JAN 2021: SQ $215 – $220 Bull Call Spread
Stock
SQ
Trade Structure
$215- $220 Call Spread
Trade Date
1/4/2021
Price Paid
$250
Expiration Days
02/05/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
I don’t always know in advance what entry points I might take for my trades, but whenever I do, I post them in the morning announcement. SQ has clear support at $200 so I was hoping to get a $200-$205 Call Spread since 12/29. SQ did drop down to $208 and kept teasing me. It never got down to the entry point I was looking for and reversed right from there. Once I saw clear signs of a reversal followed my multiple indicators on the chart confirming this, I took a higher spread instead.
Trade Selection Criteria
Overall market movement
There are no extreme movements in the Markets in general
No Earnings or Significant News
Earnings are behind us and were announced on 11/05
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
RSI is pointing up indicating a strong upward movement
ADX Analysis
DI+ is pointing up and DI- pointing down, further confirming the upward momentum
Trade Analysis
SQ Initially shot up after putting on this trade. However, it quickly gave up all its gains and pretty much kept us guessing all throughout the trade cycle. But Debit Spreads are resistance to Time Decay, so we were able to ride out until the end and close it for a 94% ROI.
Trade Outcome
WINNER
Profit/Loss
$235
Beginning Account Balance
$10,600
Ending Account Balance
$12,900
