Bull and Bear Swing Examples | Swing Trading (Days to Weeks)
good day everyone john mcnichol here and welcome to swing trading days to weeks well so far on the day it doesn't look like it's turning around tuesday more like turn inside out tuesday but we still have about an hour left we'll go ahead and we'll take a look at some swing setups after looking at market conditions and we'll also talk about some trade management with some of our previous trades that we've done on our practice account here on swing trading days to weeks coming up [Music] all right hey it's great to see those you that are live with us today we got uh wayne larry robert bethany i think we said larry there uh george is here anthony and everyone else there do appreciate your support each and every week also those you listen in the archive session appreciate you joining us each and every week as well mr james boyd is helping out on the chat i do appreciate him being here those of you probably know and love him from our webcast series does a lot of great work with technical analysis also fundamental analysis you can catch them on twitch as well so make sure you keep an eye on our webcast schedule and uh follow james as well uh both here as well as on twitter you can follow us both there he's at jboid underscore tda and you can follow myself and you'll see that at the bottom of the screen throughout the presentation at j mcnichol underscore tda let's go and take our disclosures folks and we'll get right into the discussion the contents intended for educational information purposes only not investment advice of any security strategy or account type options not suitable for all investors spread straddles and other multi-leg options strategies can often involve greater more complex risk than single leg option trades transaction costs are important factors should be considered when evaluating any trade also with some of the trades that we do with spreads and options keep in mind weekly options are short-lived instruments and may require close monitoring due to things such as volatility and those gains can quickly turn into losses with a relatively small move in the underlying asset keeping in mind also long options entire cost of that option of the position is at risk and when we're dealing with short options they can be assigned at any time up until expiration regardless of the end of money amount now uh in order to demonstrate the function of the platform we will we'll be looking at actual symbols keeping in mind td ameritrade does not make recommendations or determinability of any security or strategy for individual traders any investment decision you make in your self-directed account is solely your responsibility also a stop-loss order will not guarantee an execution at or near an activation price once activated they compete with other income in market orders there's a brief bio for those that are interested if you are new to this webcast welcome do appreciate you being here this session may come across as being a little more on the intermediate side if you are a beginner you're certainly welcome to hang around but keep in mind we do have some getting started series via our webcast page on td ameritrade education all right let's go ahead and talk about our agenda take a quick look at current market conditions we're going to utilize the thinkorswim platform on review and some possible swing setups we'll demonstrate on how to place a buy stop order with a stock trade and then we'll also do some examples of vertical spreads uh as uh many of you have been uh following this session as well as others you know when we are dealing with markets such as uh we're seeing today as well as other days whether up or down uh there certainly is more volatility being able to define risk on each and every trade may be helpful and other strategies outside of stocks such as vertical spreads may be one way of being able to do that if we have a certain expectation for price movement and time we can factor in a strategy to account for some of those parameters and we'll do that today along with reviewing some trade management techniques from some of our previous trades that we've done we actually have uh two examples of uh long put verticals we did i believe about two weeks ago uh that uh have shown a profit on the platform and we'll talk about uh those trade management techniques all right so let's go ahead and bring up the thinkorswim platform and continue on there uh we'll go right up onto the charts take a look at the s p 500 and you know we've been talking about the inverse head and shoulders uh that had been forming still technically foreman if these lows hold there was a hammer formation yesterday however no follow-through of prices trading or closing at least at this moment above the high that low day as we take a closer look at it we can see the s p at least with the lows currently with less than an hour left although down in the lower range are still above that low from yesterday now one of the better case scenarios for bulls is to see a late afternoon rally going into the close at least retracing back some of those losses some traders may refer to that potentially as a tweezer a tweezer bottom kind of think of it kind of smaller bodies with the little tweezer action there now that's to be determined as we still have an hour left prices can certainly continue cascading to the downside uh we do have uh earnings uh post close uh kind of take a quick look uh over on uh twitter there at j mcnichol underscore tda uh just a recent posts there with some of the major stocks coming with earnings aftermarket such as microsoft google or uh yeah that is sorry mine went blank it's not google visa capital one uh gm and uh texas instruments there uh to name a few uh some of these larger caps can be catalysts uh for