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NOV 2020: W $240- $250 Bull Call Spread

Stock

W

Trade Structure

$240-$250 Call Spread

Trade Date

11/09/2020

Price Paid

$500

Expiration Days

12/18/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

W shot up to $304 after announcing great earnings. However, due to the sector rotation currently affecting Nasdaq, it dropped all the way down to $240 which is a well established support level. Which is what prompted me to take this trade. Sometimes, during steep sell-offs technical indicators don't have time to catch up, so you have to use the simple concepts of Support & Resistance to pick out these trades.

Trade Selection Criteria

Overall market movement

Nasdaq has been under pressure for last 2 days causing a massive sell-off in all tech stocks

No Earnings or Significant News

Earnings are behind us and were announced on 11/03

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

RSI is inconclusive. This trade was taken based on Support & Resistance levels.

N/A

ADX Analysis

ADX is inconclusive. This trade was taken based on Support & Resistance levels.

N/A

Trade Analysis

W kept us guessing all through this trade. It entered a side-ways consolidation pattern after putting on the trade. We had to literally wait until the last day of expiration. But we are able to close it for our full profit target.

Trade Outcome

N/A

Profit/Loss

$0

Beginning Account Balance

$7,700

Ending Account Balance

$8900

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. Richard

    Do you only use Debit Call vertical for directional trade?

    Reply
    • Nishant

      Yes, I exclusively use Debit spreads. Call and Put verticals for the $25K challenge. I have laid out an Iron Condor strategy in my book for larger accounts.

      Reply

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