NOV 2020: W $240- $250 Bull Call Spread
Stock
W
Trade Structure
$240-$250 Call Spread
Trade Date
11/09/2020
Price Paid
$500
Expiration Days
12/18/2020
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
To participate in our live challenge and to access our online training, please click “Your Account” and upgrade to the “Live Trader” plan.
Trade Rationale
W shot up to $304 after announcing great earnings. However, due to the sector rotation currently affecting Nasdaq, it dropped all the way down to $240 which is a well established support level. Which is what prompted me to take this trade. Sometimes, during steep sell-offs technical indicators don't have time to catch up, so you have to use the simple concepts of Support & Resistance to pick out these trades.
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 11/03
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
W kept us guessing all through this trade. It entered a side-ways consolidation pattern after putting on the trade. We had to literally wait until the last day of expiration. But we are able to close it for our full profit target.
Trade Outcome
N/A
Profit/Loss
$0
Beginning Account Balance
$7,700
Ending Account Balance
$8900
Do you only use Debit Call vertical for directional trade?
Yes, I exclusively use Debit spreads. Call and Put verticals for the $25K challenge. I have laid out an Iron Condor strategy in my book for larger accounts.