Dec 2019: BKNG $2067- $2037 Bear Put Spread



Trade Structure

$2067-$2037 Bear Put Spread

Trade Date


Expiration Days


Trade Rationale

Dec 2019: BKNG $2067-$2037 Bear Put Spread. With the market on a tear, BKNG has been making new highs day after day. Finally on 12/30 we see a red candle showing signs of a possible exhaustion. ADX is still below 40 which means there is no clear signs of this trend continuing. On top of that RSI is giving us a very clear signal. It was in the overbought territory and finally dipped below 70 indicating a possible trend exhaustion.

Trade Selection Criteria

Overall market movement

Overall market has been on a tear for weeks. I mean look at BKNG, looks like it is invincible and will never stop. However, our first red candle after this extended trend combined with RSI is giving us a possible trading opportunity here.

No Earnings or Significant News

Earnings are behind us and the next earnings will be after our expiration cycle. Earnings scheduled for 02/26/2020

Bollinger Bands outside Keltner Channels

Bollinger Bands are clearly outside Keltner Channels. Perfect time for a mean reversion trade 

RSI Analysis

RSI finally dipped below 70 after being in over-bought territory for quite some time, indicating a possible trend reversal.

ADX Analysis

ADX is weak and does not give any clear signals about the current trend.

Trade Analysis

After I put on my position the stock went down for a day and then resumed its march to make new highs. However, I did not lose 50% of my investment at this time so I held on to the position. If you have read my book you will notice that this is inline with my loss management criteria. Fast forward to 1/24 expiration day, the stock crashed and burned allowing me to close the position for a 100% profit.

Trade Outcome




Beginning Account Balance


Ending Account Balance


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