MAR 2021: MDB $250 – $260 Bull Call Spread | Mean Reversion Trading Using Options

MAR 2021: MDB $250 – $260 Bull Call Spread

Stock

MDB

Trade Structure

$350- $360 Call Spread

Trade Date

3/29/2021

Price Paid

$500

Expiration Days

05/21/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

Every now and then I get to document picture perfect trades life these. MDB sold off after earnings and I was waiting for the downward momentum to come to an end before putting on this trade. A green candle combined with RSI popping its head above oversold territory caused me to take this trade. MDB is already trading at $290 and this trade looks like a sure shot winner at this point. NOTE: We went out 60 days for this trade to workout in our favor due to the correction happening in Nasdaq. Read Chapter 12 in my book to find out why I did this.

MDB_250_260_CallSpreadOpen | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

N/A this is a post earnings trade. The individual stock’s price action is more important for these trades.

N/A

No Earnings or Significant News

This is a post earnings trade. Earnings were announced today.

N/A

Bollinger Bands outside Keltner Channels

Bollinger bands are clearly outside the Keltner Channels.

CHECK

RSI Analysis

This is a post earnings trade. Our regular indicators don’t apply here since all these trades are taken based on Support/Resistance levels. I have described these in the 2nd edition of my book as well.

N/A