APR 2021: AMGN $230-$235 Bull Call Spread

Stock

AMGN

Trade Structure

$230 - $235 Call Spread

Trade Date

4/29/2021

Price Paid

$250

Expiration Days

06/04/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

Did I catch the bottom of this one? It clearly seems I did. But as much as I would like to flaunt my mind-blowing clairvoyant capabilities, the truth is that I just got lucky on this one. AMGN gapped down big on an earnings miss and I entered this trade after seeing signs of the downward momentum coming to an end. This is clearly evident by DI- sharply turning down, DI+ sharply turning up and RSI flattening out at oversold levels.

AMGNa_230_235_CallSpreadOpen | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

N/A – There is nothing drastic going on in the overall Market. ABNB has dropped on no material news

N/A

No Earnings or Significant News

This is a post earnings trade and earnings are behind us

CHECK

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

Although, I use support/resistance for 90% of my post-earnings tardes, in this case my usual mean reversion indicators are clearly lining up. RSI is cleary pointing up, giving us a nice mean-reversion signal.

CHECK

ADX Analysis

Although, I use support/resistance for 90% of my post-earnings tardes, in this case my usual mean reversion indicators are clearly lining up. DI- flattening out is indicating a loss of downward pressure.

CHECK

Trade Analysis

I literally caught the bottom on this trade. And the trade closed for a full profit with 2 weeks still remaining to expiration. Would love to catch bottoms like these, but with debit spreads you don't have to be right all the time, you just need to be right enough for the trade to play out in your favor