JAN 2021: CRWD $210 – $215 Bull Call Spread | Mean Reversion Trading Using Options

JAN 2021: CRWD $210 – $215 Bull Call Spread

Stock

CRWD

Trade Structure

$210 - $215 Call Spread

Trade Date

1/04/2020

Price Paid

$250

Expiration Days

02/05/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

I entered this trade, based on the support level at $210. The 2 green candles that appeared after a brief sell-off caused me to take this trade. Other indicators like ADX/RSI etc weren’t lining up yet. CRWD, continued to sell off for the next few days, which gave many buying opportunities to our members to get in at lower strikes. As I have mentioned many times in the past, with mean reversion trading, you hardly ever have to get on a trade immediately after I post a trade alert. More often than not, you get many opportunities in the following days to get into a trade and at lower strikes than what I post. We have many traders in China, Australia, Singapore who are always sleeping during our trade hours and always get these trade alerts the next day, but are still able to benefit from my program.

CRWD_210_215_CallSpreadOpen | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

Nasdaq has been trading in a beautiful upwards channel since November. The trend is really strong. We have been getting small pullbacks consistently every two weeks almost like clock work. Nasdaq pulls back to the middle Bollinger Band, bounces back and continues on its way up. Right now, trading looks like a 5th grader’s job. Just buy the dips and you are all set. Only if trading was this simple! We would keep buying these dips every 2 weeks and wrap up the $25K challenge! All I can say is enjoy this stress free trading pattern while it lasts. Earnings season is right around the corner and once earnings start coming out, the market direction will be primarily controlled by those earnings numbers.

CHECK

No Earnings or Significant News

Earnings are behind us and were announced on 12/02

CHECK

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

CHECK

RSI Analysis

N/A This trade was done based on Support/Resistance

N/A

ADX Analysis

N/A This trade was done based on Support/Resistance

N/A

Trade Analysis

January was a great month for all our trades. CRWD pretty much stayed in a sideways choppy market the entire time. If you had bought Call options, you have got annihilated by now, but debit spreads are resistant to Time Decay. We ended up closing the trade for our full profit target of 94%