Feb 2020: BKNG $1845- $1885 Bull Call Spread
Stock
Trade Structure
Trade Date
Expiration Days
Trade Rationale
Trade Selection Criteria
Overall market movement
After making new highs, week after week, Dow Jones dropped up to 500 points yesterday at one point in the day. The market had its worst day since Oct 2019.
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 way outside Keltner Channels. As you can see in the chart, BKNG dropped like a rock in the past few days with no real reason. Since, I am aware of the stocks “personality”, this is highly unusual. Perfect time for a mean reversion trade
RSI Analysis
RSI is below 30 indicating oversold conditions. But not showing clear signs of a reversal.
ADX Analysis
ADX below 40. So not too strong and not weak. Again, we are not getting any clear signals here as well.
Trade Analysis
Trade Outcome
Profit/Loss
Beginning Account Balance
Ending Account Balance
This is perfect add-on to the early entry you did a bit prematurely in Jan
Thanks. The nice thing about debit spreads is you need a small movement in the underlying to make it a winner. So, even though I was premature in the $1900 – $1915 trade, it is still coming out as a winner. If I had bought a $1900 call, it would have lost 90% of its value due to Theta or Time Decay eating into it.
New to the community..looking forward to following your trades..when will you post the next challenge and will they be posted here on the website or on Facebook
The announcement for the next challenge will be emailed to you and posted on the facebook group as well
The expiration date listed for this trade was 21-Feb-20 but the trade closeout details have yet to be posted here. Could you pls update the same?
The stock closed above $1900 on 2/21. So if held to expiration, this would have been a winner.