Stock / Symbol: NIO Limited / NIO
Strategy: Call Calendar Spread
Trade Entry Date / Price: 16 Dec 2020 / $44.84
Trade Exit Date / Price: 22 Dec 2020 / $49.15
Recap:
Our exit order was filled today at 6:47am PST, yielding a quick 14% gain. If you haven't been filled yet, I recommend exiting this Call Calendar Spread position asap as NIO seems to have peaked today. Try lowering your ask to the current mid to get filled.
Based on technical analysis, showing that NIO had found support at the $38 to $40 price level multiple times over the last 45 days, we entered into a long Delta, positive Theta, Call Calendar Spread on NIO on Dec 16, 2020. At the time of entry, NIO was trading at $44.84 and the Greeks for the position strategy were: 15.1 Delta, 7.8 Theta, and 7.6 Vega.
Then, on Dec 22, 2020, with NIO trading in our target zone of $49 to $51, we entered our closing order to capture the gain realized by the Call Calendar Spread. It is true that we could have held the position until Dec 31st to possibly realize the trade's full profit potential, but it is safer to just take profits when your price target is hit.
Position Review:
Long 1 NIO 21May21 47 call
Short 1 NIO 31Dec20 47 call
In at a net debit of $8.88 per contract and out at net credit of $10.15 per contract. As of this moment, the mid has dropped down to $9.95.
Analysis:
Max Risk: $895
Max Reward: $290 or 32% with NIO at $47 at market close on Dec 31st
Profit Range: NIO between $41.50 and $57 on Dec 31st
Commission (round trip): $2.60
Downside Stop at: $39.50
Take Profits at: $49 to $51 range
Realized Profit / Loss: $127 or 14% (pre commission)
