Embracing the Bears? | Trading a Smaller Account | Barbara Armstrong

Embracing the Bears? | Trading a Smaller Account | Barbara Armstrong

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all right good morning everyone welcome to trading a smaller account i want to begin by wishing all who are mothers in this class a happy mother's day and which is sunday and to remind all of you who have mothers to uh be sure to celebrate your mothers this weekend because they are pretty special people aren't they so geez louise are we uh like tired of getting hit with the whiplash uh in the markets these days it has been quite the wild ride this year you know like the last couple of years in retrospect it seems like we've been riding this calm little pony and then we got to 2022 and it went kind of nuts and i'm sorry i've got people here doing yard work and a window open let me just go and close the door sorry about that wouldn't you know they come at the same time as we get together on a product okay so we have got a jam-packed session today i want to thank all of you who show up each and every week um you know including radio wayne who like was here and had checked in along with vijay and doug and frank and robert i think by about five after seven so thank you all for being here and and ready to roll so early and to michael and lamar and deb and todd and saul and chuck and lucy and kay and peter and the rest of the gang thank you all for showing up each and every week um i also want to thank ken rose for bring being here he is a friend and a fellow coach he brings a tremendous amount of experience with him so if you are here live with us you have the privilege of getting to um interact with with ken in the chat so if you have any questions please don't hesitate to ask if you were joining this webcast for the very first time if you could type a greeting into the chat what you'll come to recognize is that really what we have here is it's not just a webcast it's a community and if you enjoy it um what you may find is that you want to subscribe to this channel and then just keep coming back making this part of your regular week um as we all do and you'll find that there's a lot of commentary in the chat where people are helping each other out um as we go through the webcast if they've got questions so i just have to set something up here um yeah so yesterday the last what a week we've had so monday the markets were tanking by the end of the day they closed up wednesday we had an extraordinary move to the upside after the fed did what everybody expected the fed to do which was you know raise interest rates by 50 basis points so um you know many were surprised by that and then of course we had um yesterday which you know was just a tremendous sell-off i mean i i'm on twitter and i post at the end of the day so let me just go to my screen here i post at the end of the day make that a little bigger uh here's twitter i post at the end of the day uh kind of a summary of what happened with both the nasdaq and the s p um nasdaq down five percent yesterday um only two stocks in the green booking and charter um everything else down like all the fangs down and and the you know just as ugly on the nasdaq i guess unless you're totally bearish in which case it was a fantastic day but you know the s p was clobbered it was down almost four percent well three and a half percent and and that's just one day that's not down for the month that's down in a day so um it it's interesting when we get into these markets where it's either a bear market or a corrective market how much things can swing so let's just get back we'll get talk more about the markets in a minute but um yeah so if you've got questions ask can if you're watching this in the archive you can ask them in the comment section on the chat i do check those at the beginning of every trading day and i'll get back to you pretty quickly if you loved it you can put that in there also every comment just helps more people find this kind of uh webcast and content the last way is twitter at b armstrong underscore tda ken is at k rose underscore tda we're posting content that we are hoping you will find helpful on a day-to-day basis um and personally i think you're missing out i got dragged kicking and screaming over to the world of twitter and now that i'm there i'm glad i did okay so know that everything we do in this intermediate level class is for education and informational purposes only none of it is to be construed as investment advice or a recommendation to trade any particular security or strategy in any particular way know that options aren't suitable for all investors there are special risks inherent to options trading that may expose investors to potentially rapid and substantial losses and know that when it comes to options and futures contracts one has to apply for option trading privileges and futures trading privileges in your live account if you're new to td ameritrade in our paper money account we can do whatever we like and we don't have to get any approvals for that and while we look um primarily at technical analysis in this class certainly fundamental analysis does play an important role also um know that when we use a stop loss order that it doesn't guarantee or we put a target in it doesn't guarantee that we're going to get out at exactly that price there can be um some slippage involved okay so what are we going to talk about today i'm going to just uh briefly mention the complimentary thinker swim one-on-one appointments that are available we're going to do a quick market overview we're going to manage look at managing a couple of the trades that we had placed in previous weeks and then we're going to spend the rest of our time placing some example trades on the thinkorswim paper money platform so that is what we are up to today okay and let me just scroll down so that i'm kind of keeping up with the chat okay so uh the complimentary uh one on one ken is going to post a link um in the chat and it there will also be a link in the comment section down below but whether you are a seasoned veteran or you are brand new to the world of think or swim um you can book this one-on-one appointment which is pretty cool um it's free it's 30 to 45 minutes if you're new you may want to have a look at you know the monitor tab or how to do things on the charts as a more seasoned veteran you may want to spend more time on think back or the analyze tab or or whatever but you can do one of these every six months if you haven't done one in a while here's your chance so that's that one oh okay so let's go to the market overview and we'll start with our friend the s p which hasn't been very friendly of late it's already down over one percent today and it is flirting with or pushing on this support level around the 4100 mark and right now it's sitting just below that um and you know we are sitting if we come to show price as a percentage and this is kind of my favorite current favorite way to look at things you know we are down 14 and a half percent year to date on the s p 500 so for those that are bullish or those that have invested in stocks or indexes or whatever for the longer term this has been a very painful start to the year fortunately for us with our small account what we are are looking at is ways to take advantage this year our focus has been a little different than it has been in the last two years but is it has been to take advantage of short-term changes in the market up or down and this is one of the advantages of options is that if the market's downtrending there are several strategies we can use if it's up trending we've got a kit bag of strategies we can use and if it's busy going nowhere there's a kit bag of strategies we can use our frustration has been from day to day that it's like okay it's down trending so we can use these strategies and then oops by the end of the day it's up trending again the market as a whole or sometimes that can happen with individual stocks so there has been a certain amount of whiplash involved and it's been getting you know it's been a little frustrating but yet we have prevailed and and still managed to do fairly well in this class although the last two weeks um we've kind of had the stuffing knocked out of us but um the s p 500 is you know if it breaks this support level um we could be looking at you know a four or 500 point move to the downside which would definitely put us into bear market territory i mean you know we're only four percent away from that now when we come and we look at the nasdaq the nasdaq it's officially there you know we're we're down 23.76 on the year you know ouch um sorry let me just get rid of that so you know where we had drawn our kind of line in the sand or our support level around this 13 000 um mark it has clearly broken below that now and again you know a technician might say if they considered this to be a range you've got a 450 point move potentially to the downside you know and and that would put us around you know 12 550 which if i got rid of this that's you know that's a big move that is a big move so um actually we've gone from fifteen thousand sorry to thirteen thousand you know so that's a two thousand point move so that would be thirteen thousand to eleven 000 that's not even on the chart so if i come to my price axis and i add more space to the downside so this kind of range this could be where we're heading okay and we're already down 24 percent so although this you know isn't what we like to see for the market overall some would say that a correction is somewhat overdue we've had an incredibly bullish run the last couple of years and you know if this starts moving then we'll be looking to our bearish kit bag right okay how about the russell and and here once again we have a support level you know that that was looking fairly strong and it looks like it may be breaking down below that also around this 1900 level it's currently trading at 1844 and year-to-date you know this two is down around 20 i think that the nasdaq is the worst um or leading the charge to the downside it's down 19 so well you know some sticklers might say well it's not officially in bearish territory it's standing on the edge not a good sign the dow um and when we look at the dow you know we're down this is down you know has had been had the least wounded but it's still down 10 so again in correction territory and sitting right at a support level as they all are so um that's where the major indices are how about volatility well are we surprised this is volatility um it's at the very highest end of the range it's been in all year and if we back things up and look at the last two years it hasn't often been this high and if we look at a one-year chart in the last year you know there have only been well here was our top so you might want to count this and you might not but really only one other time when it's been above that 32 level and today it's you know up 10 at 34.48 the other thing is if we go over to thinkorswim td ameritrade.com and we kind of look at

