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SEP 2020: ZM $365- $370 Bull Call Spread

Stock

ZM

Trade Structure

$365- $370 Bull Call Spread

Trade Date

09/03/2020

Price Paid

$250

Expiration Days

10/02/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

ZM was trading at $325 pre-earnings. Earnings caused a massive spike all the way up to $475! When such huge gap ups happen, it is not practical to expect the stock to pullback to pre-earnings trading levels. I had to use some level of judgement to get into this trade.

Trade Selection Criteria

Overall market movement

This is a post-earnings trade. My usual mean reversion parameters don’t apply here. These trades are based on Support/Resistance only

N/A

No Earnings or Significant News

Earnings are behind us and were announced on 08/31

Bollinger Bands outside Keltner Channels

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

RSI Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

ADX Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

Trade Analysis

Despite the fact, that we experienced a big correction in the markets during Sept, ZM stayed obstinate and after falling a little further, continued on its journey towards the upside. We were able to close this position in 20 short days for our full profit target of 94%

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$6,700

Ending Account Balance

$5,100

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. steven schwartz

    You have two different symbols here…Under “trade rationale” you show ZM, and under “trade analysis”, you show W.

    Reply
    • Nishant

      Thanks for pointing that out. Updated the post. The closing image was also wrong, which I have fixed now.

      Reply

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