Sep 2021: FIVE $185 – $190 Bull Call Spread
Stock
FIVE
Trade Structure
$185-$190 Call Spread
Trade Date
9/3/2021
Price Paid
$250
Expiration Days
10/01/2021
THIS IS A DELAYED TRADE FOR EDUCATIONAL PURPOSES ONLY.
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Trade Rationale
FIVE beat on eps estimates but was slightly below revenue estimates. They also refused to give full year guidance due to COVID uncertainty. This caused a massive and uncalled for drop in the price. Extreme market reactions mean opportunities for me. I waited for the price to stabilize and got in on the next day when I saw the first green bar followed by other indicators confirming my directional bias.
Trade Selection Criteria
Overall market movement
This was a post earnings trade. I don’t pay as much attention to the overall market as the individual stock’s price movement becomes more important for these trades
No Earnings or Significant News
Earnings were announced on 9/1 and are behind us
Bollinger Bands outside Keltner Channels
Bollinger bands are clearly outside Keltner Channels
RSI Analysis
RSI is turning up after the recent sell off
ADX Analysis
DI- is turning down.
Trade Analysis
One of the victims of SeptemBEAR! FIVE got pulled back by the correction and this trade became a loser. Look what happened just a few days later. Such is trading life. Your goal should be to have winners >= losers not all winners.
Trade Outcome
LOSER
Profit/Loss
$-250
Beginning Account Balance
$16,300
Ending Account Balance
$16,300
Thought provoking, I have an idea that less risk trades. Do you use OCO orders? Such as: $1.25 stop limit credit or $4.85 limit credit or better?
It is not possible to do stop loss orders on spreads. No trading platform is able to calculate the price of a spread correctly, so if you try a stop limit/loss order you will find that your trades get closed out prematurely for a loss even if they were profitable.