Directional Option Strategies | James Boyd | 10-16-19
Hello. And welcome to directional, option strategies, my name is James Boyd we welcome you here today today's date October, 16th we, welcome you to as we talk about short, puts. Examples. Today and also, cover call, follow-through. I got, a lot of things that are actually gonna be expiring, coming, up on Friday, think, it would actually be a great time to actually talk about the management, but also actually putting some new positions, on in the, categories, of short puts and also cover calls with. That said let's go ahead and actually get started hello Fred and many others, just. As we get started want to give us a quick reminder, remember. That options, are not suitable, for all investors there's. Special risk inherited, trading options make sure you actually have the copy. Of the characteristics, and risks under your strategy that is up for you to decide what you want to invest in what type of strategy, and also, with that remember the option. Greeks the. Terminology, and how they apply to the strategy, today, what are we going to talk about well you're gonna see now we're gonna take a quick look at the market close we will also be watching Netflix, to. See what happens with that on the earnings here so there'll be a big announcement to. See if maybe Roku, and others are biting, into their market share Disney, as well we'll, talk also about the management, of the portfolio in. Terms, of short, put management, okay. We're, gonna talk also about covered call management, which we talked about last time and then, we're also going to really be talking about some new positions, in the, space of short puts and also, cover calls the, reason why we're talking about these two strategies, is their income generation, strategies. Okay we, know that the market has actually been more neutral, and so. We, want to talk about how we might try to try to bring in some of that cash flow from. That time, decay. Now, just real quick as we're getting started here just a quick look at maybe where the market closed I'm gonna bring up Nasdaq, first. The. Comment I actually gave on the Nasdaq, if. You take a look at actually the resistance on the Nasdaq, the. Nasdaq if you look at this also in the weekly chart and the daily chart as well you'll, see that the Nasdaq, is really above that resistance, line that's, not a bad index to have lead okay. So. Technology we're, be spending. Some time there we're. Also going to be taking a quick look and let's say the SP the SP. When you draw the lines from the support to resistance kind, of more at the top of the channel or you.
Could Say the top of the resistance, that slanted down but, today kind of more of a neutral, candle, really. We see that we're only down just slightly six or so two. Tenths of a percent not, a really big day, volatility. For the day did close up down at thirteen, point. Six eight so, no major change, there from, day over day now. Let's. Kind of bring up the common app made earlier before was, regarding. That is when volatility, is low we. Might have a lot of positions, that. We might be able to profit take on now, with. That stated, and that cued up ready to go what. You'll notice is in the short put section, we. Did a number, of trades here and I'd like to really bring, these up okay, and let's. Take a look at these on the big board here and let's. Kind of talk about these so first off goes, down sometimes, we forget to manage, the positions, I like to take a look at these together and, I think we can actually do this quite quickly and what, I want to really do right here is you're, going to see that where we have the short puts we see that right there so. All of these positions. These, are all short plots okay these, are all of them that, we've done as of lately now, a couple, of those you're gonna see am Jen Boeing. Costco. Clack Lowe's. Nike. Syy. Walmart. And also x-ray, you'd, probably say that 60, 65, percent of those there, they're probably technology, plays okay you don't see a whole lot of utilities, there you don't see a whole lot staples. There etc, there. Are more highly, volatile, trades okay or highly. Volatile. Our. High implied, volatility, or higher. Beta, if you want to call it that now. What you're going to also notice is we're, going to see the Delta for this okay, all those positions and we're, also going to see the theta, for these positions, so, this is actually really showing is on a per, day basis, if. Volatility. Stayed, flat stock. Did not move, so in other words any incubator which, is not how the market really is but. That is really showing 184. That's, cumulative. For all those strategies, or all those positions it's. Really saying that if the market were to be flat. 184. Times about 30, that. Would be about, double. Check me on this now. I'm not saying that that number is gonna stay flat the whole entire month but if it did.
