NOV 2020: SHOP $900 – $910 Bull Call Spread
Stock
SHOP
Trade Structure
$900-$910 Call Spread
Trade Date
11/09/2020
Price Paid
$500
Expiration Days
12/18/2020
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
SHOP is a huge mover. Price changes of $100 - $150 in a day are normal. Even after good earnings, it dropped all the way down to $900 levels, before reversing back up to $1050. Since, Nasdaq has been under pressure due to an apparent sector rotation, SHOP gave us another opportunity today at the $900 support level. As you can clearly see, the $900 level is very well established support for SHOP which prompted me to take this trade.
Trade Selection Criteria
Overall market movement
Nasdaq has been under pressure for last 2 days causing a massive sell-off in all tech stocks
No Earnings or Significant News
Earnings are behind us and were announced on 10/29
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
RSI is inconclusive. This trade was taken based on Support & Resistance levels.
ADX Analysis
ADX is inconclusive. This trade was taken based on Support & Resistance levels.
Trade Analysis
Once in a while you get these picture perfect trades and SHOP was definitely one of them. SHOP just went in my direction almost immediately and I was able to close the trade for a 90% profit target in 20 short days.
Trade Outcome
WINNER
Profit/Loss
$450
Beginning Account Balance
$7,700
Ending Account Balance
$8300
