Active Trade Management to Protect Profits & Limit Losses | Trading Stocks & Options

[Music] [Music] good afternoon everyone welcome to our webcast on technically speaking trading stocks and options i'm connie hill happy you would join me here today we've got a lot going on in the market don't we how many of you struggle maybe even a little bit with managing your trades meaning you find it kind of easy to get in you feel like you know how to monitor them but then when it comes time to make a decision about actually managing the trade whether it's you should stay in or get out sometimes that can be a little bit more difficult so we're going to focus on that today as far as trade management and the different things you want to consider as you're deciding should you get in should you get it should you stay in i should say or get out so welcome to so many of you let's just give a quick hello to some of you we've got wayne and todd b.j dan osborne wayne george lamar fred welcome to all of you i'm also happy that we have barb armstrong joining us in the chat she's such a knowledgeable resource if you have any questions about anything we're talking about today go ahead and chat the question in either i'll catch it or borrow will catch it if you're listening to this on a recording i know lots of you do put your question in the comment section and then i'll go back and review those throughout the trading day and see if we can't get those answered pretty quickly for you so would love to have you do that so take advantage of the resources you have going on here uh i'm on twitter some of you know that in fact i've got most of you know that all of us coaches are on twitter and we'll post educational content throughout the day sometimes mine is technical sometimes it's related to different things i find on the thinkorswim scan and so my handle is at chill underscore tda you'll want to track with barb too her her handle is at b armstrong underscore tda barb does a lot of great posting throughout the week as well so don't want to just catch that all right well what we talked about today is for in educational and informational purposes only it's not intended to be investment advice or recommendation of any security strategy or account type while this webcast discusses technical analysis other approaches including fundamental analysis may serve very different views past performance of any security or strategy does not guarantee future results or success all investing involves risk including the risk of loss please no soliciting no recording we'll take care of the recording we'll post this when we are finished with it here today hopefully we won't have any technical hiccups and get that posted for you fairly quickly one thing you need to be aware of in the paper money platform is that the short options can be assigned up to any time regardless of the in the money amount when you sell that option however paper money doesn't typically do that okay it doesn't do that assignment so you need to know that that is a difference from the paper version to your live account there aren't a lot of differences but that one be aware of stock markets are volatile and can decline significantly in response to adverse issuer political regulatory market or economic developments we've seen pretty much a lot of that lately haven't we so this will be our agenda today we're really going to focus on the trade management techniques and one thing i do want to emphasize is that you'll probably want to make those decisions as you get into the trade instead of getting into the trade and flying by the seat of your pants i've done that before too so i know you probably have maybe once or twice and then trying to figure out what your exit plan is going to be and how you're going to manage it so we are going to look at a lot of different examples in our paper account show different ways we could manage it and then of course i want to show you a couple of trades that we can put out in our think or swim that are just example sample trades for us to follow up on so let's get to it we're going to start out here we're going to come over to our thinkorswim and i'm going to start us out on etsy etsy's a trade that we got into two weeks ago in our class and i marked it here with this green oval we did a short call vertical we did a 140 145 i like to put this green line in here letting me know these are just some documentation to let me know hey we sold the 140 we would like the price of the stock to say stay below that point come options expiration date so we got in here on the 7th and it just kind of drifted down for us today uh shortly after the market opened it filled our order we had an order sitting out there that said hey phyllis if we get a majority of our profit it did we bought it back for seven cents we're out of the trade we're not going to have to hold further before options expiration in may a little bit further out and we'll entirely miss at least for that trade the earnings and sometimes people like to avoid earnings that should be something to think about before uh as you're getting into the trade decide hey do i want to hold this over earnings or do i not okay that's the first trade now i'm going to go back and talk about a couple of principles here when we're talking about trade management we're talking about how you want the trade to fare how you want it to play out on the actions that you want to take to help either reduce risk or to start locking in some gains and so initially you're going to have that initial exit right we'll talk about that a lot an initial get me out if i'm wrong point especially on a stock trade or get me out if i'm right we did a couple of those last week i'm going to show you how they fared where we put in a target and a stop loss and then this is something that's important to decide at the beginning of the trade which is basically what is your objective are you just trying to get to a target or are you trying to ride the wave of the trend that can be something that uh needs to be decided at the beginning okay if you want to write it up and down and up and down great then you have that mindset but if you haven't decided and you see your stock run up and you're like sweet i am so brilliant i got this one and then you see it start to fall down and you're starting to worry and be concerned oh i maybe should have got