Aug 2020: ROKU $150 – $155 Bull Call Spread
Stock
ROKU
Trade Structure
$150- $155 Bull Call Spread
Trade Date
08/06/2020
Price Paid
$250
Expiration Days
9/4/2020
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
This is another post-earnings trade which is slightly different from my usual post-earnings trades. Sometimes, a stock will have a run-up before earnings for no reason. Leaked news? Insider Trading? It is anyone's guess. What I am looking for is pullbacks to previously established support after earnings. That is exactly what happened with ROKU. Earnings weren't as bad as expected and ROKU still pulled back nicely to a previous support at $150. This gave us an opportunity to get in on a $150-$155 Bull Call Spread.
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
No Earnings or Significant News
Earnings are behind us and were announced on 8/5
Bollinger Bands outside Keltner Channels
This is a post earnings trade – our regular mean reversion indicators don’t apply here.
RSI Analysis
This is a post earnings trade – our regular mean reversion indicators don’t apply here.
ADX Analysis
This is a post earnings trade – our regular mean reversion indicators don’t apply here.
Trade Analysis
This trade worked out as expected and we were able to close it on 9/1 for our full profit target.
Trade Outcome
WINNER
Profit/Loss
$235
Beginning Account Balance
$5,300
Ending Account Balance
$$5,650
