Sep 2021: QQQ $368 – $369 Bull Call Spread | Mean Reversion Trading Using Options

Sep 2021: QQQ $368 – $369 Bull Call Spread

Stock

QQQ

Trade Structure

$368-$369 Call Spread

Trade Date

9/21/2021

Price Paid

$50

Expiration Days

10/29/2021

COMING OUT OF A CORRECTION

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. All the trades taken during the correction are looking like winners. Here is how the next few weeks look like for our trading group consisting of 1000+ traders.

AllGreen | Mean Reversion Trading Using Options

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

Once in a couple of months you get these amazing mean reversion opportunities on Index/ETFs like SPY,QQQ,DIA. In the last decade, not even once did I have a losing trade on these opportunities. I guess if somebody wanted to be a passive trader, they could just wait for these moments and put on these trades when they show up. But for you to spot these trades, you will need to be engaged with the market. If you become too passive and stop trading for a few months only to get into these trades, you won’t even know when a sell-off is happening and even if you do come to hear about it, you will not know what levels are right for you to get into a trade. Also, these opportunities may not present themselves for several months at a time. The beauty of these trades is that they have $1 wide strikes available. You can risk as little as $50 and there is no limit to increase your exposure. Simply add more contracts to increase exposure! All 3 of these are textbookish mean reversion trades, so I will not go into further detail. You have all the mean reversion indicators in agreement. RSI coming out of oversold zone, DI- and DI+ both changing direction.

QQQ_368_369_CallSpreadOpen | Mean Reversion Trading Using Options

Trade Selection Criteria

Overall market movement

Massive drop in the markets and we are nearing the end of a correction.

CHECK

No Earnings or Significant News

N/A – This is an ETF

N/A

Bollinger Bands outside Keltner Channels

Bollinger bands are only slightly outside Keltner Channels but we are at the bottom of our trading range here.

CHECK

RSI Analysis

RSI was turning up when I took the trade. Although, It dipped again a few days later

CHECK

ADX Analysis

DI- is turning down and DI+ turning up when I put on this trade. These are rare, but amazing setups to trade.

CHECK

Trade Analysis

I took this trade when I saw the first signs of a reversal. But the first one turned out to be a fake signal. The markets kept selling off for almost next 2 weeks after this. The beauty of this trade is that it still made 94% ROI. Vertical Spreads are amazing because they don't lose value via Time Decay. If you had bought QQQ calls, they would have lost all their value in the 2 weeks that the markets kept going against you.