out i should have taken my profits well if you're doing a trend trade mentally you have to be prepared for the run-up and the pullback and the run-up and the pullback uh one thing we have not talked about a lot in here but it is certainly something to consider and that is adding to your position if you're doing a trend trade for example and you get a fresh new entry signal and you haven't used up your entire position allocation that you could some people might find that's a good place to actually add on to the trade and that's part of trade management as well some of the trades we haven't done a lot of trend trading so we haven't added to our position but do consider that a big key here managing your profit losses if you will be fairly active with your stop losses and be active in moving them up they you will find a little bit more consistency in your results now i can't promise that okay but many traders notice that if they're really active with that stop and are really paying attention to what's going on with the stock then it does make it easier for them to manage the losses and then one thing you want to consider is protective strategies and we don't really go into a lot of that here but this could be something like paying attention to my stocks coming up to earnings uh my concern that the company isn't going to be doing that well am i concerned maybe should i put a stop loss on the stock yeah though that would be part of your trade management as well many of these considerations all right let's jump back to our paper money here and get rid of all our cute little pink marks so we started with etsy it executed automatically we're out of the trade now come over here to the monitor tab with me and i actually have a few notes over here in the scratch proud from last week if you were here we talked about having different targets available and how to maybe assess that if you weren't here that's okay just know i'm going to put a link down in the description to that webcast that we had last week if you're interested in maybe going back and determining hey do i like the height of the pattern to determine a target or do i like using this fibonacci retracement sometimes that can be a way people will go to identify their targets so we talked about etsy we're out of etsy let's look at cnq now cnq we've got let's open this up a couple of things going on here we have the stock we bought 100 shares of it we also have one longer dated option contract for september and when we got into this trade the purpose of that longer dated contract was to kind of treat it like you might be treating a trend trade meeting let it run up a little bit pull back a little bit run up pull back assuming that the stock is going to continue now i want to show you where we're at so far on the 100 shares were up about 15.6 and we thought in this these two trades march 3rd so we've been in about six weeks or so uh and so the stock is rewarding us fairly nicely we're up 15 on the option we're up about 76 now i have to tell you first thing this morning these were up significantly higher which i think is helpful to kind of make the point yeah you got to have your strategy you've got to have your stops your targets whatever in place to help you try to maximize your profits as much as you can don't plan on getting out at the highest price all the time or the best price that's just not really realistic but if you can get a good chunk of it then that's a lot more realistic okay so i'm setting this up here uh both of those are doing good let's take a look at the chart here cnq canadian national resources because barb's in here maybe we could do our hand over our heart for oh canada canadian company i know but barb uh is loves her mother country now look what we've got going on here so here's our marker when we got in the trade and we've been writing the peaks and the pullbacks and the peaks and the pullback well look how far down here our stop loss is well that would have been great when we maybe started out in the trader up a little bit but if we're up 76 in that option maybe we ought to consider tightening something up here now i'm going to zoom in so we can see a little bit more closely what we've got going in here we have this stock everyone's having a red candle right but look what's going on here we have had six days of green candles six days of bullish action and now we're getting a red candle now the red candle isn't the end of the world it doesn't mean the trend is going to change it does mean we could see a little pullback i mean look how far this stock is from this 30 period moving average it's a ways away it has been climbing at a real steep clip if we're somebody that says you know that was just kind of a nice little run i don't mind taking some profits here or locking in some profits you could do that but you wouldn't want to ignore it and just fly by the seat of your pants okay so we're going to do two things here one we're going to move up this stop loss on the stock and then we're going to put a stop loss on the option as well now if you want to give it the room to run up and pull back and run up and pull back great for the stock what we might consider is maybe moving this stop up just a little bit below the moving average but it hasn't really used that moving average it hasn't come down that low let me kind of back up here show you a little bit more now if you in your mind you think you know exactly what you would do to manage this trade i want you to chat it in here okay go ahead and chat it in and i'm just trying to look through the chats here real quick see if there's anything i need to catch or if barb is it looks like you guys are doing pretty well right now while you give me your opinion i'm gonna go move up our stop-loss uh let's add another moving average here and i am going to add on and this is a really pretty aggressive simple average we're going to put in a five day uh so that we've already got our 30 in there we're gonna put this on we're gonna put it in at five days make it a little bit bigger i'm gonna make this color blue i like my shorter term moving averages to be blue just a creature of habit look how nicely it is just riding that five-day moving average um if you wanted you could say well that seems to be where it's finding support maybe we go a little bit below the five-day moving average and not the 30.

