Bearish Strategies & Protection | Technically Speaking: Trading the Trend
Done. Hmm. Hello and welcome to technically speaking. Trading the trend. Weeks to months. Money exchange jayboyd. Today I'll be wearing my technical analysis goggles. They're not
really glasses. They're kind of more blue like glasses. If you do a lot of reading, so they kind of help your eyes a little bit, But I'm going to use them for my technical house goggles here today. You like to welcome
J X VJ Bill Orlando, Sandeep Annette, tm tm, Chuck Rod, Seattle, Michelle and many others alongside with us. We got my good friend Michael Fair. Born in the chat fellow instructor he and I, and also other instructors do post educational content on Twitter. Check it out. Remember this? This topic is huge, Okay? Trade the trend weeks to Mars. Okay
We're not talking about just what's happening in the short term. We want to kind of see the bigger picture of what's happening on the three year weekly chart as well. And so absolutely that's going to be something we actually kind of focused on here today as well.
Now as we're getting started just real quick. Want to kind of give us uh, reminder of with what we discuss here today is it is done for educational informational purposes only not investment advice or recommendation of any security strategy or account type. Also understand the options are not suitable for on message, Special Risk and Erica trading options. Also understand that we will demonstrate the function of the platform. We will use actual
symbols. Also remember that futures and futures options trading boss substantial risk not suitable for all investors. ADDMASTER There's also disclosure statement as well now also last, but not least when we talk about options, remember the option Greeks know what those are sensitivity to. So just real quick As we're getting started here. I want to kind of show just real quick. Kind of the
material that we're really going to be covered. Now I would appreciate it if you just kind of focus on me. And maybe not my glasses because Because, really, they're just blue light glasses . Okay, so I know you're thinking No, man, you know, but if there are distraction, I'll take him off. Matter of fact I'll take them off because some of you are enjoying them too much. Alright, little fun there
so Here's what we want to talk about. We wanna talk about market conditions, but, uh one contact but portfolio kind of what's happening there. We also want to be talking about, Let's say sectors or any sector starting to go up our is anything Actually really holding. And they were gonna talk about some management of positions of some new positions we put on just this week. And I
want to kind of talk about maybe some adjustments that might be done in the portfolio quickly doesn't have to take forever And that's my point. I'm gonna show you when you do adjustments. A lot of times, it doesn't need to really take that long. And then the other thing we want to talk about is I'd like to bring up a bearish example. And kind of
talk about how embarrassed trade relates to the portfolio. And if someone does appearance, trade doesn't really mean that someone is but bearish in their portfolio. Okay so first off, I got the S and P up here. This
has been our horizontal support level. Now you kind of take a look at this. We're kind of down near the area where storage KLI There had been more bulls and bears yesterday when Fed Jerome Palace folk by the end of the day, the market rallied. And we actually saw about 1000 Point update today. We're actually seeing pretty much the opposite of that. And we're actually kind
of doing. It's not a bearish engulfing candle, but it's a larger candle near support. Now how many of you are actually thinking that maybe this support level might not hold? Okay I will look at Apple. Absolutely
So if we kind of look at this kind of thinking here here is that maybe there's support levels not gonna hold. Okay And I'm gonna do a trade on the index here today as we talked about that. So we're kind of thinking that maybe if this index does not hold and it's looking like it might not. Okay
what could the investor do? We're gonna show to bear's trades. Gay In our examples. Don't worry. It's not all bears class today. Okay but we're gonna show examples of two bears trades when you actually take a look at that. Let's say the NASDAQ, you're gonna see that that one did not hit a fresh new love. But my gosh, it was close
. If you actually saw what the 15 minute chart looks like this morning throughout, you would have thought this was like a roller coaster at cedar breaks. Okay is that cedar breaks in Ohio? Sandusky, Ohio, wherever it is. I mean, it went up and it absolutely just crater actually five minutes. It was even better. But if you look at the five minutes it just opened up and just flushed. Okay, straight down. So when you look at the
NASDAQ again, that's going to be an area when we talk about bearish trades here today, we're going to look for some tech stocks that might be under pressure of those rising rates, and those rates have become Smoking, and if you actually look at the rates, we actually went up to 3.10 on the 10 year, the 30 years. Golly I'm gonna put my glasses back on. So I
don't get poked in the eye, but you're seeing 3.20 really on the 30 year. Okay so member as these rates skyrocket or have gone up very aggressively, they're gonna put they can put severe pressure for the valuations. These stocks. It's not just the current valuation. But also when you look at actually foreign numbers, it can also put a lower multiple going forward. And if