That. Would be about. $5,500. In time. Decay if these positions, stayed, flat. Volatility. Stayed flat that, would be $5,500. In this paper money count just. From the time decay, okay. Now if they. Moved. And. You'll, see that we are positive, Delta positive. Delta just means it's. Bullish okay. So, these are Delta. Positive bullish, strategy, theta. Positive, and the, third element of these is if volatility. Were to contract it. Can even help us so three ways we can win or lose Direction, time, volatility. Let's, take a look at these and kind of really break these down and, let's. Bring these up and let's kind of just take them one at a time so, first off when we take a look at the position. First. Thing I'm always going to really try to take a look at here is how, many days do we have - what. Is the Delta of the position, so. It's 35, okay when. We sold that position, again it was 30 to 40, it. Was out of the money typically, two strikes and, what you'll notice is the Delta is still pretty much in between what's. Kind of a little shocking, and why. This, is we're not just looking at one, number when. You take a look at this we have two contracts. To 30. Days left to expiration we're thinking well, I don't really need to really, do anything that's. Not, necessarily. Completely. True because. What you'll really notice is here is that, was sold for 380, and now. That mark value, is really about 153. So. That's like cut in half when. We look at the profit, loss percentage. It's. Really about. 59%. Okay. Now I want. You to kind of think about this option aid don't do anything we. Actually still have in this case a dollar. Fifty three okay. So I want to cut it right up here let's say a let's. Just call this nothing okay. We're. Not going to do anything we're. Going to try to get the remaining, dollar fifty three we, know we have a certain, amount of the premium but. Let's say for example we want to try to get a little bit more okay, I want, you to vote option. B how many of you would think of James I'm going, to roll that. Position. Meaning. Gonna, buy back that short, put I'm gonna try to really sell, another one okay. B-roll. Okay. And what, I want you to do is I want you to kind of type in the chat role or, C, just. Flat-out exit. Which. One, would you choose and I wrote it up here so you can remember, a. Nothing. Let, it play out try, to get more premium to, roll. It you actually, think that ops that stock might continue to go to the upside or C. Really exit, the position, let's. See what you actually said so, first off when we take a look at this one. Thing I really want to bring up here is if. We take, a look at this if we right click so, let me just bring up the chart and let. Me kind of show you what it really looks like if you look at Amgen, and Jen. Was a stock, that really, broke, up, through. The. Diagonal. Resistance, okay, which, by the way if you kind of go back we'll see where when. Was this trade placed okay. A lot, of you are actually saying C okay. Let. Me go see when the traders place it was placed on ten seven so, nine days, ago nine, days we're. Gonna go back let's kind of give ourselves a, little check on how, we think the entry was well. We go back to really nine seven, we would have to kind of say from geez I mean. Think. You fabricated, the trader something like that it was literally on the day I'm that yellow oval, that, was the day the stock broke, the, diagonal. Resistance, that's, Dale's place so. From really that, current price so here, the. Option. Has lost, fifty. Nine percent of its value so we've had the direction, right, we've. Had the time has helped us and maybe. Would have to look on the volatility, now here's what I want you to bring up just real quick is I want you to be. Able to if we go back to am Jim and we bring up the option, we're looking at let's say the, one ninety. Put, what. I'm gonna do is I'm, gonna I want to right-click on that option so if, we right-click on, that option we're. Going to go down to where it says more, info, and we're gonna bring it up on the toss, chart, okay.
So We right clicked on the option, we, went to more info, and what. I'm gonna do is I'm going to put it in the second, box in, the, toss char now what it's going to do is the first box is gonna be the stock on the. Right hand side it's. Going to be the option now. If I click on that right there it, will show us the option. Premium, over time. Now, I don't know if you like to see this but, I like to kind of see how the stock, moved in. Relationship. To the. Option premium so, on this left hand side the stock on the, right hand side the option, that. Option when, it was sold was right around about four dollars remember that was the most we could collect. The, premium, and as. The stock goes up in value the. Option. Declines, and that's what we're really seeing right here. So. We can see it's side-by-side okay. How do we do that again just real, quick go to the option we sold right, click on it go down, to where it says more info. Once. We go to a more info, we're going to put it on the chart, and when you say it what do you mean by it we, mean the option, price okay. It's gonna chart the option, price and if, we put it in the second. Box what. You're going to notice is right there it's now we bring up it. Will show the pot, okay. The, one ninety, put now. Let's, kind of see so a lot of you actually saying James, exit, the position, okay I'm not gonna argue with you I'm, gonna go with you so let's kind of do that so if we right-click Craig. Closing order we're, gonna buy that now take, a look at this just real quick so the, comment that came in to me before was, when. Did you put most of these positions, on well. These positions, on ten seven okay, so. Let's kind of get a gauge. 919, 925. 10 8 okay. So there's another one 10 8 we, go back to this one position 10, 7, 10 9, so these what, you're gonna probably see. That. One's on 10 8. This. One right here 829. So that's the longest one we've seen, we, go to the next one, 925. So. You're. Gonna probably see the bulk of these there's 10 8 okay. And. Then if we go back to this one 10 9 and, we. Go the last one right there really about 10 8 well what's my point of bringing that up well, most of these what you'll see is that, 2,300. Dollars that's on realized, we're, talking, about money. Okay. Most. Of these positions, are in the, last 10 days. Now. Think.