uh the s p as well as the nasdaq on whether those lows hold uh go in after uh the close today and uh going into uh tomorrow there all right uh so with that let's go ahead and bring up the thinkorswim platform again look at some of the other indices ndx nasdaq still in the low range here hasn't quite taken out the lows i'm sure a lot of traders are keeping an eye around the 13 000 area but nevertheless some continued weakness there by the way i believe the nasdaq is technically in a bear market being 20 percent uh off their highs and likewise another market that's technically in a bear market as well is the russell and if the russell is any type of uh leader here we are potentially seeing a lower close not the low being taken out but a lower close at least for the year and probably i believe when i was looking at this earlier uh basically uh going back to uh october actually looks like back to probably november mid-december it looks like of uh 2020. so we can kind of see more of that bias to the downside there and as we bring up the vix vix for volatility we can see that's up in the higher range and we can kind of see where volatility has been over the course of this last year and so we are seeing the vix potentially being up again close to higher range not necessarily at the extremes uh billy it'd be interesting to see as far as any catalysts with some of these other larger caps uh during the week not only with after close today but between tomorrow and thursday i believe thursday we have uh apple uh meta i believe is coming out along the way oh and i just reminded myself uh google is now alphabet as it was running around in the back of my brain there so there we go thanks for everyone who may have shared there uh also let's go ahead and make sure we're following along with our agenda here so we did a quick uh snapshot of the market there let's go ahead and take a look at uh some potential swing setups uh both uh potentially from a bullish as well as a bearish and some of it may be skewed to the bearish since we've seen uh more of uh the price action lately at least over the intermediate uh trending to the downside there so we'll go back up to thinkorswim platform a couple examples i was looking at uh let's bring up the daily chart we're going to look at anf for abercrombie we can see a stock that has been attempting to recover after its last earnings attempting to kind of fill in the gap there so to speak and seeing a trend develop in a little more towards the upside now as we zoom in on this some traders may refer to this as more of a bull flag strategy and this is a common setup for swing traders from a bullish perspective is when prices swing up attempting to capture some of these swing moves and then when prices retrace in this example form in potentially a flag and this would be called a bull flag since it's supported more towards the upside is looking for that price action to bounce or break above that pattern now one of the techniques we look for is kind of more of a hold looking for price to close or trade above the high of the low day now with a less than an hour whether that price is able to do that may be determined or to be determined however if price action does close kind of what we're seeing here today this is what we would call a harami a bullish harami since it is occurring closer to support in this case kind of a 55 day moving average the idea here is if this is where our close is similar to one may look to enter if price trades or closes above outside of that harami pattern all right and so with that let's go ahead and do an example of the trade setup now i'll do this uh since we are close to the close i'm going to do it based off of the high of this harami as i put my cursor on that that's at 36.05 now right now the stock is trading at 36.26
now if the idea is to enter if the price trades above that area what we can do is we can enter an order called a buy stop now those of you that have followed this webcast we have done this in the past and certainly if you are new would encourage you you know to take a look at the playlist which is i believe in the description for this webcast uh you can also google john mcnichols swing trading and uh you'll see plenty of videos come up on that so as we look at this example what we can do is put in an order to enter if the price trades above that area now if we were to put in order right now which is typically with some traders uh if i right click and just create a buy order you'll see as we look at this order here i'm going to go ahead and go full screen again is that this would be an example of a limit order by default and what it's specifying is entering in and i'm going to go ahead and edit this so we actually have the order up and i'm going to unlock this because basically when i right clicked on the chart it brings up the price on wherever your cursor is at and i was a little bit higher above the market so by clicking on that little lock we went ahead and we're looking at the current price now if i put this order in right now it'll attempt to buy it at 35.25 or better hence the limit order uh but let's say the scenario is we're not looking to enter at this point i'm looking to enter once there's some type of momentum showing that the price is actually bouncing and trading above the high that previous day which in this case is 36.05 now let's go ahead and say that we'll give a little bit of a buffer to trigger if it goes about 20 cents above that and that would be about 36.25 now again you know if i went ahead and said well okay well i'll just go ahead and make this 3625. okay would that be the correct answer well no because if we place the order we're saying we want to buy it at 36.25 or better at the limit we're setting a limit we're willing to pay up to 36.25
