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MAR 2021: DOCU $200- $205 Bull Call Spread

Stock

DOCU

Trade Structure

$200- $205 Call Spread

Trade Date

3/24/2021

Price Paid

$250

Expiration Days

04/30/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

DOCU pulled back after an earnings beat and I entered the spread here around the $200 support level. Because Nasdaq has been pulling back consistently, all stocks are getting affected by it. DOCU did pull back to $190 level before turning back around. I take all these trades based on clear and well documented rules that I am very transparent about. But, we do need Nasdaq to stabilize a little for all these trades to work out.

Trade Selection Criteria

Overall market movement

Nasdaq has been in a deep pullback, so all tech stocks are trading at a discount.

No Earnings or Significant News

This is a post-earnings trade. DOCU just announced earnings so we are safe.

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

Trade was taken based on support/resistance levels
N/A

ADX Analysis

Trade was taken based on support/resistance levels
N/A

Trade Analysis

We opened this trade in the middle of the Nasdaq correction. The market made a dramatic recovery and DOCU closed today for our full profit target with 7 days still remaining to expiration.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$10,700

Ending Account Balance

$11,500

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