Of The short pullets, as. Potential. Stock, positions, that. Make sense now. We, don't own the shares yet we, could this. Is a way we might get, to own the shares in the paper money count so, most, of these trades were done really in the last 10 days or so the. Marquee had yeah I had one up move but, really not like a breakout in the index or anything just. Kind of slightly, right on time direction, and some, time we're, going to right-click on that 380 create. Closing order and a buy two of those engines back 159, now, what I'm going to do is going to move that mid price to about 154. Try. To buy it back for a little bit less the mid again is in between the bid and ask and if, we go limit, that just means in essence, how, much. Okay. That's the most we're willing to pay limit. Day GTC. Now if, we go confirm, and send and send that order you're, gonna see that member there's two contracts, so 65, cents all contract. Okay. Cost. The trade that's the, dad that we're paying back for. Two contracts. 130. Total. 309, if that's what we want to do we're, gonna send the order now, remember there's two goals when we actually sell these plots number one collect, income number, two potentially. Buy the stock at a potential, discount, from, where, it is currently, the, risk. While. We're in the position the volatility, could expand sure, the, stock could go down which. Means we could be the buyer of the stock we get it okay, we should now. If I come down to the next one right here which is on Boeing. Now, the thing is about Boeing, what I want to kind of take a quick gander, at is Boeing. Is actually coming up for expiration, in two days wonder. If you said James I don't. Really want to have shares, of Boeing, put to me or a. Situation. Where maybe I I now, own a hundred, shares, of Boeing. Well. In this case the. Option, was sold for let's say six, thirty and we, could see that right there it, was sold for six thirty check. The. Mark right there is four twenty that. Means that if, we're not let, if if we're seeing that option premium is, still four hundred four dollars and 20 cents that, means the strike, and the stock price are, still.
Pretty Close together and they are matter. Of fact the. Strike. Price, is higher. Than. The. Stock price boom. What. That means is they. Could put us these shares as. Soon as possible, if someone wanted to remember, what we're, the miss. Account, this. Account is, the buyer, of the stock on the. Opposite. Side of the trade someone. Has a right, to sell, this. Account, those, shares at the strike price so. If we said don't, want to be long those shares. Don't. Want to actually have. $37,500. Tied, up in an a stock. Option. Number one is we could take that to ten, right. Now and not. Have that risk of being put to especially. Inside, the week of the earnings not, the earning excuse me the, expert. Okay. So how do we do that we're, gonna right-click on, that line now, it would have been nice if we could have made more. Welcome. To reality, okay, Ville. And now. We're gonna right. Click on it create closing order we're, gonna say by, +1. 4:30. Let's see if we can't give 4:20, yes. 4:20. Being the mid-price, limit. Day okay. If. I kept this day this. Should carry for carry-forward. Over until tomorrow I'm, gonna go ahead and go confirm and send and send. That order now if, you're gonna see that we're buying up back for for 24. The one contract. Sixty-five. Cents okay, and we're, just going to try to make it where this account, is not at risk of having. Those shares put. To us okay. So, that's one thing we want to kind of make him on keep in mind now just. To others I want to point out right real quick so. First thing when we actually go back let's go back to the big board just real quick ones might have those higher percentages. This, one this. One that one. So. You'll notice that this one right there, 93. Percent, that. One could maybe be exited. Potentially, or rolled the. Other one right there what you'll see is 73, percent those, might be ones, that we might potentially let's say closed, off as well let's double check that so, it looks like, that one was Lowe's, can. You believe someone, would ever say, that I don't have time to, do short plots or a strategy, like this I mean, how much time is it really taking, so, first off what you're gonna see is if, I take a look at that you're going to notice that has. Two days left now. Why not wait till Friday. Where. It's 1:55. Mountain. Standard Time or 355, Eastern and