MAR 2021: ARKK $110 – $115 Bull Call Spread
Stock
ARKK
Trade Structure
$110- $115 Call Spread
Trade Date
3/29/2021
Price Paid
$250
Expiration Days
05/21/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
I have been eyeing Cathy Wood’s ARKK for a while. It’s performance follows Nasdaq closely. But it fell down 30% from its peak on 2/22 and has presented multiple opportunities to enter into trades. There is a clear support at $110, which is where I entered this trade. As long as Nasdaq stays healthy and QQQ stays above $320 level, this trade is going to be a clear winner.
Notice that I gave this trade 60 days (instead of the usual 30 days) to work out in my favor due to the 12% correction that we just experienced in Nasdaq. Refer to Chapter 12 of my book to learn why I did this.
Trade Selection Criteria
Overall market movement
Nasdaq has been in a massive correction the entire month of March. Making use of the deep discount that every stock is trading at this time.
No Earnings or Significant News
N/A
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
RSI is in over-sold territory and not showing any clear signals. However, support/resistance and ADX are supporting this trade.
ADX Analysis
DI- is pointing down. In addition to this the clear support at $110 is a factor for taking this trade.
Trade Analysis
Analysis will be updated when we close this trade.
Trade Outcome
PENDING
Profit/Loss
$N/A
Beginning Account Balance
$9,800
Ending Account Balance
$N/A
