SEP 2020: ZM $365- $370 Bull Call Spread

Stock

Trade Structure

$365- $370 Bull Call Spread

Trade Date

09/03/2020

Price Paid

$250

Expiration Days

10/02/2020

THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.

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Trade Rationale

ZM was trading at $325 pre-earnings. Earnings caused a massive spike all the way up to $475! When such huge gap ups happen, it is not practical to expect the stock to pullback to pre-earnings trading levels. I had to use some level of judgement to get into this trade.

Trade Selection Criteria

Overall market movement

This is a post-earnings trade. My usual mean reversion parameters don’t apply here. These trades are based on Support/Resistance only

N/A

No Earnings or Significant News

Earnings are behind us and were announced on 08/31

CHECK

Bollinger Bands outside Keltner Channels

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

RSI Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

ADX Analysis

This is a post earnings trade – our regular mean reversion indicators don’t apply here.

N/A

Trade Analysis

Despite the fact, that we experienced a big correction in the markets during Sept, ZM stayed obstinate and after falling a little further, continued on its journey towards the upside. We were able to close this position in 20 short days for our full profit target of 94%