part of it depends on how much are you willing to give up to continue to advance in the trade if you're not willing to give up much you're going to put on the stop loss really tight if you are willing to give up a little bit and give that stock room to maneuver around and wiggle then yeah we're going to put that lower so i'm just curious what you say george says maybe we could use the atr which is the average true range uh dan says nice looking trend move this stop up and ride the wave all right we could use atr i am not going to use the average true range although somebody could it would be entirely appropriate um in fact if you go to a lot of or some of barb's classes that she teaches i do her chat sometimes she will teach how to use this atr method i'm not planning to use it today but if you got into the trade like george was thinking about and using that absolutely continue to use that throughout the trade don't get in based on atr and then all of a sudden go oh let's just change it let's go do something else let's be spontaneous you know don't do that plan the trade and then trade that plan all right five-day moving average is about it's not showing here for me for some reason it's about 67 30. if we were to go one percent below 67 30 so we're going to multiply that by 0.99 now i would say put a stop around 66 62 okay i'm going to drag and drop this one all right because it's easy to do 66 i'm looking at the gray number on this side uh 62 oh i'm getting so close i'll take the 61. 66 61 we'll go ahead uh we're just going to replace that stop loss it's going to do that action for us okay we've got that stop loss pretty tight now what about the option if we're in this option trade and we actually don't have an exit plan for it right now what we could do is we could also use the movement of the stock the price of this option when we got in was 8.70 price now is 1545.

somebody could if they wanted do it based on the price of the option and say man i want to keep a lot of it you know maybe you'd put in a stop for a price of maybe twelve dollars okay if the price of the option gets down to twelve dollars trigger out of the trade again know that that would shave off a significant amount of the 77 percent and some of you might be thinking i'm not going to give that back that was nice of the market to be so good to us i don't want to give that back and that's fine so you're going to base your stop based on your what you think about the stock now some of the basic materials are down this is a more of a natural resources play and some of those happen to be down today but it doesn't mean their whole trend is changing so what we're going to do on cnq we're going to base the exit on the price of the stock to get out of our option so the stop that i calculated here was 66 62 we're going to do that on the option as well so we're calling it pretty tight let's come over here i'm going to do a right mouse click create a closing order and we're not going to sell it we're going to put this in as a actually we're going to do it as a market order but it's going to act as a stop for us we're going to come in here we're going to make it good till cancel and then we're going to put in the condition here's our order rules box we're going to come down here to this second level some of you may be familiar with this and use it all the time some of you this might be a little bit newer to you but we can come in here and we can say okay cnq let's do the mark price that's what think or swim likes if it gets at or above or at or below so i think that's the outer below what price we're going to put in 66 62 and get out based on the price of the stock if it drops that low we want it to trigger a market order we don't know what the price the option would be at that point so that's why we're just going to have a trigger market order leave it good till cancelled any questions on that oh moment says you are a newbie well welcome a moment snapper we're happy to have you here if some of this seems a little bit more advanced because you haven't been to any of the classes before you just hang with us okay you're going to learn quite a bit today regardless i'm going to kind of force it okay force you to learn some things all right let's go ahead and save this let's go ahead and send it off and notice uh there is a small commission on those options the other thing i should point out while we're here is that when this triggers we're not at a guaranteed price okay it's just going to fill at the market rate which is basically the next available price so just remember it's not guaranteed at anything let's go ahead we're going to send that up we're going to let those two stop orders work on those two cnq traits all right we're going to pick the pace up a little bit air air we've got 96 shares of the stock we got in this two weeks ago as well and we weren't doing a particular strategy like a 520 moving crossover which we've done at times if so i would have put something in the notes filled but i didn't okay so as i come back here let's look at the chart on air we got in based on a flag breakout so what does that mean it means we saw this nice flagpole here and then it was consolidating and we in this one we actually said if