Mar 2020: RUT $1000 – $1005 Bull Call Spread

Stock

RUT

Trade Structure

$1000 - $1005 Bull Call Spread

Trade Date

03/19/2020

Price Paid

$245

Expiration Days

05/15/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale

Mar 2020: RUT $1000- $1005 Bull Call Spread. With the ongoing Coronavirus scare, all stocks and indexes have been dropping like a rock. With some of our indicators indicating that this might be the end of this monstrous pullback, I am testing the waters with a $1000 - $1005 Bull Call Spread. We are risking $245 to make $255 on this trade. Notice, that I usually trade 30 day expiration cycles, but due to the unprecedented times we are going through in the financial markets, I am giving it a larger time frame to work out in my favor

Trade Selection Criteria

Overall market movement

We have experienced an unprecedented sell-off in the markets due to the ongoing Coronavirus scare

CHECK

No Earnings or Significant News

We were forced to give this trade 57 days to work in our favor due to the market conditions. This is an Index so there are no earnings involved.

CHECK

Bollinger Bands outside Keltner Channels

This is a no-brainer! Bollinger Bands are way outside Keltner Channels. 

CHECK

RSI Analysis

RSI has been in oversold zone for some time. However, it is not showing any signs of a clear reversal yet

INDETERMINATE

ADX Analysis

ADX is not showing any clear signs. However, DI- is reversing directions indicating that the downward movement maybe losing steam.

INDETERMINATE

Trade Analysis

This trade was one of the picture perfect trades of how debit spread can double your money. We paid $245 and we literally doubled our money on this trade.

Trade Outcome

WINNER

Profit/Loss

$245

Beginning Account Balance

$2,500

Ending Account Balance

$3200

To follow along the strategies we use in the $25K challenge, we recommend that you get the strategy book which explains the whys and wherefores of our method. Get it here=> https://amzn.to/2MUOCE5

2 Comments

  1. Derek R
    Derek R on March 26, 2020 at 7:45 pm

    Hi
    Could you pls also mention how much of the starting capital of $2500 was allocated to this trade?

    Your followers might want to replicate that too in order to exactly get the same results at the end
    of the yearly challenge 🙂

    Reply
    • Nishant
      Nishant on March 26, 2020 at 7:48 pm

      I have mentioned it, look at the price paid column at the top.

      Reply

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