June 2020: NFLX $410 – $415 Bull Call Spread | Mean Reversion Trading Using Options

June 2020: NFLX $410 – $415 Bull Call Spread

Stock

NFLX

Trade Structure

$410 - $415 Bull Call Spread

Trade Date

06/04/2020

Price Paid

$250

Expiration Days

07/10/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

To participate in our live challenge and to access our online training, please click “Your Account” and upgrade to the “Live Trader” plan.

Trade Rationale

With NFLX, I had originally posted a post-earnings $395 - $400 Bull Call Spread as a "continuation trade", but NFLX went up so fast that only few members were able to get in on this trade. After that, I have been waiting to see if I get another opportunity to get into a similar trade. You will notice NFLX has a very strong Support base established at $400. Expecting NFLX to pull all the way back to $400 support line is unrealistic (of course anything can happen in the stock market so take my words with a grain of salt), so I had been waiting for a $400-$410 Bull Call spread opportunity for almost 3 weeks now and we got that opportunity today.

NFlX_410_415_BullCallSpread_Open | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

We had a small pullback in the NASDAQ on 6/4, but nothing major.

INDETERMINATE

No Earnings or Significant News

Earnings were just announced on 4/21 and are behind us

CHECK

Bollinger Bands outside Keltner Channels

Yes, Bollinger Bands are wildly outside the Keltner Channels

CHECK

RSI Analysis

RSI is pointing up, but this is irrelevant because we are not coming from an oversold situation. (i.e RSI wasn’t below 30 earlier). We used simple Support/Resistance for this trade.

INDETERMINATE