it breaks out beyond the flag go ahead and get us in the trade now this is the day where i have the green oval that we got into the trade an initial stop loss typically is placed just a little bit below that so that if it falls back inside here into the flag consolidation we're out of the trade the pattern isn't following through now as you look at it right here does it look like the that it's following through for us we had a height of our flagpole that gave us a target up here around 54. so we put that in and the stock isn't going that way is it it's starting to show some weakness in fact those of you that pay attention to candlesticks what is this candle man that's a bearish engulfing candle isn't it it is saying i am pulling back so one thing we could consider doing is saying okay if we're gonna move our stop loss aggressively up every single day let's maybe use one percent below the low of the candle and we would have moved it up we would have moved it up we would have moved it up and if we go one percent below the low here the low is 51. no that's the close the low is 51.02 let's clear out our calculator we could do a quarter below it we could do a percentage below it it can be whatever you like and it may vary from stock to stock but it definitely has gone way past the low of yesterday okay so in this scenario somebody might say you know what it's losing its momentum this was a short term swing trade and we have that target it's just not utilizing it it's not going there it's falling short of it at least for the time being so if you we were on this short term trade wanting to inch up our stop loss along the way guess what we would have been we would be out today if i go one percent below the low which was 5102 and i'm going to multiply that by 0.99 so we get that one percent below that would be fifty dollars and fifty cents well it came down to fifty dollars and fifty cents and now it's starting to go lower so we are going to take action based on had we been putting our stop loss in one percent below the low every single night locking in some gains in fact here let's see we're up barely on the trade we're up about three percent uh but because it's just not following through somebody might decide to get out if somebody said i saw the flag and the target but i really want to trend trade it then you might not get out right now you might say well let's give it a little bit more wiggle room let's uh maybe go it bounced here off the 30. you know

maybe if you had a longer term type trade in mind then yeah you might put that stop lower for our purposes i'm just going to get us out of the trade so i'm going to cancel our stop i'm going to cancel our target we're going to come over here to air when i was planning it we were only going to adjust our stop loss but because it's met that condition we are just going to get out and you could try to get the midpoint price if you want if you've got kind of a wide spread that can be helpful maybe not paying quite as much to the market maker but so we'll try for the midpoint we're going to hit confirm and send and on the way it goes we've said what we want to get filled out that should get filled here in the next minute or two now gary has a question well gary has a couple questions here what happens if the market opens and you have a falling window meaning a gap down we'll talk about that does stop trigger out or hold a trigger um i wish i would have seen that before i cancelled the stop loss here gary sorry the status if we come up here to the working order status let's see if we can find another one see this this little mark here right here in the side it kind of pairs up those two trades sitting together and it gives you the idea oh we're going to get out if this happens or if that happens and so jk solar we did a similar thing with it last week and so we've got a couple of conditions right now it's saying 735 is the price but it's putting it in a weight condition but sometimes you will see that as a trigger what if we have a gap down yeah that's important to think about in fact let's uh let's go to jk solar here real quick we see it out here we said we want to get out if the price of the stock hits 64 which is the target get us out there or if it hits the stop loss it was fifty dollars and 48 cents it hasn't it hasn't hit it yet let's go look at what jk solar is doing and you can see i've got my my orders in sitting in there uh 4058 let's see now i forgot what that low was um see if it'll balloon out for me it's showing us two they're really tight four or fifty dollars and 48 cents so it's not quite that low right now and it didn't quite get that low but if it does we've got our stop in place we've already made our decision we're going to let our plan work what if tomorrow morning the stock gapped down could it happen you bet especially during earnings season that can happen this stock is a couple days away from that on the 28th that would be a week from today if the price of the stock gaps down it triggers that market order that market order lines up with all the other market orders and tries to get filled at the next available price that next available price is certainly going to be lower than the trigger it's going to be lower than