending Account Balance

$6300

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

Submit a Comment

Your email address will not be published.

Free no-obligation 7-day trial The Bull Run is just getting started...

The massive 5 month long correction is behind us and the Bull run is just getting started. Are you ready to take advantage of it?