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MAR 2021: ARKK $110 – $115 Bull Call Spread

Stock

ARKK

Trade Structure

$110- $115 Call Spread

Trade Date

3/29/2021

Price Paid

$250

Expiration Days

05/21/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

I have been eyeing Cathy Wood’s ARKK for a while. It’s performance follows Nasdaq closely. But it fell down 30% from its peak on 2/22 and has presented multiple opportunities to enter into trades. There is a clear support at $110, which is where I entered this trade. As long as Nasdaq stays healthy and QQQ stays above $320 level, this trade is going to be a clear winner. Notice that I gave this trade 60 days (instead of the usual 30 days) to work out in my favor due to the 12% correction that we just experienced in Nasdaq. Refer to Chapter 12 of my book to learn why I did this.

Trade Selection Criteria

Overall market movement

Nasdaq has been in a massive correction the entire month of March. Making use of the deep discount that every stock is trading at this time.

No Earnings or Significant News

N/A

N/A

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

RSI is in over-sold territory and not showing any clear signals. However, support/resistance and ADX are supporting this trade. 

N/A

ADX Analysis

DI- is pointing down. In addition to this the clear support at $110 is a factor for taking this trade. 

Trade Analysis

Analysis will be updated when we close this trade.

Trade Outcome

PENDING

Profit/Loss

$N/A

Beginning Account Balance

$9,800

Ending Account Balance

$N/A

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

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