our 50 and 48 cents if it gapped down to say 47 or something so the intent would be to hurry and get it filled you may take a loss bigger than what you anticipated taking when you set up the stop loss there's no way to avoid that but what you need to know is it'll execute hopefully close to that price that's the intent but it's never guaranteed okay hopefully that makes sense to you all right barb's helping out here as well uh letting us letting uh giving you a good answer to that as well i think we covered similar things all right so that's our jk solar one more we're going to do here because i do want to show you a couple of interesting setups that we could use as practice trades costco last week we have a an idea here we could do a a flag target let's get the stock up here of 632 64 or a fibonacci target in this case we chose the flag target the fibonacci target was pretty aggressive it would have had us be up here quite a ways i don't remember what it was oh it was 6.50 okay so we're looking we've only been in the trade a week again we saw this flagpole we saw it pull back it came out and it's advancing but it hasn't gone as quickly to the target as as we would like it to but again if we want to go one percent below the low so every night you're you're looking at the low maybe the market's closed that's fine it doesn't have to be open and you see what the low is then you adjust your stop you always want to move it up you don't want to move it down what do i mean by this yesterday the low was 597.30 and currently the current price is slightly lower than that 597.19. now suppose i had calculated the stop loss and we'll do it here real quick low here is 597 30. i'm going to multiply that by .99 i'm going to give it the one percent that would say hey stop us out of 591.

now suppose today it didn't get a sound okay it really would have had we have that trade in place because the price of the stock went lower but suppose you don't get stopped out and you want to do it based off the new low if the new low actually goes lower we don't want to lower our stock price we want to keep it at this previously calculated higher price okay which allows us to inch up that stop loss as it goes but typically a trader doesn't want to drop where the stock already has been if you make a mistake that's a totally different scenario if you made a mistake go back fix it okay but you don't want to go oh well let's might go down and hit my stop tomorrow so let's make it lower no we don't want to do that okay that's emotional trading uh we want to be logical about things okay so in reality we should have hit our stop already uh let's see if we're even up on the trade uh on costco why didn't it trigger yet it said costco would trigger at uh 570. oh okay because that was our original stop and we haven't done anything with it yet but let's go ahead and move it up here uh if we put in 591.32 it's going to trigger us out of the trade so let's just go get out i'll cancel our stop and i'm going to change this order here let's do a um cancel replace just so it queues it up for us let's take off the walk with the current price fit in fill in here we know it's a little bit higher than uh a little bit lower than where the stop loss would have taken us out now something doesn't look right here not sure why that price didn't update see how the real price right now is 597.27

not sure why that did not adjust but we're going to fix it to the current price 597 point 22 and let's go ahead and submit that should get triggered right away so it really doesn't matter if it's a good tail cancel or a day order so it canceled our old stop loss it's got our new one as a limit order that should execute pretty quickly and a couple of trades that haven't executed as quickly as i might thought might have thought they would have so here's costco all right there's our costco good let's come back to our charts what have you guys noticed in the market we're going to switch gears we're going to talk about new a couple of uh trades that we might want to consider have you noticed any trends in the market going on sometimes it has to do with strength of sectors and we see different stocks performing better in different sectors sometimes it's related to the price of gas sometimes it's related to to natural gas and crude oil distinguish between the two sometimes it's based on yeah what's going on there and so one thing uh we've noticed or may you may have noticed i should say is that people are starting to travel again are they not yeah people or you're probably like a lot of other people that are like i am so sick of being stuck in my house i am going to start traveling covet has settled down for the most part transmission rates are lower maybe you feel like hey i've been vaccinated i should be good or maybe you just want to travel anyway and you decide i'll find i'll wear a mask in any case some of the airlines are starting to do pretty good i know some of them have had a hard time bringing people back in so let's look at this one we've got delta airlines now on delta airlines they reported their earnings already on the 13th so last week they reported and what did they do man it gapped up and what does it continue to do is continue to run now