these companies actually cut their earnings, man, these prices could actually come down on many of these stocks like we haven't actually seen other text base. I'm also going to bring up actually up the VIX. We actually saw the VIX yesterday had a nice drop. Sad frowny face me sad to see this. Go back up here today . Remember, if you're a bull, You don't want to see rising volatility. Boom I want to see
it come down, and so we're kind of seeing what the market actually going down fall until they come back and going back up at least today. We don't see it break out of resistance, but again kind of Challenging that old resistance level. Okay Now I want to kind of take a look at just fast fire couple of sectors . We know that there are some investors. There are portfolio managers where they cannot take bears positions. Okay Some
clients might not even want to do bearish positions. They only want to buy long. They want to buy the sock or whatever it is by the index by the second, whatever. And so the drop
sometimes can be different for different individual ambassadors. So when things actually dropped some portfolio managers, some clients, they're probably going to be looking for some areas where they might not mine in buying utilities just kind of down near that area, where it kind of broke out before Little cross over so far. Early signs but utilities trying to hold its ground when we actually talked about this week , said the only sector that we were really going to discuss and did trades on was in energy. Okay energy actually hit a brand new I hear today, crude oil went up to 100 and something Try not to. I'm trying not to remember. But you know, we talked about doing trade examples on Chevron , Exxon also Devon energy, etcetera. We'll look at those in
just a moment. But that's that's the only sector that actually hit him high. When you actually take over the say basic materials rallied, faded And then when you actually take a look at let's say staples trying to turn maybe kind of at this like like this old diagonal area horizontal trying to get a turn, but not yet. If you actually take a look at, for example, maybe, like the healthcare era is anything turning trying to okay, but the area that you got to be a little concerned about Really is, Uh, well, consumer discretionary. Uh Amazon pretty
much dropped the anchor here today. It's 7% down, thus dragging down the sector, really with it to some dirty water to a fresh new low. That's never not nice. We're going to talk about that area in just a moment. When we do a barrish example we talked about that. Could that sector be challenged? So that's a sector that is right now under attack. Okay Now I want to kind
of talk about just real quick. Let's go to second agenda. What about some of these positions We just put on this week, so let's actually bring up the stock CB X. Now I think it was John On Tuesday, he kind of talked about James with higher volatility. Might it make more sense to maybe buy the stock and maybe sell a call, and we call that a buy right? Now, if you take a look at let's say Chevron and you say, Okay, When was the trade entered? It was entered on Tuesday. 100 Years of stock up for 10 short of that, Actually, the 1 70 call, remember, a lot of investors might say, But, James, I want to be up on both, and we would say Well, that's what Children do. Children,
Children. They always wanted always in their favor, Okay? I'm having a little fun with you. But you know what I mean. Okay so the one thing is member. The
stock is a bullish position and the short call. That's a bearish position. Okay But the net effect of those two is a positive Delta trade. It's 56. So this trade is not moving as if it has 100 shares only because that's not what it is. It's really a stock position with a short call, and what you're going to notice is its net overall app remember with the cover called. I'm just
trying to just something just real quick with the cover call. There we go. I want to come off the bottom with the cover call. You have to stock it. She goes up higher and higher. You're
going to see that that call would become more and more negative. There's a cap on the street. So if we look at actually shadow on and said, is there anything that may be? The investor needs to maybe do here.
We would say not necessarily already is covered, called as the Fox swings back up into the area of resistance Energy actually hit the brand new high here today when you actually look at crude oil, you actually did see that that that did actually hit Let me get that open interest off. And if you look at that, I mean crude actually tipped in at 1 11. 37 today, hitting the hot Okay recently, so I don't see anything on that. What about the Exxon example that we actually did also, I believe on Tuesday.
You know, we kind of talked about maybe an ascending triangle Continuation trade, Right? And we talked about, for example. Maybe it kind of trying to breach the area of resistance. It did. It kind of faded back here today, Wick near the old resistance and did hit a new high here today. The trade
on that was the same idea. 400 shares of stock Four short calls . Same idea by right but it did actually have in this case a short put. Could anyone kind of tell me what the investor might consider. Any anything you might
want to look at. If you take a look at this. ExxonMobil the 80 ft shorted it. Okay sold that
for 2 83. It's currently at 38 cents. Any takers on in terms of the management there? Well, if you actually tell you take a look at this, there's 87% of the premium that's been gone, The investor could try to realize they might say, James, could the investor maybe just buy this back? Or if they thought that trend could continue, which maybe that's what the investors thinking they might say, James.