who's been crushing it and i timed out here but we can see if you go and you look at different time frames whether it is the one-year time frame the six-month time frame the three-month time frame that it has been energy that has leading been leading the pack which is interesting because energy has spent a lot of time at the bottom of the heat we can see so far today energy is the only sector in the grain but when we come over here and look and this is where i come at the end of the day just fyi if you wanted to see who the top gainers and losers were but if i come and say let's look at the last year and i hadn't done this until last week but energy staples healthcare we've got utilities in spot number five so it's been kind of coming up um from behind but if we look at the last six months when you've got utilities and staples two of your top three that says that there's nervousness in the market and a rotation into stocks that are seen as less volatile hopefully you know they're paying a dividend because even bonds bonds have had the worst first quarter in in decades the worst start to a year so even bonds are getting creamed because as interest rates are going up it makes the bonds that were currently out there worth less because they're paying less of a dividend or sorry less of a payment um so energy utilities materials and staples the tops and the last three so if we wanted to do something bullish where would we want to come well we'd want to look at probably the energy sector i don't know why this is still showing as gray i guess it hasn't maybe it updates every half hour i'm not sure um in which case we'll you know we'll have numbers on that probably at the top of the hour but i don't want to spend a ton of time on this i now want to take us over to the next area which is our previous positions that we put on and it would take us the entire class because we place a lot of trades to discuss everyone we had placed um long put trades on nike and jp morgan and we are out of those trades those were trades that we will discuss in the long option class on monday since they were long option trades okay so i'm going to push those over to monday and we're already out of those so it's not a trade management issue so what do we want to manage well let's come over start by looking at our position so we're at 23.9 we're down almost 400 on the day um and at one point we were close to 26 000 on this so we've given back 10 of our gains for the year which kind of is like you know it totally sucks um doesn't it but the good news is so it you may say okay is there good news in this well the good news is we started our year with twenty thousand we're now sitting at basically twenty four thousand so we're up twenty percent year to date and we've just looked at all the markets and and you know all the major indices are down somewhere between 10 and 23 percent so we're certainly outperforming the market so what's the good news here well the good news is that what we've done is we've been disciplined when we were really doing well not to throw our shoulder out for patting ourselves on the back and saying obviously we're brilliant obviously we're you know not going to have a losing trade because we just know what to do and how to do it and so we're going to up our position size we kept our position sizes true which was we weren't going to risk more than four to five hundred dollars on any one trade and that has really saved our bacon even though we're down um we could have been down much more okay so you know it's important to have this dis a disciplined approach to our trading treat our trading like a business okay so i'll get off my pedestal you know my mom moment is over um but yeah so coming out what i do want to look at is we have a buy right covered call on american airlines and we can see that american airlines today it's only down about three cents but this call that we sold and our intention was to get called out on this but we're up 6350 on this and we've got 90 of what we could make on this call it's pulled back to a support level but it hadn't broken through when i looked at it this morning oh okay well now it's down eight was it you know so now it's it's breaking down and so we could look at this and say you know what we're just going to exit this position all together my my take when it was still sitting on this 30-day moving average was to say okay it's still sitting on the 30-day moving average and so we will buy back this call and we're going to add a stop but if we put a stop in and we said here's our low of yesterday was 1838 if we put a stop in 3 below that 18 38 times 0.97 we'd be out at 1782 and it's at 1771 right now so if we had done um what an investor might have done at this point we'd be out of this trade you know 10 cents ago so we are going to close out this position and how much are we down we're down 230 235 dollars is it what we were intending no might we get back in and do this trade again we might but are we going to do it today we are not so i am just going to there was our oh you know what that's why we didn't get out on that because i had put that we would have been out on this i made a mistake i'm just going to cancel this order and we are going to come back to our trade here right click create a closing order so we want to both buy back the call and sell our position we're going to exit that okay that's that one we also have a long put on oracle and we can see we bought that put for four dollars it's now trading at 5 32. we do have a target um you know and our target is oh we had a swing target on this one we do a lot of one atr targets which is about the amount it moves in an average day so if we come and we look at oracle and i'm going to change this and we're going to come to seeing as we're doing a lot of up close and personal stuff we put a target in of the previous low so if we come up and we look at our trade on oracle our target is 70 50.