wait, to do this remember, as we go them closer and closer to expiration the. Bid-ask spread. Widens, out as, they. Become, more illiquid. Because. Let more people are exiting, those positions the. Open interest, will. Drop off thus. Making it harder, to get out if we wait closer. To expiration, now let's do so. Sold this for 275, now. What you're gonna see is there's only 18 cents the only way you get the 18 cents stock, shoots up a lot more or you go the next two days, to. Get the last 18 cents you have to remember is that you're still tying up buying power okay, there's, still some money set aside for, that eighteen cents okay. Now. If we, said look we're just going to take the position off in this case if, we're. Going to take the position off, now. What. You're going to notice in this case is we could just right-click on that line and if, we right-click on that line what you're going to see is we, can go ahead and close that position, out and let's go ahead and do that so, we're going to right click on that line we're, going to create a closing, order and we're just gonna buy that back okay. Now, James I've seen if you came to my class earlier. Technically. Speaking you're going to see that we've been doing a lot of managing, because there's a lot to manage okay, now. What you're going to notice is we're trying to clear out some of these trades, to. Make. Space. For new. Ones now. I'm going to tell you what I learned. Sometimes. When you don't take care of the ones where there's gains and you just keep. Stacking. New. Things, on top of old, then. When the market shakes. Okay. Then. All of a sudden this, little block, so, to say of positions. They, all tumble, so. You want to be very careful, okay. When. You do this is if you have those profits, or you could roll etc. That. You made as those positions to what you're looking for, and a. Way to look for it is to manage to the percentage, of the profits, okay. Now, if we go ahead and do that again two contracts. Given. $36, back which is 18 cent 18 dollars per contract. 65. Cents a contract, or in other words a dollar 30 and if. We do that what, you're going to now see is we're giving back 37, dollars now why you say giving. Back well. You got to remember is we got to credit initially. Okay. So that's why we're giving some. Of it back if, we send that there we go now, for. The time sake what I'm going to do is I'm not going to touch this one but, on the one right here that's probably getting very quick and I think you get the picture now this.
One Right here is also, there's not a lot left. Seventy-three. Percent of that is gone okay, now, I, will. Show you this okay, if, you look at the stock which, this stock is Nike and if. You think for example that, stock can. Continue. To, go instead. Of that she may be exiting. The. Short put that's it you. Might do what we would call roll. The. Position, let's, show an example, of that so. When we actually go back to the monitor, page, okay. What, we're going to do is we got 30 days left but with 30 days left this. Option, has made 73%, so far unreal eyes if we. Right-click on, that line and say. Create. A rolling, order remember. Rolling just, means that we're actually buying, back the option that we have and then, selling, a new one okay. That's all it means if. We click on that now. We go back to the idea of what what option are we going to look at well. The option, that we're gonna look at we might stay, in the same exact, month because. There's still 30 days but. In this case we could perhaps, roll. Up on, the. Strike, this. 90, is what is in the paper money account now and what, you're now gonna see is we're moving up to about the 92, and a half that's. If you wanted the option of 90 with. 30 days left but, I'm gonna throw a little wrinkle in this because, you've asked me to James. We, have to do everything short term can we actually go out maybe till December, and maybe. Can we actually go look and say can we start with a bigger premium. Can. We go look at something like the 20, December, now. Pro about that is more premium, the, con about that is slower. The slower, time decay okay, so. We got to realize there's a there's, offset, there but, let's do that let's go to the 20 December's, now, why are we looking, the 90s. Okay November, when. We talk about a role, a, role, is. A new, position. Because. You're taking what you have off and then. Putting on a one a new. Option. So, trade number one here today is selling. The puts on the Nike okay.