I want to profit take on this one and then try to sell another one that is called rolling. And if the investor goes, create rolling order, they're buying back the option that they're in now. The 20 May the eighties strike, and now they could actually say, could I go out and try to sell another one? In the future. Let's say the June expiration and maybe try to sell the put, Maybe like the June 85o want the ones kind of in that area of let's say a delta, 30 and 40. We change the
expiration. The 17 June You're going to see that If the investor, says James, I kind of want to be more conservative, they might pick the lower strike that has the lower Delta. That's just gonna be the 85. Okay So now what you're gonna see is it's able to roll for a credit.
Why are we even talking about rolling? Well because when we actually look at the numbers as 86 86% of the maximum game, the investors trying to let's say realize that right or that is that's an option. If they said I think that stock could have got she go up a little higher. They might in this case say, I'm going to buy that option back and try to sell another one. They're able to roll for a credit. If that's what the investor wants to do, confirming, send and forget this diagonal stuff. Forget it. We know that we're just rolling the option. That's all we're doing,
and now you're seeing it to net credit. And there's the dollar 30 because it's buying the option back selling the option or slight adjustment on that. Okay the only other one I kind of want to make mention of that we actually talked about, I think on Tuesday one. See how
these are holding up Devon Energy. Okay when we actually look into stocks like Devon Energy, What was the trade example? There? Hit also Brand new Hire today. Devon Energy. What's the trade? Can anyone actually tell me what type of trade this is? What type of trade is that? Sold the higher strike put, okay. The higher strike, which is the 60? Okay sold the 60 and then bought the 55. Alright so notice what we're now going to see is this is really just what we call it short put vertical And what you're going to know. It's just
there's four contracts. The four congress contracts and aggregate really equal of 43 delta, so about each contract represents about 10 or so Delta. And you'll see that it's positive Theta So it's not super sensitive. This this whole position is like owning 43 Shares of stock. That's it, okay? But it is positive Theta if it's positive status, negative Vegas so there is risk to volatility expanding and you're going to see that it only has 27% of the maximum game. So what might be investor do with this position? Well, they might say, James, I'm really gonna actually kinda keep this position going still not change it because it doesn't really have even greater than 50% of the maximum game. Okay So
on this one, it's not. It's not gonna change anything right now at all. Now, I have one more management sample, but I'm gonna come back to it. Okay Are there any questions of what we talked about? We talked about markets. We throughout the question and said, Is that support level going to hold? We actually talked about it, saying how utilities is probably second place as far as trying to get a little bounce, But you Energy is the sole name. Okay that is really actually showing some hives. Now I want to kind of
bring something up. Just real quick, Okay? And this is going to kind of want to kind of sometimes a picture is better than words. Sometimes the picture summarizes. Maybe the
thoughts emotions. And we know that as the markets for example , when you look at this portfolio that we actually have in the Martin in the IRET The portfolios are bullish. They're both positive Delta. The portfolios have been kind of let's say hiding out. On the Diqing thin sheets of ice that are shrinking more and more and more places to hide or the places to get in. They're
shrinking. Okay So here's the deal. It's not that the portfolio wants to be barriers. The portfolio is actually trying to really evaluate market conditions. And in trade, the dominant trends. Okay, so I want
to kind of bring up an example. When we actually let's say, Take a look at Let's say a stock and I'm going to take a stock example given like crn, okay? Now this is actually been one that's been a little bit under pressure. Okay Now what I'm gonna do is I'm gonna kind of strip this chart, so we just kind of see straight up chart. This is what we got. This is the daily chart. So if I kind of asked you and said, Hey, what do you see is the trend What would you say to me? What would you say The trend is okay. Now, if
we actually take a look at this When we actually take a look at the What's the dominant trend, right? Well by the way, the stock has been about cut in half in about last 56 months, Let's say six months or so. And you know, we might be thinking why can't go any lower? Well we know that's not true. Okay It could go. Laura could go higher. But if you actually take a look at this if we go back to that three year weekly chart This is what that chart is really showing now if we went back and actually said, Okay, this was maybe in the level of support. It fell
down below that, and then we actually had kind of a secondary level support. And then maybe this one kind of being another area. So the issue is when you start falling below support. A lot of bulls tend to be not asked. Opportunistic to get in
because they're concerned about where the support is, is their support and are is there enough momentum the change the direction of the trend. Okay? Now I want to kind of just take a look at this. How many of you kind of feel like when we talk about bearish positions? How many of you kind of feel like you kind of struggle with that a little bit? Okay So if I were going to kind of start out with maybe a bear strategies I would kind of think in terms of These are in particular. Okay And I'm gonna kind of write these just super quick. But if I actually looked at this and actually said the third one may be a long put, and I would actually say the fourth one would actually be what's called a short synthetic.