and where is it trading right now it's at 71.80 so it's continuing to fall so we're going to let it just continue to percolate because this was a swing target we had said if it you know gets to the point where it loses half its value we'd like to exit okay so we're just going to let that one percolate um we also had a couple of short foot verticals and we're just going to have a look at those now when i looked at them pre-market they all looked like they were kind of holding their own and but you know things can change pretty rapidly in this market so we had delta and we did a short put vertical here at 42 and 40. and you know it it we're so early in the day we may just wait on this one but if at the end of the day this one hasn't come back up it with volatility being so high that's working against us because this being a selling strategy our idea here was to you know sell this and get paid credit and have it go down in value and of course even though this was still sitting above this morning the volatility is is killing us um so we're going to wait on that because this is the first day it's actually gone below that strike and then we had dollar tree 160 and you know so here we're just kind of holding our own so on this one you know we have a couple of weeks left we may decide to just hold it would make us feel much better if that were bouncing instead of falling but with what's going on with the economy we felt the dollar tree might might be a little more resilient and that was why we had placed that bullish trade there and then the last one was walmart and so walmart at this time and it's a live candle and who knows where it'll be because everything was down on monday at at the open and by the end of the day it was up so we have this candle of indecision currently and we've had several of those on this stock so here are our strikes at 155 and 152 so we're currently through both strikes and i have would have thought when i first started with this like oh if i'm through both strikes i'm at max loss and i have nothing to lose but we're not um if i come down and we look at walmart i mean we're still not where we want to be but we could be at a loss of 250 here and we're at 145. so you know because we position size with this we could take up to a 400 loss and of course these are all bullish trades we're underwater on all of them but with a little bit of patience this may turn around and then again it may not so but if we're looking at this we may say candle of indecision bullish day at support inside day indicating that things may be turning you know because this is at a support level and moving to the upside so who knows so this you know could be that this is going to continue down but we might give this another day we've got a couple of weeks and this might be that time where we choose to sit on our hands okay so these are the only ones that i'm going to review today we have a couple of others that you know one that was successful or two that were successful and one that was not that we'll review monday i treat the long options class as kind of a companion class to this one to the extent that i can okay so let's go and look at some potentially bearish setups now given that the bears seem to be ruling the ruse today so we have airbnb and had we met yesterday we might have already been in this trade but if we we you know look at this and say well airbnb seems to be trading in a range and it's heading for this support level here in an average day how much is airbnb moving about 9.29 how much has it moved today well 9.46 so i rest my case so could we do a one atr trade here this is an expensive stock and so if we come out here and we look at june and you might say well i don't want to be in this that long but here's the deal if it takes a little longer we don't want time decay if we look at may it's much less expensive for the at the money put but time decay will be totally eating our lunch and so what we may do here instead is come out to june and say how about we look at a long put vertical where we're using um the price of the the position we're selling it's still directional it's just it's capping our gain so if we looked at this we could say okay one it's trading at 133 we could even sell the first strike in the money do the 135 and the 130 and we'd ultimately have our max gain at 1 30. now this is

