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Sep 2021: MSTR $645 – $650 Bull Call Spread

Stock

MSTR

Trade Structure

$645-$650 Call Spread

Trade Date

9/9/2021

Price Paid

$250

Expiration Days

10/08/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

MSTR as a company is looking solid. It has a better 1 year return than Wells Fargo, Facebook, Disney and Amazon. The stock is also not for the faint-hearted as it is a huge mover and can go up or down $30 - $50 in a single day on literally no news. I entered this trade after seeing it stabilize after the recent sell-off. RSI and DI- were both pointing towards a mean-reversion trade. But MSTR is heavily dependent on Bitcoin’s price movement as they are a huge investor in Bitcoin (They hold $3 Billion worth of Bitcoin). Watch Bitcoin in the coming week as the performance of this trade will be closely correlated to it.

Trade Selection Criteria

Overall market movement

Markets have been pulling back generating some trading opportunities

No Earnings or Significant News

Earnings were announced on 7/29 and are behind us

Bollinger Bands outside Keltner Channels

Bollinger bands are slightly outside Keltner Channels, but MSTR has a huge trading range so this is irrelevant.

N/A

RSI Analysis

RSI is turning up after the recent sell off

ADX Analysis

DI- is turning down.

Trade Analysis

Such an interesting trade. MSTR is a high ATR stock and certainly not for the faint hearted. The stock can move $35- $50 in 1 day on literally no news. MSTR went against me initially and fell down to $545 in a matter of a few days. MSTR is also heavily dependent on Bitcoin, so the recent rally in Bitcoin helped MSTR bounce back from the dead and I was able to close it for my full profit target today. Don't be confused by the huge jump in the account balance. September dragged my account down by 11% at its worst, but I have almost recovered from the sell off already.

Trade Outcome

WINNER

Profit/Loss

$235

Beginning Account Balance

$16,300

Ending Account Balance

$17,100

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