Now, What you're gonna see is in this example we're. Gonna look and see what's the mid-price okay. 1:39, that's. Right there, okay, got it we. Have the 20 December's. Yes, 90. Strike why well. That's the one that's the closest, so let's say a delta of 30 to 40 but, what you will notice is an investor, might, choose to go let's say the ninety two and a half but. What you'll notice is that's going to be pretty, tight you, can it's. Just that that's closer, to 40, than it is thirty, okay. So, I'm trying to go something a little bit a, little. Bit higher. Premie. Less, premium, with, a lower, probability. Of. Having. Those shares put to this account now. In this case I'm going to change this to really uh I'm. Going to actually keep it to where it is one, contract, but we could technically go to, 90. Put dollar 39 confirm. And send again, we could really do two and, send. That order remember. We have a transaction. Fee because we're buying back one, and then. Another transaction, fee that we're selling one hence, the dollar thirty sixty-five cents a contract. Now, if that's what we want to do we're gonna resend, that order right. There okay. Now. So. When we take a look at these is now that we start to take some of those off it, kind of opens, up are there, any new, ones. That. We can actually go look to do that's. An interesting question I think. There might be now, let's take a quick look just real quick at, Netflix. Okay, now. Netflix that she did if we take a look at this this. Is actually the. Paper money count has no trade on Netflix so there's no kind, of skin in the game here, for this - paper money towel but, it's acts about, $30. Higher, okay. Not. Bad okay, see what we did see we're seeing a bit ass both. Currently. Okay. That, are higher than the last the last, is as a 4:00, p.m. Eastern. Okay, the, been asked, that's, what is trading in in the after, hours in the last 26, minutes clearly. They're probably not on the conference call yet they might probably be kicking it off just shortly that, can change but, currently, actually that is actually substantially higher good, twenty four thirty dollars higher than, where we closed so pretty interesting all, right now. Let's, take a look at for example some stocks and some, of the stocks I'm really gonna go to I'm. Gonna go look at some stocks, that, are maybe in not, maybe they are I'm, gonna go look for some stocks, that are really. In the. The. Nasdaq, one, of the stocks that want to bring up just real quick is a. Stock like cucum, okay, again. A you. Could go look at stocks from um from a volatility. Perspective. You. Might bring up let's say the IV, percentile. On the list you, might say hey I'm gonna look to look. At those stocks they have the higher I higher. IV percentile, that's, a way to do it problem. Is the IV percentile, doesn't tell you about Trent okay, not. The about two standard one if, you have the script that we talked about it does but. If we take a look at this the second, way is to be, able to look for stocks go and look at stocks visually, that. Have a trend, that. Are above support, and then. Number, two go. Look and see what the implied volatility, is and most, of our examples we look at the chart first then. What the volatility, is if we, go look at let's say the trade page when. We look at the implied volatility, we're. Trying to go out about, 40. Or so days okay. Why. Not Friday, why, not next, week well. We're trying to like get, a temperature, gauge right, we're, trying to go a little far back so that way if earnings was in the next two weeks we. Don't get abnormally. High read okay. We're not trying to look at implied, volatility, 300, days out because it's too far trying. To maybe get somewhere in the middle that implied, volatility, right now is. Pretty, much in that 33 34, percent. Range. Okay. That's, the annualized, number, the. Number of the nominal, amount dollar-wise. Is saying that stock could go up or down, seven. Dollars from. Now into expiration now, seven, dollars on a stock. That's 78, that's. Almost, 10%, that's. Quite a bit okay, now, when we come down let's say that today's option, statistics, when. We take a look at this you might have a certain, percentile. That you're, looking for, remember. 46. Was. The high. 26. Was. The low and what, you're saying is if we said look let's, say 36. Was, the middle, gate. Of that, range, right. Now we're kind of just slightly, below, the middle, of the range you're. At the 42nd, so you're not the high okay. You're, kind of more towards the middle which. Isn't really that bad when you think of where the VIX is that. The VIX is at 13, which can play into this now. What we're going to show in this example let's kind of first think about the position, size, if.
