Nov 2019: AMZN $1820- $1800 Bear Put Spread

Stock

AMZN

Trade Structure

$1820- $1800 Bear Put Spread

Trade Date

11/27/2019

Expiration Days

12/27/2019

Trade Rationale

The markets have been roaring higher and higher for 6 weeks and all stocks in my watchlist are over-extended to the upside. AMZN was beaten down for many days but then bounced right back up piercing the upper Bollinger Band. ADX however is not supporting this sudden upward price movement and is showing weakness. We paid $870 for this put spread and hope to double our money in the next 30 days.

Trade Selection Criteria

Overall market movement

With S&P 500 making new all time highs week over week for 6 weeks now, the overall market and practically every stock in my watchlist is making new highs. AMZN was beaten down but bounced right back up with the market. But the ADX is not supporting this sudden upward price movement.

CHECK

No Earnings or Significant News

Earnings are behind us and were announced on 10/24. There is no significant news or earnings event during our trade cycle.

CHECK

Bollinger Bands outside Keltner Channels

Bollinger Bands are clearly outside Keltner Channels. Perfect time for a mean reversion trade 

CHECK

RSI Analysis

RSI is in over-extended territory, however not showing any clear signs of trend reversal.

INDETERMINATE

ADX Analysis

ADX is clearly not supporting the upwards price movement we saw in the last week. This in combination with all other observations, give us a good reason to put on a mean reversion trade.

CHECK

Trade Analysis

As predicted by our technical analysis, AMZN sharply reversed and gave up its earlier gains, bottoming out on 12/08. However, it started going back up after that. But we were still able to close the position for a profit of $899 on 12/16. NOTE: As mentioned in my book, I don't try to "fix" my losing trades. I simply close out when I lose 50% of my initial outlay. However, I do actively close my profitable trades when I see the profit. If we had been lazy and waited until expiration, we would have got totally annihilated. Notice what happened on 12/27 expiration day.

Trade Outcome

Winner

Profit/Loss

$899

Beginning Account Balance

$16,200

Ending Account Balance

$17,099

To follow along the strategies we use in the $25K challenge, we recommend that you get the strategy book which explains the whys and wherefores of our method. Get it here=> https://amzn.to/2MUOCE5

15 Comments

  1. C T
    C T on December 29, 2019 at 10:40 pm

    Nishant: Hello below is an email I’ve sent to support@tradingextremes.com twice and it keeps bouncing back so decide to send it here.

    Nishant:

    Hello, happy holidays.

    I registered on your website and purchased your book. The book arrived Saturday and I was through the book in a few hours. I thought it was great, to the point and informative. I’ve already shared the book with a few other friends so they can order it.

    Question: Are these trades based off daily charts?I assume they are.

    Also, are you using any other times frames to evaluate equity and the market bias?

    Once you have a qualified trade do you enter regardless of the time of the trading day?

    I forward to your response.

    Thanks,

    Carlos
    ctrevino17@gmail.com

    Reply
    • Nishant
      Nishant on December 30, 2019 at 12:13 am

      Hi Carlos,

      Thanks for your nice words and sharing with your friends. If you don’t mind kindly leave a 1 liner review for my book. I am sorry the email bounced. I will get it checked. Here are answers to your questions:

      • My time frame for the charts are 3 month/daily charts. That is the only time frame I use to decide my trades as it aligns perfectly with my trade window, which lasts between 30-60 days at max.
      • Once I am ready to put on a trace, I don’t care much about the time of the day, I just go ahead and place the order trying to get a fill on the lower end of the trading range (if I have a bullish outlook). For bearish trades it is the opposite. If the trade doesn’t fill, I simply let it go. There is always another trade around the corner.
      Reply
  2. Robert Mazur
    Robert Mazur on December 30, 2019 at 4:45 pm

    Hello Nishant
    I also purchased your book and I like it. Did you try to use your method trading futures and indexes?
    Thank you
    Robert

    Reply
    • Nishant
      Nishant on January 1, 2020 at 10:19 pm

      Hi Robert,

      I don’t trade futures so can’t comment on that. However, it shouldn’t matter what you are trading, the principles should hold. I have applied this to indexes and it works the same. There is no difference. However, you need to find Indexes like RUT, NDX etc where the price movements are larger, it makes it much easier.

      Also, if you liked the book, kindly leave a 1 line review for me. It will be greatly appreciated.

      Reply
      • Robert Mazur
        Robert Mazur on January 2, 2020 at 10:45 pm

        Thank you

        Reply
  3. Vijay
    Vijay on January 2, 2020 at 4:04 pm

    Nishant , Do you also invest on behalf of others on a profit sharing basis ?

    Reply
    • Nishant
      Nishant on January 2, 2020 at 6:44 pm

      Hi Vijay. I don’t do that. However, I will be starting my 11th challenge around March. And you will be able to follow my live trades for a monthly fee.

      Reply
  4. C T
    C T on January 7, 2020 at 1:46 am

    Nishant, Hello I notice in your last post with Vijay you mention monthly fee, what is the monthly fee to follow your live trades?

    Thanks,

    CT

    Reply
    • Nishant
      Nishant on January 7, 2020 at 4:42 pm

      Hi CT,
      Yes. For thhe next $25k challenge which will start approximately around March, I will be putting out my live trades. The fees are being worked on right now. I will send out an email update when we are getting ready.

      Reply
  5. Richard Judge
    Richard Judge on January 13, 2020 at 3:57 am

    So where are the results? It’s well into January.

    Reply
    • Nishant
      Nishant on January 13, 2020 at 4:17 am

      Due to Holidays I wasn’t able to update my trades. Will update the results tomorrow. You can verify independently too that this was a 100% winner.

      Reply
  6. Nishant
    Nishant on January 18, 2020 at 3:40 pm

    I have updated the results of this trade for anyone interested.

    Reply
  7. C T
    C T on January 18, 2020 at 9:25 pm

    Nishant:

    Thanks for the reply. I don’t the update trades.

    CT

    Reply
  8. Blair Saunders
    Blair Saunders on February 20, 2021 at 4:17 pm

    Surely these results have to be in a summarized spreadsheet form so we can so avg p/l, % accuracy, profit factor, max drawdown etc. Can you pls send it to me?
    Going through one at a time doesn’t provide this picture

    Reply
    • Nishant
      Nishant on February 20, 2021 at 7:22 pm

      The trades I post here are for free members to learn from and is meant to be an additional resource on top of the examples I have laid out in my book. In our private Discord group, our 1000 members track all their trades in excel sheets and share with each other.

      Reply

Submit a Comment

Your email address will not be published. Required fields are marked *

No-obligation 7-day trial

Can a $5 move in a stock double your investment? Discover the power of Vertical Spreads. Come join us where we do this with 1000+ traders every day of the week.

View Plans

Don't show me this message again.