July 2020: ADBE $420 – $425 Bull Call Spread
Stock
ADBE
Trade Structure
$420 - $425 Bull Call Spread
Trade Date
07/14/2020
Price Paid
$250
Expiration Days
08/14/2020
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
ADBE's trade is almost a clone of OKTA trade. On days when the markets pull back, you will find most charts looking similar to each other, which gives you multiple trading opportunities. It also gives you a chance of adding some diversification on your portfolio. In my 25k challenge portfolio, I hardly ever do 2 trades on the same stock in the same expiration cycle. This is a great example of where instead of putting on 2 contracts of OKTA, you add an ADBE instead.
Trade Selection Criteria
Overall market movement
The market has been going up non-stop for 10 days, and we got a quick pullback today, when DOW dropped more than 300 points today.
No Earnings or Significant News
Next earnings are on 09/15
Bollinger Bands outside Keltner Channels
Bollinger Bands are outside Keltner Chanels.
RSI Analysis
RSI is smack in the middle (i.e not oversold or overbought)
ADX Analysis
ADX is pointing down and below 25, indicating that the downward pressure is not sustainable.
Trade Analysis
ADBE got stuck in a trading range after we put on this spread, whipsawing between profits and losses all throughout our trade's lifetime. However, all we needed was for it to expire above $425 and we still made a handsome 94% ROI on this trade. Simply beautiful!
Trade Outcome
WINNER
Profit/Loss
$235
Beginning Account Balance
$5,400
Ending Account Balance
$5900