we have a trade on we've got a target up there based on the height of that triangle so we're kind of holding out expecting that to happen as we're talking about managing losses uh this is not actually a trade in our class account but if you were managing it again just do using some of the different methodologies about locking in gains sometimes stocks don't go all the way to the target but i bring up a delta airlines to show you the momentum they received after they announced earnings now today we're going to look at uh united who ual who reported today what could happen to them look at that big gap up they're up about 11 today now some of you might be concerned of chasing the stock that's already up 11 today and i could understand that completely however let's just kind of look maybe back here was the previous high of 54. it's on its way there now if we were going to say based on the height of our candle or triangle um i have gone to the second point in the triangle let me actually let's just delete this i want to make it a little straighter i'm going to start at my second point in the triangle over here's my first point going to my second point i'm going to go straight up in fact i'm going to try to make it as straight as i can just trying to have it be over well that's a little crookedy but it's mostly straight okay that could act as our target if we go ahead in here and we duplicate the drawing and we put it out here at the breakout site which some people might have said was yesterday but certainly it is today which would look at this and say man that stock has a little bit more room to run up into the neighborhood about 64 and some change now you could approach this different ways some of you might say yeah that's nice and that is a nice hefty aggressive target but i don't feel that great about united airlines maybe you want to do a little bit more conservative of a trade so maybe you say okay let's do a short put vertical if it does retrace a little bit hopefully it'll stay above a strike price that we've sold somebody some of you could be aggressive and say yeah i want to shoot for that target up there at 64 and maybe you do a swing trade with an option or with a stock we're going to be a little bit more conservative on this one and we are going to look at maybe selling we'll open up the may contracts they have 29 days if you're not somebody that's familiar with a short vertical trade let me tell you we teach about them quite frequently if if you're new you'll want to hit barb armstrong's class getting started with options she teaches this webcast every tuesdays at noon eastern time and she will teach all the different strategies in the trading options course so if you're not familiar with that you will want to head over there and see when she might be teaching that next or maybe the last time she taught it you could go back in the archives and find it so here earnings are over implied volatilities come out to some degree in these options and what if we wanted to sell for example let's sell something with a 30 to 40 delta we've got a 37 a 35 a 32 a 30. we've got a lot of choices here let's do the 32 delta so out of ways let's see how if it will pay us decent let's do a right mouse click cell vertical now it's going to separate it by this half 50 cent increment okay so 49 it grabs the 48.50 next i want to spread it out a little bit okay so let's change this to 48 instead of 48.50 spreads it out a little bit that gives us i'm going to lock that in a credit of about 31 cents and we would want the stock to do what stay above 49. now some people would

just look at the probability here and say well it's starting out with a 62 probability that it would expire out of the money which is what we would like so anything above 60 we would consider higher probability there might be some of you that say you know i think i'd want to go further out and maybe bring in a little less cash for a higher probability now one of the things that i had in my consideration was open interest here on the open interest you're going to notice that the kind of the flat numbers without a 50 cents in it have a lot more open interest 48.50 zippo do you want to be out there where nobody's trading the contracts no we don't okay so spreading it out for a couple of reasons makes sense because then we also have some additional open interest here in the 48s what kind of a return is that if we have say 31 cents we need to divide that by what uh 69 cents that's about a 44 return some of you might be happy with that some of you might not okay can united stay above 48. well it's got a little bit of leeway here doesn't it let's zoom in here 48 puts it about where my mouse is so it could drop quite a bit still stay above it or even go below it for a period of time and then come back up could go flat or it could go up so we're going to do the more conservative again somebody could do it the target a little bit higher so on this particular one we can only do one contract we typically don't want to risk very much in our class we typically only want to do uh 750 dollars and so we wouldn't want to do too much here but if we're risking 31 or we're gaining 31 our risk is 69. it's really 69 we could technically do 10 contracts