one where if we want to be more aggressive we could come out to may but then if it rallies we don't have much time to recover you know and so we could come out to may and say okay we want to buy a vertical and that's definitely more aggressive and where does this have to be for us to see our max gain it's got to be below 130 and we you know this has only a two week time frame how much could we lose 235 dollars how much could we make 260. where's our break even our break even is actually below where it's currently trading by about a dollar so it has to move another dollar to the downside so if we did this we could also say you know what i don't have to make my max gain if this gets to the point where it's worth 350 i've paid 230 to get in if i'm up a dollar 30 on this like that's over a 50 percent gain i'd be happy with that and so what we're going to do is come to fir single order first trigger sequence we're going to right click create an opposite order and say hey if this gets to the point where it's worth 350 that's a over a 50 gain i i would like to exit this position and we're gonna make it good till canceled we could afford to do two contracts we don't want to risk more than two percent of the account so 240 would be one percent of our current account so if we do two contracts that's a two percent risk and some might say well i have a million dollar account i'd never risk two percent on a trade like this well nor should you but in a smaller account sometimes you know in order there are trades we couldn't even place if we limited our risk to a hundred or two hundred dollars and so that's what we're going to do with airbnb we're going to put that in our long put vertical bucket and fire in the hole oh that was airbnb okay how about adobe so many of these stocks are just expensive um we're focusing on the letter a today it would seem okay so here's adobe and things are getting kind of squished because we're giving so much room to the downside so i am going to go and adjust my chart back this price access um axis you see how that makes a difference so you know when we look at this i'm going to just move this line so activate my drawing and move this down so it's breaking below this support level today which could be considered an entry in an average day it moves about you know 17 well saying here 16.50 seventeen dollars let's just use seventeen dollars so if we were you know depending on our account size the one atr is 17 but this is almost a 400 stock so we know right out of the gate that we can't afford to just buy it buy a put and if we come and we look at this even the may expiration 1690 likes that's a 1700 dollar trade can we afford to do that we cannot and so if we look at this and we say but it's trading at 385 if it goes down to 380 you know when we look at this that's not that big a stretch in an average day this stock can move 17 it's down 16 today so you know could we do a short put vertical and again we're being a little more aggressive if we go with the main time frame so what i'd like to do with this one just so we can compare the two time frames on a long put vertical we're going to do that 385 which is above where it's currently trading and just see and this is 380 250 how about we make it 380.

