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MAY 2021: FB $315-$320 Bull Call Spread

Stock

FB

Trade Structure

$315- $320 Call Spread

Trade Date

5/5/2021

Price Paid

$250

Expiration Days

6/11/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

Why do you think I am Bullish on Nasdaq? Every single tech giant has beat earnings this season. FB gapped up to $331 after a comfortable earnings beat. When it gave up its gains due to profit taking last week due to the Nasdaq sell-off, it gave me a beautiful opportunity to enter a trade at the gap fill level. We need Nasdaq to behave next week and all these tech trades will shape up nicely for us.

Trade Selection Criteria

Overall market movement

Markets have been under pressure since 5/1. Is ‘Sell in May’ becoming a self-fulfilling prophecy?

No Earnings or Significant News

This is a post earnings trade and earnings are behind us

Bollinger Bands outside Keltner Channels

This is a post-earnings trade. We use support/resistance for these as other indicators are mostly irrelevant for these kind of trades

N/A

RSI Analysis

This is a post-earnings trade. We use support/resistance for these as other indicators are mostly irrelevant for these kind of trades

N/A

ADX Analysis

This is a post-earnings trade. We use support/resistance for these as other indicators are mostly irrelevant for these kind of trades

N/A

Trade Analysis

Although, FB went against me initially and got stuck in a sideways move but I was able to close this trade for 94% ROI. If you had bought regular Call options, you would have been wiped out on this trade due to Time Decay.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$11,100

Ending Account Balance

$11,400

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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