Jan 2020: BKNG $1900 – $1915 Bull Call Spread
Trade Selection Criteria
Overall market movement
The markets have been pulling back due to the ongoing Coronavirus scare
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. Note: I did choose a smaller expiration cycle for this trade to avoid earnings
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 since 1/10/2020. Since, I am aware of the stocks “personality”, this is highly unusual and even though Coronavirus may affect the stock but this extreme pullback is uncalled for. Perfect time for a mean reversion trade
RSI crossed above 30 after being in the oversold zone for some time, indicating a trend reversal
ADX is not very clear. It seems flat or slightly rising. However the DI- line is showing a sharp turn which indicates exhaustion of the current downwards trend.
Beginning Account Balance
Ending Account Balance
I like this but as you realize now the stock went right to the Nov low and Aug gap ~ 1826
I think indicators are fine but you can improve further by incorporating support and resistance.
Yes, no amount of indicators will give you a sure shot win. I use indicators along with my own experience to put on my trades. I do eyeball support and resistance too. But as you will see, sometimes even with all indicators lining up, you still don’t win. However, as long as your winners are greater than losers, you will keep growing your account, which is what my goal is.
I read your book many time, I have some questions?
1. Can I use all of this indication to buy call option? B/c my options level can’t buy vertical
2. I am small account Can I used this indicator to buy stock below 10?