for this stock but in this example that's not the idea the idea is to enter once it goes above 36.25 and so in that case we want to use an order that actually theoretically enters at a worse price and kind of the order that we can look at is a stop and a lot of you have already utilized stops for a stop loss order once you're already in a trade right uh and from a standpoint of a long position or a bullish position you know for bullish stock a stop loss is essentially a worse price well guess what we can use a stop to enter into a trade as well quote as a worse price in this case a higher price and so what we'll do is we'll actually change this to a stop now if we did stop this would be a stop market where we're specifying that once the price hits 36.25 it's going to trigger an order what type of order it's going to trigger a market order now that could be fine if one has no concern on how much they're willing to pay for the stock it would be filled at the next market price now the problem with that is well what if the stock gaps up and opens up at like 38 okay that would be some gap risk by doing this type of order at the market but we do have control over price in case of the market it will be filled there's just no control over the price that would be filled if you want some control over the price we can change this to a stop market so we're going to change that to a stop market or correction stop limit and notice that brings up two prices one we got a 3625 that's going to be the trigger price once it hits 36.25 it's going to trigger
an order what type of order a limit order and that's where we have to specify a another price now in this case what we're saying if it hits 36.25 now buy it at 36.25 or better now if the price gaps it will still trigger the order but it will not fill unless the price comes back closer to that limit now usually here another idea is to maybe put a little bit of a buffer you know whether it's 10 cents 20 cents between that or correction let's make that a little bit higher okay a little above that limit so if it's during the market market hours price goes ahead and hits 36.25 it'll trigger an order what type of order it'll trigger a limit we're saying he'll pay 36.35
or less for that stock so if it falls anywhere in between that or lower than 3625 once it triggers then it would go ahead and fill all right now time and force we got day by default now since the market is still open we want this to be in effect for tomorrow as well we can make that a gtc and continue monitoring that all right so there's a potential entry there so we went ahead and walked through an example of a buy stop there let me go ahead and bring this up here so we went ahead and did an example of a buy stop for a stock trade but that's based off the entry another thing we can do is also attach that order and and have a potential exit where we think the stock may go to the upside and likewise if we want to utilize a stop loss order we can do that as well so to construct that let's go ahead and bring up once again the thinkorswim platform now if i want i can build on this order by calling this a uh an advanced order where we would call it a first triggers oco it looks like we got stopped out of lulu um so it looks like the market is not turning around today uh let's go ahead and first triggers uh uh oco this would be the type of order that one can utilize now if we want to go ahead and do this from scratch let's do this another way i'm gonna go ahead and right click you know approximately where we may look to enter the trade right click we'll do buy custom with oco bracket okay buy custom with oco bracket as we mentioned before on the buy order make this a stop limit gtc and then put in our trigger price which i believe we said was 36.25 and then we'll put a little bit of a buffer above there you know about 10 20 cents and so we have our uh order entry for the for the stock now we got the sell orders notice we got two sell orders we'll change both of these to gtc because we want those orders to remain working if this order gets filled and notice we have a limit order and a stop order now if we start from the standpoint of the wrist side and look at it from standpoint of a stop where is a likely place to set a stop we can go ahead and look at the low of uh this flag pattern if we put our cursor we can look at both of these days that information is up here in the upper left if i put my cursor on that day the low is 34.57 if we go to low here we got 34.25 so it looks like that's our low let's say we're willing to put a stop that's about one percent below that low so we'll go ahead and we'll do the math on that let's go ahead and switch gadget we'll bring up a calculator and i believe we uh set on that let's bring that up we said that was uh 3425 so we'll take 34.25 times and we'll do 0.99 that'll be one percent
below that low so we got a price of 33 90. we'll go ahead and we'll round down so notes down here on the bottom that's where our order is hiding there we'll click on that to bring that up and so on the stop uh we'll change this to 33.90 33.90 we'll hit enter so we got half of that order taken care of now let's talk about the potential target well one can go ahead and look at these previous swings to possibly deduce uh how much that price can swing to the upside uh if the price does that bounce now there's no guarantee that it would be a similar move but some technicians will look at previous moves to do that now notice i kind of use my drawing tools here uh my presentation tools to kind of highlight those swings now some of you that may be new maybe trying to you know determine okay well where's the low where's the high high low you know there's a low there's a high okay so we see those higher highs and higher lows as we illustrated with that trend now remember a lot of you that