Nov 2021: DIA $350 – $351 Bull Call Spread
Stock
Trade Structure
Trade Date
Price Paid
Expiration Days
the 11th 25k Challenge was successfully completed on 12/18.
I still have some trades opened in Nov/Dec which are beginning to close now, so will finish documenting them as they close.
The beauty of ETF trades!
During a correction, 2-4 weeks of trades will get absolutely wiped out, but we save so much cash with this trading method that using it strategically will save you from these events which come unannounced and without warnings. Corrections although brutal bring amazing opportunities with them. You will notice that ETFs like SPY, QQQ, DIA, IWM etc which represent the Stock Market get pulled back and generate trading opportunities during these events. This is the time when you need to deploy enough cash from your portfolio to take on these ETF trades, so that you either cancel out the damage from the correction or come out in a better place than you were before the correction.
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
Trade Selection Criteria
Overall market movement
Massive knee-jerk reaction and a gap down in the markets.
No Earnings or Significant News
N/A – This is an ETF
Bollinger Bands outside Keltner Channels
Bollinger bands are only slightly outside Keltner Channels but we are at the bottom of our trading range here.
RSI Analysis
When you are taking trades on knee-jerk reactions, RSI and ADX are of no use. The only thing to watch out for is support/resistance and price/action itself.
ADX Analysis
When you are taking trades on knee-jerk reactions, RSI and ADX are of no use. The only thing to watch out for is support/resistance and price/action itself.
Trade Analysis
Trade Outcome
Profit/Loss
Beginning Account Balance
Ending Account Balance
Hello,
I really enjoyed reading your book. Very easy to read and the concept is simple yet logical.
You mentioned that you like trading ETF’s, but how do you handle the skew in the indexes? The ATM call verticals don’t give risk 1 to make 1. They are risk 3 to make 2. Do you use OTM spreads to bring the verticals closer to 1 to 1 or do you just accept the higher risk to reward when initiating a trade on the indexes?
Since Index ETFs are high probability trades, you always have to go OTM (instead of the regular ATM spreads that I trade). eg. With DIA at 348, you may be able to grab a 350-351 spread for .60c. Risk 60 to make 40. Need to add enough contracts to make sense out of the trade.