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JUN 2021: URI $300 – $310 Bull Call Spread

Stock

URI

Trade Structure

$300- $310 Call Spread

Trade Date

06/15/2021

Price Paid

$500

Expiration Days

7/16/2021

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

I took this trade after seeing multiple signs of a mean reversion coming into play as indicated in the chart below. However, the broader market sell off caused URI to further dip down to $285.

Trade Selection Criteria

Overall market movement

May sell-off is behind us and markets are in decent shape. There is no exaggerated movement in the overall markets and this trade is based on purely this stocks own movement. 

N/A

No Earnings or Significant News

Earnings are behind us and were announced on 4/29

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside Keltner Channels.

RSI Analysis

RSI is pointing up giving this trade more conviction

ADX Analysis

DI- and DI+ are both reversing directions. This is a very text-bookish trade. Don’t see many of these in real life.

Trade Analysis

URI pretty much stayed sideways through this entire trade. And although, it ended up just $4 above my short strike but I was still able to make 90% ROI on this trade. If you were unfortunate enough to buy a naked call on this, you would have been wiped out. If you follow the 50% loss rule, it creates a statistical advantage for you. By doing this 1 winner should ideally cancel out 2 losers. This is what creates "positive expectancy" and in trading your account will never grow if you don't have positive expectancy built into your trading method.

Trade Outcome

WINNER

Profit/Loss

$450

Beginning Account Balance

$14,400

Ending Account Balance

$15,500

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

2 Comments

  1. Lin

    7/16 expiration had 6losers 4winners. why this display account only showed winner, where all 6 losers go to?

    Reply
    • Nishant

      This site is meant purely for educational purposes. The intent of this site is not to be treated as an audit log but for me to share the techniques described in my book with my readers. I only post the trades here which can used to learn something. eg. I did post a few 50% losers recently demonstrating the 50% loss rule, a few put spreads recently demonstrating how to trade peaking markets etc.

      In addition to this, only trades taken in the 25K Challenge account are shown here. In our private group we take many more trades (10-14 trades per week)

      Reply

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