So it's not, for example, that the investor can just look at the stock and say I would go bearish. The question really becomes, is which strategy Okay ? Which strategy moving that over Which strategy in Y Okay, So let's kind of talk about this. How many of you actually have practice over the last little bit about you know, in terms of just kind of practicing with a short call Vertical. So when I actually say, for example, a short call vertical I like to think about in 33 things Delta Feta and I want to know the Vega. Okay so we actually say, Delta that short call vertical, You know, on a one contract basis. It's probably
only going to be a Delta. Let's say negative 10 to really 20. It's negative because it's parish. The situation with this
is and I'll just print the size that negative 10 Okay to negative 30. Okay now what I want you to actually notice here is this is positive data. But if it's positive theta What you gonna notices? We'll just stay positive and it's gonna be negative volatility were to expand the position could actually lose. From volatility becoming affecting the option premiums. I'm gonna start with this one real quick and we're going to use the example. This is probably more the more forgiving strategy. We're going
to look at the example of CRM, okay? Now I want to kind of show you this if we actually look at the portfolio, Okay, so I'm gonna look down here below, So if we look at the stocks that are in this portfolio, and we add them all up, Okay, so I can scroll up scroll down. But if we if we just said, let me see the bottom What is the dealt on this portfolio the IRA account. And while you're going to notice this, it's 21 70. What does that number mean? This is a this is a bullish portfolio. Now remember , I kind of showed the picture of the polar bear How that ice was shrinking. It's probably gonna be the case. Maybe we'll
have to see over time that maybe this number is probably gonna start to go lower and lower as there's more bearish trends. Then bullish. Okay So if we put on example given a bearish trade , does it make the portfolio bearish? Of course not. It's kind of stupid if I even thought that If we put on the barest position, Okay. Any stock whatever it was, let's say Bank of America. Okay, if we put that
on That's not going to turn the portfolio Barrish. Okay Now let's show this example. Okay let's say the investor decide they want to go out 20 to 50 Days expiration. And they're
being looked at you sell a call that maybe had a delta. Let's say 30 to 40. Okay So what we're gonna do is we're gonna position size this for the IRA account. Which is a potential $2500 max loss. If you actually take a look at this, let's say the investor, said James. I think the stock could actually stay below the 1 85. And if they
said, Well, James wonder if, for example, I'm wrong. What if I'm wrong? Well, maybe the investor wants to actually buy a call above that, just in case. For protection. So the ambassador is gonna they could actually right click on the 1 85 South go right to actually where it says vertical. And now what? You're going to notice this got a $5 widespread. There's the max credit. And what you're going to
notice is it's going to show us here on a one contract basis. What's the max loss? Okay now, let's say, for example, we said the portfolio can really risk. $2500 without even pulling out the calculator. I'm thinking we're going to be pretty good was showing an example of six contracts. Okay So if we now a
justice since we say minus minus minus minus minus to get to six Now we go back to confirm and send the reason why I kind of said that this strategy is really more forgiving is that the stock could even stay flat. Matter of fact, it can go from 1 71 all the way up to actually 1 86. Which is about $15. Which is about 10% of the stock and still be below break even Max. Profit MAX loss, Okay, so notice when we actually kind of look at this kind of these examples. This is going to be the same. Okay But the problem is, if you said, Well, James, what about like a long put vertical We're just gonna cross those. This one is
actually more forgiving. The short call vertical with a long put vertical You actually have a higher maximum game or a higher return on risk. But that's because the investor really has a debit. Okay So if someone says James Beaumont kind of more probability on my side, they might consider the short call vertical. If someone said James
, I kind of want to focus on higher, potentially higher potential profitability. They might pick the long put vertical . Okay so paperMoney account is gonna We're gonna do a trade right in the paid money count in our class example. You're going to see that. Here's the max
profit Max loss theirs for the six contracts Now, why is why is our class examples showing this will because the stock itself is actually in a downtrend? We're thinking could that trend Go to the downside even further. Okay and cook. He did that love just like any short option type of trade. The investor might not
try to get all of the premium if they got 50% 65 80% of the premium. That might be their goal. And what what kind of go down that path As we see what happens. The other thing is, the investor could also say, James, is there a certain point on this chart? Where Maybe the trend isn't going down anymore. Maybe it's reversing. Yeah, we probably say right around 1 91.
