Finding Short Call Verticals Using Spread Hacker | Technically Speaking: Trading Stocks & Options
[Music] [Music] well good afternoon everyone welcome to our webcast on technically speaking trading stocks and options we get to combine some of my favorite things which is studying the chart and doing whatever kind of trade seems to be appropriate now how many of you are tired of the market maybe you're thinking this is old i this is so old i am so sick of it well i have to tell you it's maybe not that old i'll tell you what's old the other day i went uh snooping through a box that i hadn't unpacked when i moved a few years ago and i found something that i've been holding on to for a long time this do you recognize this this is a floppy disk of which i have no drive on any computer that could even read this anymore and on here is a document that's my friend's resume from october of 1998 okay now this is old all right uh and even though we might be a little tired of what the market's doing right now we're going to do our best to take advantage of what we see and incorporate that into our trading into our our portfolio that we're using in our class so i'm happy to see so many of you here i'm also happy to see cameron may here he's going to help me out as we field your questions in the chats he's very knowledgeable he can probably answer any kind of question you want to throw at him so please take advantage of that opportunity now i do want to say i'm on twitter my handle is at chill underscore tda i hope you're following me i hope you're also following cameron he's at cma underscore tda we'll post educational content throughout the day some things that we notice maybe some stories and some conclusions we can make from some of those news stories so you'll want to stay abreast of all of those opportunities well what we talk about today is intended for educational and informational purposes only it shouldn't be considered investment advice or recommendation of any security strategy or account type options are not suitable for all investors as a special risk inherent options trading may expose investors potentially rapid and substantial losses while this webcast discusses technical analysis there are other approaches including fundamental analysis that may assert very different views stock markets are volatile and can decline significantly in response to adverse issuer political regulatory market or economic developments past performance of any security or strategy does not guarantee future results for success please no soliciting no photography take lots and lots of notes though very good today what have we got on tap we're going to review a couple of our paper traits that we've been following and tracking a couple from last week we're not going to spend that much time on time on them but i do want to give you an update i want to take a very brief look at the markets just in case you don't know what's going on but i think you probably all do i want to show you how to use spread hacker and how it can identify some potential opportunities to examine and of course we always want to do some sample traits so let's get busy let's move ourselves over to our first trade we're going to look at that we're monitoring we put this on last week we put a trade on dq now dq uh let's just take a quick look at the chart dq was a stop it's actually been up for trending not a whole lot of those right and we saw it bang out there's a pretty big day that it broke out of what our flag formation some might have even considered it a breakout over a short-term resistance area so this is the day we got in with the green oval and we had a place for a target if the stock really ran to it and then we had a place for the stop okay so our target was up here about 79 maybe a little bit lower and our stop loss we did a little bit differently on a flag formation if the price drops back into this consolidation then typically you say ah is it vaults breakout we're not going to go with it however many times the middle point of a candle can act as support and that's the one that we choose to put in in our paper trade that we're tracking and so the idea was hey if it stays above it great but if it violates the midpoint of this large candle that also has some decent volume on it then we're going to get out of the trade and that's what happened as we switch over here i want you to note a couple of things we were in the trade for a few days we got filled right here in our class the day we got stopped out was monday and i want to draw your attention to a couple of things with that the first thing i want you to note is where we have our stop placed at 71.41 is where we said hey stock if you go lower than that or to that point trigger a market order get us out of the trade it did get us out of the trade notice what the price was 71.22 so it wasn't exactly 71-41 and we try to to educate you on this that that number is not guaranteed but is it pretty dang close actually it was pretty dang close especially being that it uh transacted just as soon as options started working at mountain time 731 so i just wanted to show you that as well as when we look on the chart to to show you yeah you know it on monday when it broke through that midpoint of the candle it did look like possibly uh well we had already determined we didn't want to be in the trade now the other thing i want to point out is the trend isn't broken even though we were stopped out of