so we're risking 220 to make you know 270 but we could say you know what if this gets to the point where it's worth four dollars or i've doubled my money i've got a 100 type return i'd like to exit or you could do that like add fifty percent say if this gets to the point you know where it's worth about 350 i've made 115 on a risk of to um of 200 so you know we can do it you know either way so we're going to create an opposite order and if i add 50 that's like close to 350. we'll make it 350 good till cancelled confirm and send we're putting that in our long put vertical bucket and then what we're going to do is we're going to go out to june and we're going to do one with the june time frame and we're going to you know do it the same way and just see what the differences are in looking at two different time frames because this one we've got 42 days to expiration so if we come and we say we want to buy a vertical which is directional it means you know we want it to be to get our max gain it would have to go through both strikes be trading below both strikes so this one we're paying more to get in because it has more time value so with this one we might say okay i want to get out of this one at four dollars but we have more time and we'll make that good till cancelled and again directionally our intention is the same we're expecting that it'll move through both strikes and instead of doing two contracts of each you know we're we're risking our 400 or just over 400 dollars but we're doing it between two trades on the same stock with the purpose of comparing them okay so that is adobe and that my friends is it for the letter a today stocks beginning with the letter a i thought we could come over and look at our friends starbucks now for those of you who follow starbucks um howard schultz has come back for his third kick at the can as ceo to try and bring things back around the bend yesterday we would have just had an entry on this and it's following through today but again this one is less expensive we might be able to do that one atr trade and with that current atr on starbucks being 276 and again we would be looking at buying a put so it's trading the one it's trading closest to is 75. so if we said okay if we looked at this 75 put out in june it's 335 how much can we risk if we buy a put the entire amount so we're risking 335 to 350 dollars there are 6 000 contracts almost on the books well there are when you add the two together um so we're not the first ones to have this idea so we're going to come here right click and we want to buy and then what do we want to buy so now we know we can afford to buy a put here now what we need to do is come to the charts and say okay i don't know why this keeps happening there we go um if we look at the low today it's 75-23 75 23 and we are going to subtract and i am just trying to move quickly here so our one atr is 276.

so 75 23 a minus 276 is 72.47 that's going to be our target so it's below that just below that recent low and then if the trade goes against us and we know that trades can go against us because we have had that um not so delicious experience the high today is 77.22 and if it goes 276 above that that would be 79.96 we're going to um take it out we're going to exit the position okay so we're coming here to the trade tab and now we're going to go to first uh trigger sequence right click create an opposite order and we're going to make this an oco order and how are we doing that we're doing that by clicking on our sprocket we're going to say and i always put the target in first just creature of habit so 72-47 and if it goes at or above 79.96 this isn't going according to plan and we are going to exit 7247 79 96 save confirm and send so we want to buy one put on starbucks with an expiration date in june we're paying 335 so we're risking 335 there's a 65 cent transaction fee to place the trade we want to exit one's target when starbucks goes at or below 72.47 or at or above 79.96

