MAR 2021: DOCU $200- $205 Bull Call Spread
Stock
DOCU
Trade Structure
$200- $205 Call Spread
Trade Date
3/24/2021
Price Paid
$250
Expiration Days
04/30/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
DOCU pulled back after an earnings beat and I entered the spread here around the $200 support level. Because Nasdaq has been pulling back consistently, all stocks are getting affected by it. DOCU did pull back to $190 level before turning back around. I take all these trades based on clear and well documented rules that I am very transparent about. But, we do need Nasdaq to stabilize a little for all these trades to work out.
Trade Selection Criteria
Overall market movement
Nasdaq has been in a deep pullback, so all tech stocks are trading at a discount.
No Earnings or Significant News
This is a post-earnings trade. DOCU just announced earnings so we are safe.
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
Trade was taken based on support/resistance levels
ADX Analysis
Trade was taken based on support/resistance levels
Trade Analysis
We opened this trade in the middle of the Nasdaq correction. The market made a dramatic recovery and DOCU closed today for our full profit target with 7 days still remaining to expiration.
Trade Outcome
WINNER
Profit/Loss
$235
Beginning Account Balance
$10,700
Ending Account Balance
$11,500
