Hey 5-Star Trader,
“Tuesday Trade” Journal: One of the most important concepts in trading is to review your work, and learn from the good and the bad. Identifying what is working is critical — to do more of it. So, to lead by example, each Tuesday, you’ll get a trade from my trading journal, in which I explain my thought process from start to finish. Trading is all about finding something that works, and applying it over and over again. That’s how you find trading success. So study up on this “Tuesday Trade” and let’s get to work.
For this week’s “Tuesday Trade,” I want to outline my trade(s) in John Deere (DE).
Over the past year, John Deere has performed well throughout the pandemic and the last several quarters surrounding earnings went really well for them overall. Because of this, it has become one of my favorite tickers to trade.
DE had another earnings report coming up so I knew I wanted in. The night before the report came out, I sold two iron condors and got into my trade ー SELL -2 IRON CONDOR DE 100 21 MAY 21 355/365/355/345 CALL/PUT @7.77 limit order.
There was a gap down at the time of entry, but because of their past performances I just viewed this as a better spot to get in. Pictured below is DE in the Hot Zone.
While I was happy with my entry in my iron condors, the nature of that trade was neutral. Because of my confidence in this setup, I decided to add to my position in DE with a put credit spread ― SOLD -1 VERTICAL DE 100 21 MAY 21 355/350 PUT @2.27.
This gave the condor more risk but a bullish slant. I decided to only buy one contract because the report was going into Friday. This meant I wouldn’t have time to adjust, making me risk the full amount.
The next morning I was able to sell my iron condor for a profit 一 BUY +2 IRON CONDOR DE 100 21 MAY 21 355/365/355/345 CALL/PUT @5.46 limit order. I could have tried to hold it and let it decay more, but instead I just held the put credit spread.
Finally, a few hours later, it was at almost a max profit, but if I let DE stay near where it was, then it could potentially expire worthless. So I sold my bullish put credit spread ― BUY +1 VERTICAL DE 100 21 MAY 21 355/350 PUT @.11 limit order.
That’s how my DE proved to be a two-entry ticker for a profit.
Interested in trading earnings reports? Join me for my Quarterly Profits live-trading sessions. We will deep-dive into the run into earnings as well as trade the actual reports in real-time.