NOV 2020: STMP $185- $190 Bull Call Spread
Stock
STMP
Trade Structure
$185-$190 Call Spread
Trade Date
11/11/2020
Price Paid
$250
Expiration Days
12/24/2020
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
STMP announced great earnings but the stock got punished brutally for that. Another reason why I don't trade earnings as the market's reaction is totally unpredictable. The exaggerated move to the downside was overdone and it caught my attention. I got into a $185-$190 Call Spread, after seeing the first signs of reversal.
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 11/05
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside the Keltner Channels.
RSI Analysis
RSI is in oversold zone but still inconclusive.
ADX Analysis
DI- is turning downwards indicating that the downward pressure has lost steam.
Trade Analysis
STMP initially went side ways and made us wait until the last week of expiration. Usually, if the stock takes off in your direction, you can close these spreads out in 20 days for your profit target.
Trade Outcome
WINNER
Profit/Loss
$0
Beginning Account Balance
$7,730
Ending Account Balance
$9200