This Paper money account can invest $20,000. A position. 20,000. And we're. Really talking about a stock that the $78. Stock, this. Would really mean that we could do about two. Contracts. Two, contracts, so. What you're going to notice is we're gonna go out a little bit further and I want, to give you a little practice, on this normally, we talk about going 30 to 40 days out but. I think it would also be good for you to see the difference, when, you go up maybe 70, to 100 days which. Again we know there's higher premium, typically. Okay. And slower. Time, decay now, that's not necessarily, true if earnings. Was. Super. Inflating. The, options. That were 30 to 40 days I get it okay but, we don't really see a massive. Difference between 30. To 40 day implied volatility, and 65. Day implied volatility, at 32 don't, really see a massive difference there now, when we take a look at the the. Delta, or the, strike. That. Is between 30, to 40, the, one we're really looking at here is the. 75. Okay. Now, when you take a look at this and we're talking about we're in the, after-hours. We, really have a 279. Bid. 298. Ask the. Open, interest there is, 27. 81, okay. That's, the number of open, on exercise. Contracts. Now I had. A dream on volume last night okay, literally I, look. It's gonna be very hard to actually harvest your games if there's. No one really to sell to outside. The market maker so. If you get into something that has little, to no volume. Or little. To no open, interests you. Just, did your own self, a disservice, so. There's thousands. There 2,700, and when, we go take a look at that say the volume what, was that volume today the, the number of contracts, there was 27. So, 27 not. A lot, but. 2,700. That. Are open, still and on, exercise, so in other words a pool. Okay. Of liquidity, now. If we go in what I'm gonna do is I'm gonna right click on. That bid right click gonna. Go over right there to where it says sell custom, gonna, go right down to where it says we're stop if, we click on sell custom with stop right there, now. What I'm going to do is I'm gonna move this price, over here to, where it says 288, now remember in the last ten days for. The most part the short, put, section, of the portfolio, has, unrealized. Profits, of let's say 2300. How. Many 10 days are in a month. Three. We. Can maybe try to get, 2300, times three that. Could actually be. Roundabout. Number, $7000. We. Didn't own any of the shares now, let's just say it's half as good maybe let's say some, crappy, trades go in there too that don't make money well. Seven thousand cut that in half that'd be 3,500, and so. If we had 3,500. Didn't. Own the shares had, the risk of owning the shares just. Got paid for the time to cave direction, in the volatility, potential, contraction, we. Say that we're gonna try to do that all the time yeah. I'm gonna try to he's, it always gonna work no we're. Gonna see let's. Go check it out so, if we go back you thought I was gonna say no didn't you now. 288. Okay. So. What you're gonna notice is there's 288, that's, the mid-price and let's. Say for example, we just for, simple, math okay, you. Might set a different, percentage, goal but let's say we're trying to capture. 80%, of, that. 288. But, again which. So if you if you, had 80% that. Would only leave me 20% okay, so, think like that what's 20%. Of, 288. Well that's gonna be about 57. Cents. Okay. Now you might have different numbers here and I'm gonna show different, numbers but. If we go dated, GTC. That's. Wrong we. Need to change that to a limit. Order limit. Okay. There. We go we're, saying that price, or lower. Okay. GTC. And, we also need to change the number of contracts. Down okay, number, of contracts, down now. I need to think about this and this, is a this. Is a demoralizing, story. I learned when. The market, is actually going up the positions, that you've had for a while they're. Going up with, the, overall, market, okay.
Typically. Now. As the market goes up more and more you, start to stack positions, on top of previous positions, stack. More positions, up on top of those stack, more positions, up on top of those and stack, more positions, up on top of those and then, all of a sudden that little tower of blocks. Get. Shook. And then. All of a sudden. The ones you got into, last. Lose. Or you're. In the water and they. Take. Or eat into the. Ones that you were doing good on and then, all of a sudden it drops, and it falls over and all, of your positions. Well. You go back to net neutral. So. I want you to notice what we did we're, not just going to keep building up the blocks and the blocks and, the blocks and, blocks when. We can we're going to harvest some of those try to which we did as we. Put on new ones we. Can even with, that in mind the James as the market goes up higher and higher can. We maybe even have a risk, of maybe it might become harder. To. Get that 80%. Yeah. Well. If you were a little concerned about that might, you make your percentage, a little bit more realistic, like what well. Wonder if we say with James as the, market goes up more and more let's try to set more, realistic. Targets, let's. Say, for example like a number like a half, number like 50% cut. In half so, if we took 288, cut in half to 144. Do, we have a greater chance of, targeting, out at that versus, 80%, we, should. With. That in mind let's keep it at 50%. Now. What we're gonna do in this case we're, gonna go to confirm, and send got. Two contracts. 