Dec 2019: BKNG $2067- $2037 Bear Put Spread
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 finally dipped below 70 after being in over-bought territory for quite some time, indicating a possible trend reversal.
ADX is weak and does not give any clear signals about the current trend.
Beginning Account Balance
Ending Account Balance
Looks like this ones a winner.
Yes Fred. An absolute winner. I will be updating the open positions this weekend to reflect the outcomes.
Really enjoyed your book and lessons – but was a little impatient to try out your methods and jumped into a bullish vertical trade on Google perhaps too soon – but have until Feb 21st – so we’ll see. Left a positive review on Amazon and telling friends about book.
Albert, thanks for the kind words and sharing my book. Just curious what does your spread look like?
Goog Feb 21 2020 vertical call spread 1480/1485; Though most indicators were heading up even after multiple green bar days, RSI strong and ADX over 50 – may have taken a long position too soon – but have some time and not down 50% yet. .
Looks like when you open several positions in one month – you still make sure to never have more than a 1/3 of your invested capital at risk or in play- correct? Any particular reason to limit a specific trade to $600-800 when you could go higher? Or just diversifying/spreading your risk even with that 1/3?
Albert, weird that I just saw your comment after so long. Yes, I am doing it for diversification and spreading risk. Not putting all my eggs in 1 basket basically.
Quick question with a $30 spread shouldn’t the cost be closer to $2000 or am I thinking about the pricing incorrectly?
I caught my mistake. It should be closer to $1500. ~$250 per 5 point spread.