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

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