If this stock started get about 1 91. That trend could be reversing the investor might be willing to take A portion of the max loss and just accent based upon the trend changing Okay, now I want to, for example. One of the questions was Robert Casey. Gratitude James, Do you have a daily live session? I do.
Okay So let me kind of just just briefly if we actually just grab trainer education, So if you actually said if we went to where it says right on, the Tdameritrade website went to education. Okay on the left hand side will go right to the education offering where it says Webcast. We have actually a calendar. Okay And I'll send
this link out for this calendar . This this is pretty much set. Okay So you're gonna see that on it well on a daily basis this week, the answer is yes. I do teach on a daily basis this week . Okay so if I pull actually up this Webcast calendar you're going to see here we are Thursday, and the session that we're doing is right here. I teach. Also yesterday, I talked right there. I also for example , on Tuesday, teach right there.
But also on Wednesday that is not listed here as a teacher session on twitch, which is like YouTube, where it's an open Q and a forum, okay? I did that do that. When? Every Wednesday at 11:30 A.m. eastern, and I'm gonna do that tomorrow Friday as well. Okay, so that's where you can see that. You said, Why can I see the archives? Click on archives typing instructor. You can click on any instructor. But
if you said, where are those set the weather live recordings of them Just like a TiVo. You can actually park any class actually did right there. Okay, perfect. Now. I want to actually kind of go back to just real quick, kind of where the market is. And if we got to take a look at this, how many of you are actually thinking, Uh, That the market might break support. Is anyone actually thinking that could be a possibility? Okay I want to kind of see if this trade is actually filled yet. So I don't
see that a field yet. And if I look at that order I want I'm gonna just it just slightly so we can see if it can fill push it down seven cents for the credit. And now what I'm gonna do is going to go back to the monitor What fills? Now the purpose of me showing you this. Is a lot of times when I actually do a bearish trade Example in class. Sometimes people will say, Well, your parents and I'm like no, that that is just because someone does. A bearish trade does not mean that the portfolio is barest. So the trade that we
actually just did was on crn. That's crn does actually have a bearish Delta that bears Delta means It's embarrassed trade. But when you look at the portfolio and all and whole When we actually scroll down is still APPOSITIVE Delta portfolio. Okay I need you to understand that if someone doesn't bear is traded doesn't mean that their bearish you'd want to look down the Delta column. If you do see that you're closer to zero, you're more neutral market. If you actually see that the delta number is negative, your you have not only done a bearish trade, but your portfolio is bearish. Okay Now what I'm gonna
do is I'm gonna kind of go back to an example. I'm going to take a look at one more example of Home Depot, and then we're gonna talk about in index trading. So if we look at let's say stock like let's say, like Home Depot . What type of price pattern do you see on Home Depot? Now what actually has lower highs. Equal lows. Remember when you actually
see lower highs That actually means that the price is that the lower highs are creating a downward sloping diagonal. Resistance Remember, we kind of talked about the tools right? When we actually kind of go back and take a look at the kind of the strategies, right? I like to think about really. The short called Vertical is more probability base, but the long put vertical is really kind of more. Profitability based or could be if you set it up a certain way. It has a higher maximum gain relative to the Max lost. In our second example of bearish here. We're going to
look at the example of home Depot and we're questioning now. Home Depot is in what sector? Technology E. Utilities. Take another one. Financials No, So
it's actually indiscretion rates . We know the discretionary is under pressure. It's almost like that song under pressure. You know who that was by So if we actually take a look at that we're thinking if that's set direction breaks down stocks like Amazon stocks like Nike stocks like Disney stocks like Home Depot that are probably in some of the top holdings of that sector. They could be under pressure. Remember you could tell me what the trend is, but my next question to you is what's the strategy? Okay So you got to have a strategy that you would actually say, What am I comfortable and practicing Basseterre, said James. I want
to kind of do something that has a higher reward relative to the risk. I understand that about that short call vertical, but I just don't like to make something so small relative to what the risk is. Okay so let's hear the investor decides that they want to do like a long But vertical. Let's start with the first two words long put. If someone buys a long put, they typically want something to have a greater likelihood of being in the money. And expiration. If
there's an if it's in the money, there's intrinsic value, And that means the stock is below the strike. So if someone's gonna hold it closer to expiration, they typically want to try to focus on something where they Delta is higher, Probably 50 to 70 to start with, So let's say, the investor says. You know what, James? I actually think maybe The Home Depot stock could stay below the 300 investor says so they buy the 300. Now the investor might seem
well Jeez, I don't want to put out 17 60. Well being. Ambassador could do. They could say, could I buy a put and then maybe sell a put to create a credit? And then make it for the But this law so let me show you something. The investor buys a put by itself. Sell those shares at 300 the rights not free at 17 50. What you're going to notice
is that that break even is at 2 82 50. So that means the stock has to go down $14 by exploration just to break even many people don't like that. Many people don't like that negative time to get and then the stock has a drop. I'm talking about an expiration. So what does sometimes As they say, Look, I want to write class on that 300. Gonna buy verdict.
