This is a discussion of the "RSI Below 30 Call Diagonal" strategy.
This is a bullish mean-reversion speculation that waits for an oversold stock with 14-day RSI below 30 to start bouncing, then uses a 60-day long 50-delta call against a 30-day short 20-delta call to capture recovery while avoiding earnings.
Overview
- Diagonal Credit Spread
- 2 legs
RSI Below 30 Call Diagonal Strategy Settings
- 30 Below Diagonal Strategy utilizes a custom strategy which is labeled "CML_Diagonal_50-20_CS" under the custom strategy dropdown menu.
RSI Below 30 Call Diagonal Open Conditions:
- 14 Day RSI below 30
- On the day, the stock moves up .25% or more
- On a scale of 1 to 5 (best) the minimum liquidity for an option trade is 4
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Details on Options TradeMachine is Selecting for RSI Below 30 Call Diagonal Strategy:
- 1x long 50 delta call near 60 days to expiration
- 1x short 20 delta call near 30 days to expiration
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Earnings Handling for RSI Below 30 Call Diagonal Strategy:
RSI Below 30 Call Diagonal Close Conditions:
- 14 Day RSI above 45
- Close 2 days before earnings
- Gains are above 80%
- Options reach expiration (Close all legs with front month options)
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Open next trade for RSI Below 30 Call Diagonal:
