AUG 2021: EXAS $105 – $110 Bull Call Spread | Mean Reversion Trading Using Options

AUG 2021: EXAS $105 – $110 Bull Call Spread

Stock

EXAS

Trade Structure

$105- $110 Call Spread

Trade Date

8/2/2021

Price Paid

$250

Expiration Days

9/3/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

EXAS dropped on an earnings miss and I took this trade based on support around 105. Based on how this chart looks like, it seems to want to fall further. The next support is around $90. So watch out for this one of it keeps dipping. Don’t forget the 50% loss rule and go back and read the #case-studies on Discord (paid members only) when in doubt.

EXAS_105_110_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 a few days ago.

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

With mean-reversion trading 99% of my trades go against me for 7-10 days after putting them on. This is expected. But EXAS just kept falling for the next 18 days before starting to recover. I still ended up closing this position for a 20% profit in the end though. If you were unfortunate enough to buy naked Calls on EXAS, you would have lost your entire investment due to the whipsawing price movement EXAS went through during the entire trade duration.