follow along we can bring up a trusty pattern tool on thinkorswim under patterns we'll select show patterns now notice when i did it i had these little carrot marks that mistake uh that coincidentally kind of highlighted some of those same areas that i highlighted with my presentation tool okay now it's not real time this is a potential higher low but would not be confirmed unless the price goes higher and that may plot another carrot point what it does is essentially highlights these candle reversals that swing traders may utilize or potentially utilize for entries and exits now for you to add that just come up here again the patterns make sure show patterns is selected and then we'll go to select patterns once there we're going to go ahead and go to candlestick and under candlestick we'll type in williamsfractal and should come up that's interesting let's try that again oh it was hiding uh so there's the list we'll just start typing in will and there's williams fractal uh any of these patterns you can click on the little uh question mark that appears to the right and that can take you to the learning center you can learn more about these tools now sometimes it loads up i sometimes have a problem when i'm in a presentation mode that it does not come up so for instance for some reason it's a blank but it'll basically highlight some of those candle patterns so we'll make sure that williams fractal is added and all you need to do is again search for it under patterns select candlestick type in will and you can double click to move it over to the right so if i go ahead and do that right there and these default settings are fine for our purposes here i'm going to go ahead and we'll apply that and you can go ahead and take one of your trusty drawing tools such as a diagonal line and then go from a swing low to a swing high that was about a eight and a half dollar move about 28 percent uh if you go ahead and not click but just right click it'll remove the line some traders may go back and measure some of the previous levels clicking once and drag you know there's a six point move right click again you know there's the smaller move was about four dollars so for the swing there's a couple potential targets one is if the price takes out that previous high in this case that's around 38.49 this would be a successful swing trade and that would be about a two dollar move if we want to go ahead and measure again a previous swing let's go ahead and take that drawing tool go from low to high we can duplicate that line by right clicking on it and then go ahead and move that to the low of the flag and there's that potential target now some traders may just go ahead and look for a potential quick gain and target that previous high may go ahead and swing for the the big swing and put in a target there now what we can do is we can potentially go ahead and put in this as a target by clicking on our order again and i'll go ahead and click on for the limit forty two point eight six being the target so now what we've done is we planned a swing and basically are looking to trade uh that potential plan all right again this is a practice trade not a recommendation now keep in mind when it comes to the stops as i mentioned at the beginning of this session once a stop is triggered in the case of a stop market we don't have control over the price it's going to fill at the next available price it could be at that price it could be lower it can be a little bit higher but typically it would end up being lower okay so keep that in mind now as far as position size we have 100 shares if i go ahead and do a confirm and send we can see how much equity we're tying up in the trade in this case 3 500 now theoretically if we entered in at 36.25 and was stopped out somewhere just below 34 that would be somewhere along the risk and it depends on where we're filled here but let's say uh as an example uh risking about a buck uh let's see three let's see that would be two i'll probably do the math here let's see 3635 minus 33.90
36.95 or let's see 36.35 minus 33 and i think we said 90. that would be about 2.45 cents
okay so let's say we're willing to risk about uh 500 for the trade now this is a much more of a sizable portfolio some traders may look at a percentage of that portfolio as far as risk whether one percent half percent two percent uh you know one percent is certainly a a smaller amount of this portfolio um you know one percent would be uh that would be ten thousand dollars yeah half a percent would be about 5 000 i believe uh if i'm doing that math right but i usually like to do examples of a smaller position size uh for our students here so let's say i'm willing to risk a thousand dollars in the trade okay so we take that 245 divided into a thousand so one thousand uh divided by two dollars and 45 cents this says we can go ahead and do 400 shares about 408 shares now there's no you can do uh odd lots there's no issue with that i'm going to just uh round this to 400 shares for our example and we'll type that in so we got 400 and there we go now if i do a confirm and send and then go ahead and click send now notice here we're tying up about fourteen thousand five hundred dollars now if if for instance if i had a hundred thousand dollar portfolio that'd be locking up about fourteen percent of the account um some traders may wanna keep it you know less than ten percent or other traders may look at five percent uh again with this example this portfolio this is a reasonably smaller amount so i'm going to go ahead and click send now notice nothing happened uh except that we got a plot here on the chart with that potential order there is that potential stop order and there is that potential limit order now if i zoom in on this the reason why is our condition hasn't been met right will happen is if