NOV 2020: LRCX $430 – $425 Bear Put Spread
Stock
LRCX
Trade Structure
$430-$425 Put Spread
Trade Date
11/13/2020
Price Paid
$250
Expiration Days
11/27/2020
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
Since we are in a bullish market, I am not doing any Bear Put spreads this year as the bearish moves don't last long and quickly reverse towards the Bullish side. That being said, LRCX has shot up dramatically in the past few days and it is not an earnings event which caused this movement. It is just a share buyback program. Of course, there are no guarantees in the stock market on any trade being successful, but this movement really seems overdone to me. Also notice, that I have chosen an expiration of only 2 weeks for this trade as Bearish movements don't last too long in the current bull market. It could be argued that this pattern looks like a Bull Flag, but it remains to be seen how this trade shape up. I am not seeing any fundamental reason behind this move at this time.
Trade Selection Criteria
Overall market movement
There is no extreme movement in Nasdaq, but the stock does show signs of an extreme up move.
No Earnings or Significant News
Earnings are behind us and were announced on 10/21
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
RSI is in overbought zone but no conclusive as it hasn’t dipped below 70
ADX Analysis
DI+ is pointing downwards, indicating that the bullish momentum may have lost its legs.
Trade Analysis
Analysis will be updated when we close this trade.
Trade Outcome
N/A
Profit/Loss
$0
Beginning Account Balance
$7,730
Ending Account Balance
$N/A
