Mar 2020: RUT $1000 – $1005 Bull Call Spread

Stock

RUT

Trade Structure

$1000 - $1005 Bull Call Spread

Trade Date

03/19/2020

Price Paid

$245

Expiration Days

05/15/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale

Mar 2020: RUT $1000- $1005 Bull Call Spread. With the ongoing Coronavirus scare, all stocks and indexes have been dropping like a rock. With some of our indicators indicating that this might be the end of this monstrous pullback, I am testing the waters with a $1000 - $1005 Bull Call Spread. We are risking $245 to make $255 on this trade. Notice, that I usually trade 30 day expiration cycles, but due to the unprecedented times we are going through in the financial markets, I am giving it a larger time frame to work out in my favor

Trade Selection Criteria

Overall market movement

We have experienced an unprecedented sell-off in the markets due to the ongoing Coronavirus scare

No Earnings or Significant News

We were forced to give this trade 57 days to work in our favor due to the market conditions. This is an Index so there are no earnings involved.

Bollinger Bands outside Keltner Channels

This is a no-brainer! Bollinger Bands are way outside Keltner Channels. 

RSI Analysis

RSI has been in oversold zone for some time. However, it is not showing any signs of a clear reversal yet

ADX Analysis

ADX is not showing any clear signs. However, DI- is reversing directions indicating that the downward movement maybe losing steam.

Trade Analysis

This trade was one of the picture perfect trades of how debit spread can double your money. We paid $245 and we literally doubled our money on this trade.

Trade Outcome

WINNER

Profit/Loss

$245

Beginning Account Balance

$2,500

Ending Account Balance

$3200

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