Okay When the investor we said long put, we did step one. Step two is seller put against it. If the investor actually says you know what I'm gonna do is I'm going to buy the 300. That's the barest trade and nothing gonna sell the 2 95 create a credit. What that watch you do is just going to reduce how much the investors really putting it risk or paying the dab it and what that really does is it makes where the break even Is not as low as it is with a long put, so let's kind of go back to our little diagram here. Okay that long put we're talking about a debit. Per contract. It's
negative 10 negative 20, typically the state of those negative, somewhat okay somewhat , but if voluntarily work to go high, you're okay. Well, you're gonna see it that could actually be Positive. Okay so that's the real advantage of a long put vertical compared to let's say a short call Vertical. Okay Now, if we take over this on a one, let's kind of imagine the investor, said James. I'm
willing to risk about $1000. Well I don't want contract basis. We know it's 2 53. Just Four. Lows. Edit. Click. One plus two plus three plus four. It's gonna really get this case too. Really what the next profit is, and Max Cheers. Put vertical
, the reward and the risks are a lot closer together. That was not the case with a short put bird with a short call Vertical . Okay so this actually has higher potential upside profit. Long put verticals tend to be focused on a lot more when the volatility is higher. Okay And
I'll just kind of wrap this up in a nice big fat Bo. When someone for example, does a long put they might take it Put potentially doesn't have to be just this. They might take something. Maybe. Where the deltas between negative 30 to 70 something out of the money at the money. You're in the money,
okay? So if you take over that, well, we already talked about is the state of their is negatives . Okay Vega if someone owns a long put in the voluntary work to increase They would love the volatility to go up because of the volatile it goes up and typically means one of two things. The stock prices probably down, probably, but if the volatility goes up, it's gonna inflator should increase the value of the long put's But then the Astrid here Is this has the lowest break, even okay? When you compare it to the two previous strategies, and the biggest thing is here is again It is a Devon, The investor is paying for it. Okay so we're kind of at a real critical juncture here, Okay? FB investor . Actually, says, James, I'm kind of like that Polar where I own a stock, or I have some bullish stocks in my portfolio, having them Piecyk understanding Of actually how an investor could a protect the stock, protect the portfolio, Or maybe even do embarrassed position. These are things that are not the wharf. A critical juncture here of can they even see above the support level. Okay Now, if we actually investor did this, I'm four contracts. There's the
commission. If that's okay, The ambassador could say, Okay, I've reviewed it. If it's okay, they could actually send the order. It feels so now if we actually take a look at this, the data The session lows and I want to go back to kind of take a pause and see if there's any questions . Okay Lot of you are right on Bowie under pressure, okay? So just real quick. Any questions on what we talked about? So I wanted to kind of bring up the different tools that the investor has. If they said James , I want to kind of do a bearish type of strategy, okay? Now if we weren't actually look at this , let's kind of make the assumption now that the investor own stocks and they're saying, James, I'm not really sure if my stocks are really gonna hold and I want to protect them. Okay So
what I'm gonna do, and I'm going to kind of show how quickly the ambassador could evaluate. Some of you were asking questions about a stock like apple. What a good time to bring it up. So what? You're gonna notices and in our classes so we don't do any trades outside class. All the trades are inside the webcast. Okay There was only one example where I did a trade five minutes earlier. And I actually
told you as soon as we actually started one, Okay, So let's imagine the investor says, James. I gotta stock like Apple. Wanted to try and have it more as a was like a long passage holding, But I'm a little concerned now that maybe Apple could be drug down with the market. We know that if the ambassador says, I want to sell a cover call, that's a credit okay, and a capsule upside along . Put is a debit. The investor has the right to sell underneath the strike price or at the strike price. I meant underneath the current stock price typically, and a caller is a blend of those two. When we talk about a caller, we're typically talking about and expiration of 20 to 50 days expiration. Okay That's the starting point. We
talk about also selling the car out of the money. And the put out of the money buying that put out of the money. Not in our examples when we look at stocks like Apple Archer Daniels Midland. Marriott. PG are
