JUL 2021: XBI $120 – $125 Bull Call Spread
Stock
XBI
Trade Structure
$120- $125 Call Spread
Trade Date
07/27/2021
Price Paid
$250
Expiration Days
8/27/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
Due to earnings season, it was very hard to find good trades the whole of July. I picked this Biotech ETF because every other stock in my watchlist had earnings coming up. This trade was picked based on the support level at $125. XBI briefly dipped below support which allowed me to enter the 120-125 spread. XBI is also trading at the bottom of its trading range, so even if it bounces back to support from here, this will become a winner.
Trade Selection Criteria
Overall market movement
This trade is a typical swing trade based on the movements of XBI. The overall market did not factor into the decision making on this trade.
No Earnings or Significant News
XBI is an ETF.
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside Keltner Channels.
RSI Analysis
This trade was taken based on Support/Resistance levels. RSI did not factor into the analysis.
ADX Analysis
This trade was taken based on Support/Resistance levels. RSI did not factor into the analysis.
Trade Analysis
Even though XBI fell further after putting on this trade and then stayed stuck in a sideways movement throughout the trade, I was still able to close this trade for 94% ROI. That is the beauty of debit spreads. A $5 move can double your money. If you were unfortunate enough to buy an XBI Call instead, you would have been wiped out on this trade.
Trade Outcome
WINNER
Profit/Loss
$235
Beginning Account Balance
$15,700
Ending Account Balance
$16,600