the trade because we put on some type parameters which is just fine it hasn't formed a lower low in fact it kind of came down here about the same as these previous lows and so the trend is still intact so some people might choose to re-enter that trade if they see an entry signal that they like all right next one up let's go to the monitor tab activity and positions and we've got mrna moderna we did two things last week one we bought 31 shares of the stock with the idea uh that if somebody it's a kind of an expensive stock and so for our portfolio that we positions ties to we say we don't want to risk more than 750 dollars in the trade that means we're going to limit how many shares we buy we also bought one longer dated option out to january and we determined with this one we're going to let it ebb and flow we're going to treat it like a stock because we've got a lot of time we don't have to treat it like a swing trade or we get out really quickly but we're going to see kind of what happens here and if there is a point when we would want to be out of the stock trade typically we'll go in and close that on our our account trade example as well so let's go see what the stock looks like we are down about percent on the stock trade we're down about 25 on the option trade so this one doesn't feel so good let's jump over the chart mrna let's bring that up and we can see what happened it had some really decent resistance here uh right about 153 or so and what we did we entered in on the trade with this it had kind of broken out a little bit here and was continuing on now this is one of those trades where some people might have passed on they might have said oh that break i don't know maybe it's got a little far past where the resistance level is we do expect it to act as support going forward and what we might be seeing right now is maybe a little test of that as the stock is pulling back here now we've got our stop-loss set if it violates and goes three percent below what should be support for the stock then we've got our stop loss that says get out of the trade but many times what we're going to see happen on a breakout is it'll run for a little bit and then it'll pull back kind of test that old resistance that should be new support and many times not all the time but many times it's going to bounce back up sometimes people will use that as an entry point when we get in on a breakout we need to be mentally prepared for the fact that it might go back and test that the trend isn't broken even though it is pulling back here so we're just going to monitor those two traits if you have any questions on them go ahead and send those questions in let's see it looks like michael is making fun of my floppy disk here i know it's old this is really old and i recognize that that's why i had to share that with you today all right next area of our agenda just a real quick look at the markets hopefully you've been paying attention you know what's going on uh the trends haven't changed all that much have they we are still in a downward trend this is a 30 period moving average and what's kind of interesting here lately is you know we've had this pullback in the market today earlier with the market was down significantly now it's up off its lows and when i was looking at the spx and the in the dow as well as the nasdaq all of them had a similar looking candle and if you've studied candles you know this is looking like maybe it's not perfect at this point but it's looking like a hammer where it has a shadow to the downside that should be twice as long as the thickness of that candle body if it just is a little stub down here at the bottom no that's not a hammer it's got to kind of look like you're hammering your tool box having that long shadow and just a real small head but in any case it's representative that the market was down on its lows and the bowls have pushed it back up has the trend changed no it really still hasn't changed at all has it uh wrong thing there we go i want to point out though we had our low we had a higher low and this was kind of trying to run up we were looking for a higher high to get higher than this previous point and it just didn't do it okay so again we're seeing that market weakness we've seen it across the board i think we are starting to see some stocks off their lows though uh having a little bit of a a bounce even though overall looks like uh s p is still down one and a half percent now the vix quick look at the bits a volatility index do you have a fill for if it's higher if it's low in your mind do you know x you know this number is low this number is high i hope you're starting to get a feel from it because i think we talk about it a lot in our sessions when we're looking at the overall outlook for the market and so i've got a little bit longer term chart up here we've got a couple of years and i would say you know down here are the lows right that's about maybe 14 15 in the last couple years have been the low areas now we've also had some major spikes all right when we had some major spikes in august of uh 2020 we can see the market came clear up here it went up even higher when we had our initial pullback uh from concerns of covet and basically causing a a global slowdown of things and recently in the last few months yeah the vix is getting up here it's been a little bit high a little bit high it's lows more recently we have been down here right around 18. this one's about 24. right now it's a 27 so i'm going to