the price does trade above 36.25 it'll attempt to fill it at 36.35 or better if that happens and we're in the trade then these orders will begin to work if the price goes ahead and stops out it'll be filled at the next available price it will cancel the limit order hence oco one cancels other if the price goes ahead and trades up and it hits that limit it'll go ahead and close it out at a game and it'll cancel out the stop so this is a you know a great example of you know being able to plan a trade and trade a plan where one has their entry as well as their exits in mind and so this would be a class a classic example of a bullish swing tray okay and we'd encourage you to possibly practice some of these techniques if you see a pattern that's similar to this on paper money and and do a similar uh exercise both with a potential buy stop first trigger's oco and then likewise position size based off of the level of risk you're willing to take now as far as profit management if we do enter into the trade and let's say the price does take out this high uh that would potentially be a profitable trade at that point and some traders may want to look to adjusting that stop to reduce the risk and one way of doing that is if let's say we do take out that high going into a close then what one can do is take the stop and what's cool here with the stock trade on the chart is you can actually left click and drag that let's say to a break even factoring in some of the commissions well on the stock there's no commissions on this example but go ahead and reduce the risk by adjusting the stop now keeping in mind there's no guarantee that the stop would fill at that price either you know there could be gap down and things like that but that would be an attempt to reduce the risk on the trade now if you go ahead and adjust and you're trying to get the exact price you want you can always go ahead into the edit function and change that because i'm going to come here and we're going to change that back to 33.90 which is our initial stop okay so we're gonna go ahead and we got that uh sent and we'll continue managing that let's go ahead and look at our agenda make sure we're staying on track here hopefully found that as a good example to work with thanks james for helping out in the chat now uh wiley says can you also do this type of order on spreads uh yes if you want you can do what's called a conditional order if the price trades above a certain level uh one can go ahead and do a spread trade or an option trade and we've done that in the past on this class as well where we can do a conditional order to enter into an option and that can be applied to a spread as well however keep in mind options may have some liquidity issues if one's doing a market order one may not necessarily get uh the fill that they want and again you can use limit orders for those spreads now speaking of spreads what i'd like to do uh is demonstrate an example of some defined risk utilizing spreads for another example or two and we'll go ahead and we'll wrap things up for today we'll also review some of our existing trades too so let's do that another example we were looking at let's see prior to getting started let's see uh how they're shaping up um since the market's more on the downside uh one of them was looking at a 3m 3m company they are post earnings they actually i believe did have a beat but they did guide uh that you know still issues as far as on the supply chain and the like uh what is interesting is uh even though it did gap down uh it is down about three percent it is a little off the low there some bulls may be looking to see this may be a little more of a value play but let's say for our example if we may expect that the prices may continue drifting lower possibly test some of these lows we may consider looking at a spread to take advantage of that now what would be a way of doing this let's go ahead and bring up i think i actually had configured one previously i just want to make sure i'm on the right track uh let's see okay so what i'm going to do is i'm going to go to the trade tab and you know over the last month or two we have looked at examples of uh doing uh spread trades you know or looking at puts put spreads and even puts to take advantage of price action going down while defining risk along the way and i think when i was looking at this previously i was focusing on may so relatively shorter term over the next 24 days with an expectation that possibly uh 3m price may continue drifting down and was looking at when i was doing this example uh start off with an option that's a little more slightly in the money we're looking at the put side over here was looking at the 47 strike earlier it was at around a a 60. uh usually on these examples if i'm going a little more into money for example maybe looking at deltas that are somewhere in that 60 to 70 range a little more in the money less time premium uh being purchased okay however there is the risk of that intrinsic value if we buy this option uh the entire amount this option would be at risk in this case that would be about 700 let me adjust this a little bit and i'll go with the 148 and we're going to buy this option but then we're also going to go ahead and sell another option where we believe that the price may be trading below and so let's say in this case uh looking at that low range that's around 139 you know we got around uh 1 41 to 140 so let's say we're just expecting to go slightly lower there i think i was looking at around the uh 1 40 there so what i'm going to do is i'm going to right click on this one option we're going to do by vertical so we did a buy vertical where we're buying one put and then we're going to sell another put now notice by default it just goes to the next strike we were referencing i believe the 140.