etcetera and R TX. I'm gonna put on five Where they want and then five minutes to put on. Matter of fact, William Go slow. Okay So the investor, said James, I actually don't like the trend about the apple and I want to actually consider coloring the position. When the investor callers the position they're actually reducing how bullish the portfolios and the position going to go the 20-40 days 20 to 50 days to expiration. It's going to sell the car out of the money. And it's gonna buy the
put out of the money, so that would actually be in this case. The 1 65 1 50, Right, Click sell gonna go right to where it says caller. And we 50 bucks now. The paperMoney account already has one example of those collars. So we're just gonna need to show an example of doing two contracts. So how long does it really take? To put on the trade example. Not that long. Okay James, could
this could you know if this class was earlier? Could this have been put on early, But we wait until the class. Okay So there it is. There's a structure, same structure. 2050 days expiration. The cause Delta
30 to 40 puts the Delta 30-40 notice. There's a little debit here. That can be the case, sometimes, especially if there's a little bit more of a skewed towards the downside, like now, Okay, confirm and send to contracts evaluate that commission there. There you go. So now I'm gonna actually go down to the Archer Daniels Midland. I want to ask you a question is Archer Daniels Midland? Maybe a stock that might be trying to pull itself back. Is that it? Is this kind of something that's maybe at risk of maybe dropping. Is there
any signs of this kind of stock kind of turning around? Maybe not right. So if we actually go back and say, what's the trade? We're actually gonna go back to the position. What is it 100. Shares of stock. The stock is somewhat down. It's going to cancel the stop because it's going to put on the protection.
Guess what's going to happen? It's going to go back to an exploration of 2050 days. It's gonna sell the call with a Delta 30 to 40. It's going to buy the put the delta 30 to 40. It's gonna right click on the bid. Sell. Gonna go right to actually where it says caller, Synthetic.
And if it has 100 chance it's gonna sell one. What's the strike on the put side to verify? Well if we did that, actually, the one that Delta 30 to 40. That would not be the 92 a half. It's the 85. So now we actually look at this. If the
investor says I'm going to do this, they're going to protect the stock. How long does it really take? And the ambassador might say, I'm the Protect it the protectionist, not the credit. It's not the 92 a half call. That's a that's an income. That's not a right to sell. The protection is coming from the 85 put Confirming sand. Evaluate the commission. Send the order.
Now what I want to do just want to take one more R TX. Now this is actually one where there's 400 shares in this We want to actually go and take a look at Let's say is this may be a stock that might have broken down. And maybe, is there potential risk of maybe even dropping further. It broke support, and it made a lower low. If you make a lower low what typically happens next? Break of support. Make a lower low. Higher high, Not
necessarily. Once you break support, you make a lower low. There tends to be a risk of maybe where that stock might not be able to get back above what the old support level was, which is the new potential resistance. The ambassador has 400 shares of stock In this case. It's our
class example. And they say, James, I kind of want to be a little protected by the unrealized profit but also capital they actually kind of think back and say, What's the protection strategy? What option might they have? Well, they might get to go look at the expiration of 20 to 50 days as a starting point they might consider selling called Delta 30 to 40 as a starting point, and they might actually consider maybe buying a put with a delta 30 to 40. As a starting point. The reason why, he said the starting point is, it's not going to be the case that every time that there might not be a strike in that range example. Gavin we actually see on our $TYX. There's only there's a strike of 90. So in this case, it's going to sell the 100 for credit. Take that credit and
then you use that credit. To help pay for the put. Okay now what happens when the investor actually does this? What they're really doing is they're actually decreasing the bullishness of the trade. Well why would they
want to consider in doing that? Well, that trend is not going up. They might actually say, James, I don't really want to have just straight up 400 shares of stock, which is actually right back here, and it's sitting right there. They might say I don't want to have a Delta 400. The higher the delta, the more painful it can be. When the prices drop. The more pleasure.
