MAY 2021: FB $315-$320 Bull Call Spread

Stock

Trade Structure

$315- $320 Call Spread

Trade Date

5/5/2021

Price Paid

$250

Expiration Days

6/11/2021

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

Why do you think I am Bullish on Nasdaq? Every single tech giant has beat earnings this season. FB gapped up to $331 after a comfortable earnings beat. When it gave up its gains due to profit taking last week due to the Nasdaq sell-off, it gave me a beautiful opportunity to enter a trade at the gap fill level. We need Nasdaq to behave next week and all these tech trades will shape up nicely for us.

FB_315_320_CallSpreadOpen | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

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

CHECK

No Earnings or Significant News

This is a post earnings trade and earnings are behind us

CHECK

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

N/A

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

N/A

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

N/A

Trade Analysis

Although, FB went against me initially and got stuck in a sideways move but I was able to close this trade for 94% ROI. If you had bought regular Call options, you would have been wiped out on this trade due to Time Decay.