say it's still in a higher range where there's concern in the market it's not panic in the streets like what that might indicate up here where the vix gets super high right noting that some people use this as a gauge to say is the market worried or not kind of a fear factor gauge yeah when it's up here people are very feel free fearful but uh it's pulled back a little bit but reckon it's not down here at 16 15 14. it's not in these low areas i would say fear is still in the streets okay next thing how do we take advantage of this even though you might think it's old and maybe to you it's old and you're sick of it you're ready for a change and that could be applicable to so many of us right our brains are wired for things to be bullish but there's just not a lot out there that is bullish we're going to find little opportunities but by and large the more opportunities we're going to find they're going to be bearish so let's show you how to take advantage of that with some additional paper trades that we're going to use as examples today again these aren't recommendations now i'm going to come over here to the scan tool and i'm going to select here on stock or spread hacker and the purpose of spread hacker is to go look for the parameters we fill up here it doesn't look at technical analysis it does not look a trend support resistance it doesn't look at any of that it just goes out and crunches some numbers for it and then it's going to be up to us to do a technical analysis on maybe some of the results it brings back and determine if we like it or not okay that's going to be our job so let's let's set this up here when you come up here and you do a reset it basically starts it over fresh and clean like this and we're just going to start building this little spread hacker some of you have seen me fill this out before we've done it once a while in this class we really haven't done it for a long time and it's a fabulous time right now to let this toggle work for us okay uh underlying price you can put whatever price you want here sometimes people like to put it a little bit higher so there's still room for the stock to drop if you put in a ten dollar price tag here and we're thinking yeah we're hopefully going to find a lot of bearish opportunities because that's what the market is presenting then you know you might want it to start at 50 or 60 or 70 or something like that i'm just going to have it start at 40 and we're not going to put a maximum price on it we don't care about that the other thing i want to point out here this is not going to point out anything for somebody that's a stock trader or a stock investor it's really going to be focusing on options as we as i show you here a little bit further but i want you to know that from the get-go if you're somebody that hasn't been doing options yet i don't want you to flee i want you to stick around to pick up what you can maybe go to barb armstrong's class on tuesdays at noon eastern time where she's she teaches getting started with options and she goes through week by week a fresh new strategy that you can find in the trading options course okay she teaches the complementary class to that so if you're trying to learn man that's a great place to start learning those strategies and use that course to learn them okay for this scan what we're going to do we're going to target a particular type of trade we are going to target verticals uh so i'm going to do a little changing up here in the search all it can go find any and all of these particular trades but i want to focus on verticals today one reason i want to do that is implied volatility is high the market is bearish and sometimes it's really nice to be a seller of premium sometimes uh the selling of premium can i mean all of these strategies you sell some premium in uh for our intermediate level i think it's appropriate to find opportunities that are strategies that are not super multi-legged or things you don't understand we'll get into iron condors we'll do some of those a little bit sometimes we'll do some diagonals and some calendars but for this particular scan we're going to have it focus on verticals for us and then to kind of narrow down our field of what we're looking at uh i'm going to say we don't necessarily want to look at all stocks but i am going to put a filter in here to look for some of the bigger market cap stocks we could use the nasdaq 100 here we could use the s p 100 i'm really going to use the public list of the s p 500 okay but again you can change that put in whatever you want if you want it to cross you could even put your own watch list in here as well if you've got a watch list of say your 40 favorite stocks you could select it here have it go look and crunch the numbers for you okay so we're going to put those two in probability of profit since we're going to target a vertical having already run this and already examine the results uh it's going to biases more so to credit spreads and so with a credit spread typically you're going to have some ranges of information you're going to put in for example probability of profit now some of you may have an idea what probability of profit you might want here we're going to put a range in here that we're looking for anywhere from we want it to be higher we're going to go anywhere from 60 to 85 probability 100 is kind of unrealistic and we might get back a lot of junk but if we