577. Is the total we're not trying to get the total we're trying to really get half of that now, as the volatility, goes down the market goes up what. Can happen is we get greedy err we. Want bigger, percentage, returns, and the. Other thing is we start stacking. A. Inordinate. Or too. Many. Contracts. And we, now become undisciplined. That's. You've. Got to be careful there right notice. We're not doing, anything different outside. Making, a comment, that. Hey could, it might might it be a little harder, to, try to get that 80 percent might. We want to set a lower target so we might not get caught if the market were, back ok. Now. I know I'm not making these comments to you you might know somebody but. Now you can tell them, what. I said, right, to, be careful in that now. There's. The dollar 30 because we have two contracts, we're. Gonna send that order now, the reason why I bring this up what you're going to notice is. The. Call said why. Did you choose queue calm, well, because number one we actually, brought up the example of, when. You take a look at where queue calm is and we're, gonna just, bring this up in terms of technically. Speaking okay. You're, gonna see that if you connect, these lines, you're. Gonna see that queue calm now I'm just gonna kind of lead the witness a little bit okay I'm. Sorry about my neighbor he's a lawyer and so, both, of them are lawyers and so, I I'm trying, to like use, some terms they say, to me they say James I ask, them questions and I say James you're leaving the witness and like say it I always, leave the witness JD when I talk to you so, call, and everyone without. Me for example just giving it away or leading the witness, I drew, two lines that's. As far as they're gonna go to leave the witness why, do we Jax you choose to come as our example now, we actually brought, up Q calm in terms of the implied volatility, the, IV, percentile. Is 42, okay. But, technically. Why do you think we brought up Q calm. Why. Talk. To me now, the reason why I want to kind of go back to so, Apple, has the new 11, Pro max whatever they want to call it right well. What. Chips, or what products. Are in. Those, phones. Dad. Now, if you actually also take a look at let's say the stock of T Mobile which. Is. Unusually. Bullish lately when. You actually take a look at let's say Verizon. Which. That's. Also, been quite bullish and and, it, looks like it's even maybe trying to pick its, head above the resistance, and, you. Take a look at say t-mobile, TM. U.s. you're. Thinking, well what's in the, phone. Okay. Well. It's, one, of the supply, which there's many okay. Is one of those cucum so. If Apple reports great earnings right or vice, versa. My. Causes, suppliers, to. Benefit. From the demand of the iPhones, does. That make sense yeah. So James nails it a chip. Developer, for the iPhones now if, we take a look at that so we're, kind of saying look if Apple. Has been going up and if there's been quite, a bit of demand, on the iPhone, who. Are the direct suppliers, that. Actually give. Them the, supplies, to make that phone now. Again I think there's over I think the last time I look there's over 200. Suppliers. Some, of those suppliers, might be an overlap okay. Why. Because they don't want just one company responsible, for one. Thing they might have three four five that. Do the same exact thing but they can actually diversify. Who, they buy it from etc. Okay, now. Yeah. I'm counting out the comment from colas, but, relative.
Strength. 65. Now. This kind of brings up an interesting point in coal I'm so, glad. That you said that so. We actually go look at the relative strength a lot. Of times we look at relative, strength where, the. Stock, has. Has. Relative. Strength of something. Let's say 80 or, 90, do. Not. Okay. Think, that if we pick something that is in that grayish, color which. This which. Cucum, will be please. Do not think, that you. Can't, look at those stocks. Now. If you look at cucum what you'll notice is since about June July, August set cetera it has, been above. The line but. Not like Microsoft. But. If you actually take a look at something like Apple, what, you'll notice is looking. At Apple compared to the relative strength of the. SPX, what. You'll notice is it was even, negative. But. It's getting closer and closer to the line, so. Coal what's my comment, what's. My point my, point is you don't always go look at the top that's. The major point you, might go look for some stocks there in the gray or some. Stocks that are maybe in the slight, red that. Are turning. Potentially, the gray and then. Actually maybe maybe. Even starting to go like green on that road, to the strength column an apple. And also. Cucum they're both, examples. Of that okay. If you're, waiting until the stocks go, green, on the. Relative strength it, means you probably, weren't looking, at the trend. Fare, right all right so. Make. It a habit of actually looking for some of those stocks that are maybe underperformed. A little bit okay, but, are now starting, to perform, now, the one other stock I actually want to bring up just real quick is I want to bring up the example, of. To. Pull this up I'm gonna go back and bring up let's say a list, just. Grabbing it here and the, list I actually the stock X you want to really bring up in this case I want. To bring up the example, of. Raytheon. Now, I'm gonna actually take a look at two so, first, off couple.