okay and we're gonna put that in our long put bucket okay and this is a one atr target now the other thing we may want to do here is maybe it gets to 73 38 and our target's just below that so maybe what we want to do is is put in an alert to say hey let us know when it gets to that 73 38 ish so we're going to create an alert and maybe we want to end up exiting there so let us know if it gets below 73.50 oops because sometimes it'll come down and hit so have a look should we take our profit here assuming it's going to be a profit okay okay i've noticed and ken is so awesome about reposting things as appropriate that there's a survey in the chat and um so here's my ask because a lot of the things i cover in these classes are because of comments that have come in the surveys in fact i've decided to restructure mine getting started with options because of a comment that was made in the survey on on that class on tuesday so if you can click on that bitly link i'll refer to it again just before we close things out but know that um i do read each and every comment so if you'll give me feedback on what you love what you don't love so much what you'd like to see more of we would love your comments and i promise if you promise to fill it out i promise to read each and every comment okay so there's my plug for doing that okay i think we have time to fit in one last quick trade so let's look and we've got a bunch of different potential setups here so you know we have traded etsy before and you can see we had a target it did hit it um if we activate this we can see it kind of came down bounced and it's moving again to the downside so yesterday would have been our entry but it's continuing on today and breaking below this support level on an average day it moves about whoa 966 like that's a 10 move for the value of the stock so could we look at this and say from where it's currently trading you know as opposed to you know the low of today could we see this going down another nine dollars yeah if you're new to all of this lindrick i would go to getting started with options because we've talked about two or three different trading strategies today we closed out a buy right covered call which is a bullish strategy we've done long put verticals today we've done long puts we've reviewed something a credit spread called a short foot vertical if if it feels like you're totally drinking out of a fire hose with some of this stuff i would go to getting started with options and i'd go through that series and i have i will make sure in the comments down below if you go to the archives that there's a link to the entire getting started with option series um you know you could get into some binge learning so anyway if we wanted quickly to do a one atr on this and this one because it's such a big move relative to the price of the stock will go from where it's currently trading so that would be on etsy 85 85.72 is the current price and we would subtract 9 86 from that so 85 72 plus 9 86 okay minus 986 so 75 86 will be our target and then if we just take that 85 72 and we add 986 where this is just a tighter range it's the same strategy it's just a tighter range and saying from where it is right now if it moves up or down we'd like to either take our profit or recognize that it's not going in the right direction 95 58 would be our exit okay so trade 885 what do you know so for june you know this is too expensive for us and we're not going to break that rule so we are going to go it's at 86 let's see if we could actually do 90 and 85 and get enough premium if we buy that vertical 265 and how much does it have to move 87.35 it could go up a dollar and we'd

still have a profitable trade so if we go with this one and how many can we do we can only do one single order first trigger sequence right click create an opposite order and when this gets to four dollars we want out good till canceled and we'll put that in our long put vertical bucket and you know and just say couldn't afford to do one atr otherwise that might have been our approach and and perhaps we'll do that in the class on monday we'll just see what's going on okay so guys we are out of time but wow we have covered a lot of ground we reviewed about half a dozen trades we put about half a dozen you know new trades on um let me just come bring our powerpoint back up so you know don't forget you can do that complimentary think or swim appointment we had a look at the markets we looked at about half a dozen trades and then we added you know i don't know four or five new trades so guys um thank you for buckling up and staying with me through this whirlwind journey for the last 45 minutes i want to thank ken rose for being such an asset in the chat he really does a phenomenal job and and makes helps make this webcast the little gem that it is i hope that all of you have an absolutely amazing weekend um thank you so much for joining us again just to review um please follow us on twitter at the armstrong underscore tda at k rose underscore tda lots of great content you're missing out if um you're choosing not to participate in that hit the like button if you enjoyed this it helps others find this content subscribe to this channel if you're new you'll want to link arms with us subscribe to this channel um so that you don't miss out and what was the last thing hit like and subscribe i think oh and fill out the survey yes so if you wouldn't mind filling out that survey we'd be grateful and um last thing i mean know that everything is for education and informational purpose purposes only none of it is to be construed as a recommendation on the part of td ameritrade all myself um yeah know that all investing involves risk including the risk of loss know that options aren't suitable for all investors there are special risks inherent to options trading so with that my friends have an absolutely fabulous weekend up at noon eastern will be connie hill with getting started with stock investing i hope you'll join her for that take care everyone bye for now

2022-05-08 12:20

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