JAN 2021: LRCX $500 – $505 Bull Call Spread

Stock

LRCX

Trade Structure

$500- $505 Call Spread

Trade Date

1/28/2021

Price Paid

$250

Expiration Days

03/12/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

LRCX has now become a regularly traded stock in our group. It did have a pre-earnings runup like many earnings trade setups but sold off immediately after earnings. When this post-earnings profit taking happens, we just need to enter a trade at some kind of support level. I saw the support at $500 and entered there. Of course, with the broader market sell-off happening, LRCX got pulled back all the way down to $475 and many of our traders got into really low spreads, eg. $475 - $480. If the sell-off had continued, this could have been dragged down to next support at $460 too. Irrespective of how low it went and what happend, if it stays above $505, all trades will make the same amount of money.

Trade Selection Criteria

Overall market movement

We had a nice pullback in the entire market which allowed us to put on 18 trades this week.

No Earnings or Significant News

Earnings are behind us and were announced on 1/27

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

RSI Analysis

This is a post earnings trade. Our regular indicators don’t apply here.

ADX Analysis

This is a post earnings trade. Our regular indicators don’t apply here.

Trade Analysis

Analysis will be updated when we close this trade.

Trade Outcome

PENDING

Profit/Loss

$N/A

Beginning Account Balance

$10,383

Ending Account Balance

$N/A

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