The investor can have if there was more upside right investors more concerned about the downside, they might say, James , I want to actually use the caller at one way to do it. And if they had 400 shares of stock , they might they could do some contracts or up to four contracts. That's what it looks like. Now. If we take a look at
this, I'm going to show you one more. So I want you to imagine that you as an investor as experiences. You know, I'm seeing Marriott. And I've seen kind of Marriott budding its head up against an area of resistance, and maybe it's kind of struggling getting above the 1 82. I'm not gonna speak now. I'm just gonna do exactly what I just did in the three previous examples. Okay. How long did that take? I
think a lot of times when, when Ambassador See stocks going down? They think that it's going to take like 15 minutes per stock. What you're gonna find is if things go down, stocks are correlated. They're correlated to the market. So if someone
actually said James, I'm actually seeing that. Let's say the SPX-- is down about 3. Just take a wild guess. What do you think is going to happen with the majority? The majority are probably going to be going down. So if we actually take a look at this and said James, why they're paying money counts. Why in
class in the paper my account that we show the example protecting Apple. Protecting Archer Daniels Midland. Protecting Marriott protecting Raytheon. Why? Well because what one looks like That's what the other one looks like. So a lot of times, people think that it's going to be so different and my point is, it's not Okay, so my point in doing four examples of protection in five minutes or less. We able put on four protection examples. In the a
time where I did not talk. Which you said James that felt like it was 10 minutes long. It took 30 seconds to kind of take the same structure of the trade. In an
application. There you go. So I think when we actually kind of think about investing is, if you kind of know the kind of the strategy and the structure And you kind of see what the market is doing. You're going to be kind of doing a lot of things like if when the market goes off, you're gonna be probably considering more bullish strategies and you're gonna be kind of clumping orders there. But if the market, for example goes down You actually might say , James, I'm kind of doing more kind of cautionary or protection type trades. Okay, so there we go there. Now I'm out of my time
here today, but the biggest thing I want to kind of make reference to is actually the field orders. We did. And also the working order that we actually still have. Okay so we actually did practice today to bear's trades, a short call vertical and also a long put vertical as well. I want to also kind of give you a quick reminder of actually Right now.
We actually do have an opportunity that if you said James, I would really like to learn how to use this platform. Uh you probably didn't go to college and actually learn how to use the finger. Some platform at least not yet, anyway. OK,
maybe it's upcoming, but we actually actually have an opportunity right now where you can actually get a 1 to 1. Uh, conversation. With a specialist that can actually walk you through how to customize the platform. Talk about maybe some
of the education course resources, and it maybe had a plan with some of the things you're trying to focus on or your situation. Now what this is not as if you said, Hey, James. I have questions on technical support or something like that. That's not what this is. But if
you said, you know, James, I would like to kind of have the ability to talk to someone on 1 to 1 basis. You can actually copy and paste this link, which I'm going to post in the chat, and it's just a simple Bentley link, and what you're going to notice is you can just click on that. And it's just going to ask you. Do it, for example, say, Okay, what would be the best time for you to set up a time to talk to a specialist about using the platform? You probably have questions already of things You said wonder how to do this. Or I wonder how to do this. We have individuals that can help you with that. This is the time
where you can actually say, Can I schedule time with a consultant to talk about that? And that's a demo of about 30 to 45 minutes, and they are able to share the screen and be able to answer your question. Check out that Bentley link there below right in the chat schedule that session today. Get on it If you feel like You need that. So the biggest actually thing is, we want to give us a quick reminder that with what we discussed, we kind of brought up kind of this idea of the polar bear the shrinking sen sheet of ice. Kind
of showing that maybe let's say kind of asking the question. Is maybe the market at risk of potentially breaching support. It's gonna be important to kind of no protection or bear's trades or bears edges if that were to occur to consider, remember with what we discussed here today was done. For example, illustrative purposes only. Thank you So much for your comments and your participation and thank you for letting me wear my glasses here today and not making fun of me. Alright Happy single DiMaio to you and your family with that said, Thank you so much. Take care.
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2022-05-08 19:56
