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Nov 2019: GOOG $1322 – $1312 Bear Put Spread

Stock

GOOG

Trade Structure

$1322 - $1312 Bear Put Spread

Trade Date

11/09/2019

Expiration Days

12/06/2019

Trade Rationale

We put on a $1300 - $1320 Bear Put spread 3 days ago, however due to the "China Deal" the market went roaring higher, but since our directional bias and analysis hasn't changed, I used this opportunity to put on another Bear Put Spread in GOOG. This time it is a $1322-$1312 Spread and I paid $429 for it. In 27 days if GOOG expires below $1312, I will double my money. PS: Also see the linked GOOG trade which I put on 3 days earlier https://25koptionschallenge.com/nov-2019-goog-1300-1290-bear-put-spread/

Trade Selection Criteria

Overall market movement

With S&P 500 making new all time highs, the overall market and practically every stock in my watchlist is making new highs. With the first signs of a loss in upward momentum, it is a great time to put on some mean reversion trades.

No Earnings or Significant News

Earnings are behind us and were announced on 10/28. There is no significant news or earnings event during our trade cycle.

Bollinger Bands outside Keltner Channels

Bollinger Bands are outside Keltner Channels. We are not in a squeeze or low volatility period.

RSI Analysis

RSI has flattened out, but is not touching the overbought zone.

ADX Analysis

ADX is flat. The previous upward momentum is not building any more strength.

Trade Analysis

This bear put spread initially went in our favor for a week, but then the stock reversed and went back up to make new highs. However, since we didn't lose 50% of our initial investment, we didn't panic nor did we close the trade. The stock went back down on its own after that and our position became profitable again. That is what stocks do. They go up and they go down. As long as you stick to your plan, these gyrations shouldn't matter to you. Today the stock market dropped by 400 points on a single Tweet by our president saying that the China deal might be postponed. This allowed us to close the position at full profit.

Trade Outcome

Winner

Profit/Loss

$496

Beginning Account Balance

$16,100

Ending Account Balance

$18,000

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. d w

    Maybe a typo:
    Beginning account Balance= $16,100, Profit=$496, End Account Balance =$18,000???

    Also, I tried to contact you via the support@ email, it came back.

    Can you supply broker statements for the previous Challenge years, so we can verify?

    Thanks much!

    Reply
    • Nishant
          Remember, I have multiple trades on at the same time. The ending account balance is affected by all other trades too, not this one.
          I used to give out my broker statements. But I have stopped doing this because I do the challenge live in front of 1000 members. There is no better broker statement than 1000 people watching you day and night and looking at your wins and losses at all times.
      Reply

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