These Stocks like, a Raytheon. Or. A, stock. Like UT X now. On both, of these stocks, what you're going to notice is, and. I'm going to kind of look at the example, let's say UT x in this example I'm, gonna keep in mind with what Cole said we got about two minutes here I want to bring this up so first, off what you're going to notice is UT, x has, been something where it's been underperforming, but, that line it's. Trying, to go back to the red, line which. Is the SP, okay. So sometimes you can get under performance, -, if it's the same as the red line its. Market. Perform, or equal. But, if it's above the red line you're, outperforming. The benchmark, so. That's not necessarily bad that it's going. Back to or trying to get, back to the red line the, reason why I bring this up is what you'll notice is this, stock, you're. Going to kind of see where it's been more than a sideways. Trend, but. In the last little bit you're going to see that the stock did. Go all the way down to the bottom it. Went to the middle of the channel and what. You're gonna notice is it kind of has maybe like that cop maybe trying, to make in the, shorter term a. Shoulder. Head. Maybe. A little pullback and, then a potential. Right, shoulder, or another, flag maybe. It's a stock trying to really break resistance, again now, when you go back to the three-year weekly chart what you'll also notice is, this, has been in a longer. Term. Sideways. Trend okay, now, what is resistance. Is not always going to be resistance, what. Oh support, is not always going to be support it can, change, one. Of the area's that's actually being quite strong is the industrial. Space okay. Now. If I bring up the trade page what you're going to notice is the difference, between UTX, and let's say a tech stock is, it's not gonna they're not going to typically be as. Volatile. So. First off what I want to bring up is I'm going to show the example and I want us to practice, this so. The example, that we're gonna practice here, is we're gonna bring up let's say the, basic, price is going to go the open interest and so. You can, see the differences, here. For. The class I want to do as our example I want to practice selling, the 135. And I know that is closer I get it and I. Want to do that the 15th, of November, okay, I'm gonna sell that one as our example the, second, thing we're gonna do is we're it's a single order blast. All okay. First. It's going to go out and sell them November, the. 15th of November the 135, and, also. If we go to the next month I'm, gonna go look at that strike pretty much the same exact, strike and this. Is what I want you to discover, your own style. You. Might find, that you like to sell shorter term or you. Might defined, you, might find out for yourself that you like to sell longer. Term now, I know what I like because I practiced enough but, do you know you like you know what your style is you. Can't grab a style, from someone else you have to find out for yourself and say do you like that what. I'm going to do is so I can see a side-by-side of, this in our classes sample we're, gonna still sell the 135s, once. November. And then, once December, okay, now, if you look at these charts it looks like a basing patter that's trying to maybe, consolidation. It's trying to really break out we're, gonna see if those stocks can't break out ones, a little shorter ones. A little longer the, reason why we're also looking at this is two reasons the industrial, space, second. Reason is we're also trying to actually maybe pick something where, it's been underperforming, where try to try to might, go. To market. Perform or inline with the SP and maybe it would start to outperform that's. The idea and the, reason why bro that up brought that up is coal said. Hey this is it's, a lower number bringing. This up on. Purpose now let's, go ahead and send that November just one contract, each so. What you're going to notice is we would have in this case two, transaction. Fees sixty five cents apiece for the contract, and if, we send that order right there okay. Send. It now, we're gonna be able to see side-by-side, so. Today we talked a lot about management. You. Might have a goal of how much we're trying to make okay. Well. If we hit the goal we, want to go in and start, to identify, exit. Role, or let it play out through the expiration, okay. We, also put on some new positions, here today the new positions, where you TX we, also actually put on cue comm we, also put on the example, of Nike, be, very careful, as you actually have, positions, and if you keep stacking and stacking, and stacking, and stacking. Eventually. They fall, over. So, the reason what we did is we talked about taking off what we had that. We could putting.
Some New positions, on we're, not making, this the Leaning, Tower of, Pisa, okay. We, want to be mindful of how many positions we have, properly. Position, size are, we over. Investing. But, the goal is to be right on the direction and mainly. Also that, time want. You to go out and practice that so. In order to demonstrate the function of the platform, we, did use actual symbols remember. I like you to also go out and practice in looking, at your portfolio and, see, if you can't manage your can. You identify stocks. Or options, that, you might exit. Role, okay, and I want you to practice that and also. Remember, that TD, Ameritrade we, talked about the strategies but, you get to pick the security, or the strategy that is up for you to decide what, you want to invest in now, Brent Moors would be doing a class on getting started with mobile trading coming. Up just shortly thank. You so much for your comments, and your participation today we, spent half the, time on management. I think. It's warranted, I think it's needed think. Of some other way to say that but I think it's very important, because when those profits, are there no. One's gonna tell us to go and take them we, have to be able to visually see what's, going on and then, actually make decisions based. On what, we're seeing decisions. A lot, of people hate to make decisions, we don't mind to make tas's just. Tell us what the options are and then, we'll consider, what those options are so, with that said thank you so much for commenting your participation, I will, be in tomorrow teaching, both classes, feel, free to also follow me on twitter at je underscore. TD. A, post. Daily. Examples. Of technical, analysis, examples, of options feel, free to check that out as well you, guys did a good job today, thank, you so much take care bye bye. You.
2019-10-22 09:17
