FEB 2021: REGN $450- $455 Bull Call Spread
Stock
REGN
Trade Structure
$450- $455 Call Spread
Trade Date
2/23/2021
Price Paid
$250
Expiration Days
04/01/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
REGN has been stuck in a downward channel for some time and I have been waiting for while to put on a trade on this. The problem is when do you know the downward momentum has lost steam. In this case, I had to rely on RSI dropping below 30 indicating REGN was in oversold territory. And then RSI popping out of it which usually indicates a trend reversal. In addition DI- is now flattening out, providing more support to my directional bias.
Trade Selection Criteria
Overall market movement
N/A this is a post earnings trade. The individual stock’s price action is more important for these trades.
No Earnings or Significant News
This is a post earnings trade. Earnings were announced a few days ago.
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
Although, this is a post earnings trade, RSI is now beginning to show some signs of a recovery
ADX Analysis
DI- is flattening out, giving us further conviction about this trade.
Trade Analysis
Although, REGN mostly traded sideways during our trade window, we still ended up making our full 94% profit target on this trade. Another reason why I like spreads so much. If you had bought plain Calls here, you would have lost all your money due to Time Decay.
Trade Outcome
WINNER
Profit/Loss
$235
Beginning Account Balance
$13,500
Ending Account Balance
$10,100
Can I ask how your beginning balance is higher than ending account balance
My account balance is affected by all positions that I have open in an expiration cycle. All the positions add up to it. In this case, FEB and MARCH were affected by the 12% correction in Nasdaq. As I document more trades, you will see that I had some losers in March due to the correction.
Nishant-
I just finished your wonderful book.
I will re-read it on the flight home
Thanks so much for putting this all together.
I will be signing up for the full service!