now if we're not as directional you know we can select a a higher strike or one that's closer to the current price let's say i'll go ahead and i'll start off with this 140. and then notice by doing that it did reduce the cost of the trade so we're only tying up about uh 345 dollars per contract that's one benefit define risk most we can lose on this trade is what we pay for this option this spread now if i go to confirm and send you can see that risk there 345 and there's here's our potential gain which is 355. that gain would be realized if we're below at or below 140 24 days from now now the other thing is uh there's a break even now sometimes this break even may be uh very close to the price it may be a little bit further away now since we're a little directional um our break even is lower than where the current price is so the price does need to move however it does not necessarily need to move very strongly for this to be profitable minus any transaction fees looking at that that's about 70 some cents so there's some flexibility here uh now let's say i wanted to go ahead and risk about a thousand dollars in this trade similar or other example i'm going to go ahead and edit this and i'll do this three times it's probably going to push us over a little bit we'll bring that up so that's a thousand thirty five so there's my potential gain or my potential loss defined risk there's my potential gain now as far as profit management we may be keeping an eye on how much is gained on this and if we're able to capture about 50 percent of that maximum gain then we may look to possibly close or maybe scale out kind of sell some of those spreads for a game we actually have some existing ones we'll take a look at there i'm going to go ahead and send this one through now let's go to the edit here real quick and you'll notice there is going to be a spread between where the market price is as well as where kind of the mid price is now we can start off and place an order see if it will get fit filled at that mid price i'll do a confirm and send and send and notice in this example your results may vary a lot of it depends on liquidity if that gets filled right away or we may have to go back and adjust that price but looks like we got both of those in there and let's go ahead and bring up i'm gonna have to go back i forgot to add those to the other examples here so i'm gonna move these to our a f did not fill so let's go to mmm i'm going to move that to our swing trading class here and we're going to go ahead to swing trading and so there's our 3m spread right now and looks like it ticked up uh a little bit in our favor all right uh but notice we actually have uh two other examples of spreads here here's two put spreads that we had done let's see if you right click on the symbol you can go ahead and do view trades we did this on the 12th these were two weeks ago all right so similar setup that we did with 3m if we go in and we look at the charts of each of these and so now just want to make sure we're shifting our agenda here we're basically looking at reviewing some of the trade management techniques as we looked at on that first swing trade for a f spread trades should have some management techniques as well on how we're looking to exit now we were targeting about 50 percent of that maximum gain as an example so let's see how those existing ones are shaping up so i'm going to go back and just kind of talk about outcomes one of them was carvana cvna this is an example of a price uh breaking below a descending triangle i believe the target was targeted around the 90 dollar area we were a little conservative but it actually met and even exceeded uh the overall target we're actually trading around 70 uh dollars right now and it's still fallen now this also points out you know kind of the you know the pros and cons yes we have a defined risk with that long put vertical but we also have a defined gain if the price continues to fall uh our gain is going to be limited to the price trading at that short strike with our example here go back to the monitor tab on carvana that was at 90 level now as we look at the p l uh we basically have gained about seventy percent seventy two percent uh gain on the amount that we had put at risk so you can kind of see the gain there uh not only for today as well as overall now there's 24 days left to expiration now what some traders may do is they may determine well i've hit my target right click close the spread okay and lock in that game others may determine well there is time left and then also looking into perspective as far as price currently we are about 20 below that short strike and if the price remains below 90 this will be a maximum gain at expiration but since there's still a time factor in there not all that gain has been realized okay so what some traders may do is let some more time pass particularly if the price is going lower and then close it out as we get closer to expiration possibly in that last 10 days another thing to do is keep an eye if there's a bullish reversal candle if we see a candle reverse from a bullish perspective we may declare that swing is over and then go ahead and close out the position so we may do