AUG 2021: BDX $240 – $245 Bull Call Spread | Mean Reversion Trading Using Options

AUG 2021: BDX $240 – $245 Bull Call Spread

Stock

BDX

Trade Structure

$240- $245 Call Spread

Trade Date

8/5/2021

Price Paid

$250

Expiration Days

9/3/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

This is a very simple trade setup. BDX had a big gap down even after an earnings beat and I entered this trade after watching the price/action stabilize around the support level at 238-240ish. BDX seems to be recovering at this point, but hasn’t picked a clear direction yet.

BDX_240_245_CallSpreadOpen | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

This trade is a post earnings trade. With these kind of trades I pay attention to the individual stock movement more than anything else. The overall market movement does not factor much into it.

N/A

No Earnings or Significant News

This is a post-earnings trade. The earnings were announced yesterday.

CHECK

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside Keltner Channels.

CHECK

RSI Analysis

This trade was taken based on Support/Resistance levels. RSI did not factor into the analysis.

N/A

ADX Analysis

This trade was taken based on Support/Resistance levels. RSI did not factor into the analysis.

N/A

Trade Analysis

BDX initially slipped away from me briefly as 90% of my trades do due to the nature of mean-reversion trading, but it quickly snapped back and started heading in my direction. I closed this trade on 9/1 for 94% ROI.