JUN 2021: URI $300 – $310 Bull Call Spread
Stock
URI
Trade Structure
$300- $310 Call Spread
Trade Date
06/15/2021
Price Paid
$500
Expiration Days
7/16/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
I took this trade after seeing multiple signs of a mean reversion coming into play as indicated in the chart below. However, the broader market sell off caused URI to further dip down to $285.
Trade Selection Criteria
Overall market movement
May sell-off is behind us and markets are in decent shape. There is no exaggerated movement in the overall markets and this trade is based on purely this stocks own movement.
No Earnings or Significant News
Earnings are behind us and were announced on 4/29
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside Keltner Channels.
RSI Analysis
RSI is pointing up giving this trade more conviction
ADX Analysis
DI- and DI+ are both reversing directions. This is a very text-bookish trade. Don’t see many of these in real life.
Trade Analysis
URI pretty much stayed sideways through this entire trade. And although, it ended up just $4 above my short strike but I was still able to make 90% ROI on this trade. If you were unfortunate enough to buy a naked call on this, you would have been wiped out.
If you follow the 50% loss rule, it creates a statistical advantage for you. By doing this 1 winner should ideally cancel out 2 losers. This is what creates "positive expectancy" and in trading your account will never grow if you don't have positive expectancy built into your trading method.
Trade Outcome
WINNER
Profit/Loss
$450
Beginning Account Balance
$14,400
Ending Account Balance
$15,500
7/16 expiration had 6losers 4winners. why this display account only showed winner, where all 6 losers go to?
This site is meant purely for educational purposes. The intent of this site is not to be treated as an audit log but for me to share the techniques described in my book with my readers. I only post the trades here which can used to learn something. eg. I did post a few 50% losers recently demonstrating the 50% loss rule, a few put spreads recently demonstrating how to trade peaking markets etc.
In addition to this, only trades taken in the 25K Challenge account are shown here. In our private group we take many more trades (10-14 trades per week)