MAY 2021: ALGN $597.5-$602.5 Bull Call Spread

Stock

ALGN

Trade Structure

$597.5- $602.5 Call Spread

Trade Date

5/3/2021

Price Paid

$250

Expiration Days

6/11/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

Even after a comfortable earnings beat, ALGN dropped like a rock and I entered this trade a little too early based on the support at 597. ALGN pierced through 2 support levels and dropped all the way down to 560 before bouncing back up. Although, ADX and RSI were not agreeing with me at the time I put on this trade (and I ignore them for post-earnings trade anyway esp. If I take these trades within 1-3 days of earnings), now they are clearly showing signs of a mean reversion in our favor.

Trade Selection Criteria

Overall market movement

Markets have been under pressure since 5/1. Is ‘Sell in May’ becoming a self-fulfilling prophecy?

No Earnings or Significant News

This is a post earnings trade and earnings are behind us

Bollinger Bands outside Keltner Channels

This is a post-earnings trade. We use support/resistance for these as other indicators are mostly irrelevant for these kind of trades

RSI Analysis

This is a post-earnings trade. We use support/resistance for these as other indicators are mostly irrelevant for these kind of trades

ADX Analysis

This is a post-earnings trade. We use support/resistance for these as other indicators are mostly irrelevant for these kind of trades

Trade Analysis

Interesting trade. The trade was a loser during most of the expiration cycle. I have so many winners this week that, I took some risk off the table by closing it at 50% loss when I got the chance. Several of our group members were able to close it for full profit. My goal is always to have winners > losers, so I usually don't bother about these trades as long as I am getting the outcome I am always shooting for.

WINNERS THIS WEEK

Trade Outcome

PARTIAL LOSER

Profit/Loss

$-125

Beginning Account Balance

$11,100

Ending Account Balance

$11,500

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