Jan 2020: FB $205- $215 Bull Call Spread
Stock
FB
Trade Structure
$205- $215 Bull Call Spread
Trade Date
01/30/2020
Expiration Days
02/21/2020
Trade Rationale
As mentioned in my book, I don't participate in earnings because they are binary events with unpredictable outcomes. However, I have my own way of participating in earnings. Instead of trading before earnings, I wait for earnings to be over.
In Facebook's case, although they beat earnings, the earnings weren't "good enough" for the market and the resulting 7% pullback is extreme in my opinion. This is a a mean reversion trade, although I will not be using my typical indicators for this as this is a post earnings event.
I bought a $205 - $215 Bull Call Spread, risking $480 to make $480 in 21 days.
Trade Selection Criteria
Overall market movement
DOW dropped 200 points today due to the ongoing corona virus scare.
No Earnings or Significant News
Earnings are behind us and were announced on 1/29
Bollinger Bands outside Keltner Channels
N/A – This is not a mean reversion trade in the traditional sense (i.e the typical mean reversion trades I normally do). So, we can’t use any of our usual indicators here.
RSI Analysis
N/A – This is not a mean reversion trade in the traditional sense (i.e the typical mean reversion trades I normally do). So, we can’t use any of our usual indicators here.
ADX Analysis
N/A – This is not a mean reversion trade in the traditional sense (i.e the typical mean reversion trades I normally do). So, we can’t use any of our usual indicators here.
Trade Analysis
Analysis will be updated, when we close the Trade
Trade Outcome
Pending
Profit/Loss
$N/A
Beginning Account Balance
$16,400
Ending Account Balance
$
keen to follow
Please provide trade analysis and outcome.