since we're seeing it already trade into those lows is to possibly allow that to continue now the other example which is itsy did i say that right or etsy okay this one has 10 days left so now we're getting closer at expiration now thing to keep in mind folks is you know there is risk uh of exercise uh with an in the money option that is purchased uh we are typically looking to close out these positions as we get into the last week of expiration because even though you have the right to be able to sell that stock it's not an obligation but if you carry that into expiration the broker may assume you wish to exercise that and that could potentially be exercised so we're looking to close that out prior to expiration now we're not necessarily concerned about uh an assignment well actually would be if it is in the money typically these options would offset each other if both of these are through that spread now and that is the case for at least carvana in the case of etsy here we're not down to that 90 level we're in between now considering that if you wait into expiration there's any number of scenarios that can happen hence why we look to close out this trade now since we are close on this one let's take a look at etsy and notice it was a similar pattern we saw with carvana this was more of a triangle pattern that broke out and was looking for it to be trading lower okay now with that we are close to the target knows there is an earnings event coming up here as well so it may make sense to possibly close out this trade sooner than later also as i zoom in on this we did have a little more of a bullish candle reversal not much follow through today and if the price was to rise that could cut into those gains so in this example we're going to go ahead and close out this one so i'm going to create close and order and we're going to go ahead and sell that one for a game now there is a little bit of a spread here we'll see if that actually closes didn't do that right away i may have to go back into this and adjust that price so let's go ahead and double check on some of your questions here and i believe if i looked at earlier in the session correct me if i'm wrong uh james i think we may have a survey here today let me know if we do have that and let's go ahead and get that uh reposted if i was wrong uh please let me know and looks like i heard a beep uh so i'm assuming that trade got uh filled on our practice account uh looking at questions uh agarita if i saw that said that uh correct still don't understand uh it looked big the difference between strikes on that mmm let's go ahead and bring that up uh if you're talking about if i bring mmm you know we're in this trade right here if we're talking about the spread between the bid and the ask uh this actually falls within 10 percent of the ask price so it kind of falls within some of the parameters as far as liquidity here if we look at this one that we sold uh 10 is about a 31 cent spread uh this spread is actually closer about 20 cents so looks like the liquidity is fine for our example now if you're talking about the difference between the long strike and the short strike that's about a six dollar wide now remember when we had done this example i'll go back to that filled order there's 3m i'll do a right click create a duplicate order 3.45 times 100 that's 345 dollars now we did it three times so our risk is 1035. now what's interesting is
the most that could be gained or lost is contained within that spread in this case seven dollars now if we're risking three dollars and 45 cents that means there would be about three dollars and 55 cents for a gain now i'm off the trade there let's bring that back up sorry for that so we're risking 1035 and potentially making 1065. now with that in mind uh with the 345 that's how much we have at risk it's a seven dollar wide seven dollars minus 345 means our gain is going to be 355 potentially if we're below 140 and that's gonna be multiplied by the number of contracts that we did here all right okay well let's go ahead and round things out please go ahead and click that survey there looks like it did not come through from james i'm gonna go ahead and see if we can push that through bear with me for just a moment and that should be coming up here yeah it should have been full screen when i brought that up do apologize if that didn't come through i'm trying to make sure we get the survey out for everyone here and it should be coming up right here all right there we go folks all right so let's go ahead and round things out so the survey came across thank you james now encourage to practice what you learn here today folks as we went through both the swing trade setups and went ahead and actually did both a spread as well as with the stock as well now remember in order to demonstrate the function out of the platform we did have to use actual symbols keep in mind td ameritrade does not make recommendations or determine suitability of any security or strategy through the use of our tools any investment decision you make in your self-directed account is solely your responsibility thanks for being with us here today folks we'll talk to you again real soon bye now
2022-04-28 13:22