okay so i'm going to ratchet this up to 10. i'm going to change this to a first trigger sequential that's part of the management up front we're going to create an opposite order but when we get the majority of this we're going to go buy it back now i did some calculation before our class we're going to go buy it back here at a nickel so if it goes down and we get a majority of that 31 cents man we're going to be happy we're going to let the system execute for us you can be out riding your bike or walking your dog and the system will take care of it for you you don't have to try to catch it i used to think i'd be was really good at catching these and do not i'm really not i'm too busy during the day to just watch everything or think that i could all right so it's nice that think or swim will help us out there all right just got filled on now for our 31 cents now i'm going to show you one more setup i'm not going to have time to go through all the details of it but it's another airline and how many of you are familiar with southwest maybe you've flown on them before you can see here overall it started to have a nice little uptrend what did it do today it gapped up maybe it was trading in sympathy with united and information from delta maybe the market's expecting it to have a favorable earnings as well and so that is not going to take place till the 28th in the morning so when we meet next time uh that's when we will have already had the news so this could be considered a possibility again we can take the height of the triangle we can run it up and say hey we've got a pretty tall target we could shoot for or we could do a vertical him is going to do something a little bit tricky and i think we may have time to do it i'm going to come back here and the idea here would be doing something that maybe takes advantage of that long target with a long option but maybe selling a shorter dated option to help offset the price of that premium so one thing somebody could consider doing would be selling here something out of the money and i'm going to go let's see if that was the one i was going to use yeah i was going to use these may options sell the 52 50 but buy something longer dated now if we sell that that'll give us about 82 cents that it will take off the price of our long option give us a little bit nicer point here let's do a by diagonal now it doesn't know what i want okay it's going to go out and try to pick something it doesn't know i actually want to come out here to september and grab the september 55 on uh september let's look in here what our choices are we come down i open up september here uh something close to the money would be right now about 50 that 50 strike price so let's go ahead let's change this to 50. so the one we're selling bring in a little bit of a credits a little bit out of the money this one is going to be at the money decreases our price a little bit as it brings in the credit that's it with the debit in this scenario we could lose 337 that is our total max potential loss here keeping the spread together we can do two contracts here which we'll do and if the option expires worthless then maybe we can if we wanted to or we buy it back for something cheaper we could continue to sell calls against this as the trade is progressing and that's going to be part of trade management as well is what else can you do to help lower that overall net cost that you're paying for the option spread so we'll do two contracts here we're going to hit confirm and send i'm not going to put an exit order on it i am going to see if it will go to our trading stocks and options bucket we're going to send it on its way all right i'll watch for that too to go ahead and save for us well barb's given you a lot of information that i was hoping to give to you so i'm glad that she is i just want you to apply what you've learned today go out examine every single one of your paper trades and make sure you have an exit plan if you didn't do one to begin with do it now and then as you get into new trades put your exit plan in place and document it so you can remember what you want to do you get a few traits going on sometimes it's a little bit tricky to identify what you want to do as you're managing the trade so that's what i want you to do and i appreciate each of you being here today i hope you're able to pick up a few little things about managing your own trades not getting the dare in the headlights look that's no fun barb i appreciate your help here as well answering questions she always does such a super job she's letting us know trade the trend is going to be up next it'll start at the top of the hour here and to subscribe to our channels so that you get the latest greatest and you can see other things that are happening that might not be published at this point so i just need to remind you what we talked about today was for educational and informational purposes only not investment advice or a recommendation of any security strategy or account type have a great day everyone we're going to follow up on these trades next week as well as introduce some new ones thanks everyone have a good a good day bye [Music] you

2022-04-23 19:45

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