can have something that's a pretty high probability yeah we might be interested in it all right maximum profit how much of a return do we want here typically with short verticals the profit that you might want we're not going to look at it in terms of a dollar value but we are going to look at it in terms of percentage return so we're going to put in here between 30 and let's put in over here 45. well let's go 50. we'll go 50. uh if we're getting returns a lot higher than that then they're probably not the high probability trades that we might want it to target here for us all right we could go way out of the money but it might not it might fall in this range or even higher but it won't give us this return so this system this uh spread hacker is going to go look for this information for us uh last one here we're going to add a filter and on this one we're going to put days to expiration where do we want it to focus now if you're somebody that's doing a lot of wanting to trade a lot of weeklies you might put some numbers in here to focus uh i'm going to go to the trade tab here let's get rid of that and let's just pull up and let's just do apple i want you to see that there are a lot available here as far as uh series that we might focus on right this uh we have several weeklies out there many times vertical traders will target anywhere from selling 20 to 50 days worth of time so if we said okay 20 to 50 days we've got some at 22 29 36 43 we've got several choices there now they're going to be some stocks that are really widely traded that have a lot of open interest in the weeklies there are going to be some other stocks that maybe aren't as widely traded sometimes they don't offer weeklies or if they have weeklies they're very there's not a lot of open interest in them to save time and to maybe narrow down the field for us i'm going to suggest we target this one here the monthly october or august expiration that has 36 days instead of having to pick through all of these weeklies and then bring us back some results and we go look at it and we find oh there's hardly any open interest yeah those numbers were there uh we're going to be efficient with our time here we're going to say just go target those august monthly options so as we go back to the scan okay keep in mind that number is 36 until those expire as we come back here we're going to focus in here instead of saying one to uh 36 days we're going to do 35 through 37. what is that going to focus for us yeah probably just bring back those august monthly expiration options for us and they fall in a great range as far as time that we're selling all right if you're a spread trader and you have maybe there's some other criteria you do like this might be helpful but if you've already worked out some things tweak this to your own liking and the things that you found that work for you let's keep it as 50 we're going to have it sort by probability of profit i'm going to hit scan and shazam quickly we get 50 back now it does rank it by probability of profit so the ones well actually it didn't did it um i was going to say we're it was supposed to order it this way and maybe it will when it updates the results but i'm actually going to click on here and i'm going to say okay the higher ones you're at the top so here oh we've got an 81 a 78 looking interesting uh you're going to get a column back here that says your max profitability and so this one has an 80 probability but max profitability is only about 24 maybe when i clicked on it and it focused on one maybe initially it was above 30 and then as it sits here and updates it's a little bit lower than that now we've got 50 results here we don't have 50 hours of time to go go through here so fortunately i went through and kind of did some cherry picking okay and identified some that they looked to be some opportunities now i want you to remember this is the finder of the probabilities and your percent return that you're looking for does not do technical analysis we have to do the technical analysis so one that came up here first and uh and maybe right now it's not going to come up here first is maybe shouldn't have resorted it the other way uh first one we're going to come up to is pxd and it should be on here somewhere there it is pxd it's going to tell us the strikes that it's done the calculation for a 350 355 call spread and it tells you which one's the short leg which likes the long leg and you can look at that and go oh yeah i can see clicked on the wrong one i can clearly see oh and it moved around on us that yeah that makes a short call vertical so let's go check it out let's look at the chart first and see if it looks like it has a technical setup so this is a i've got here about a one year chart i believe maybe it's oh it's two years let's just zoom in here about six months yeah this is an uh oil and energy it says natural resources have been bullish for a long time like a lot of the energy sector was and what's happening now yeah they're kind of pulling back in line the price of oil has gone down in fact right now it's about 95 uh dollars a barrel of oil had been a couple weeks ago it was up there in about what 124 125 might have even gone a little bit higher uh in any case it's falling down as well now we look at this which have to say do we see a technical setup on a bearish play we look for bounces off resistance or breaks of support or a close below the low of the high day right if a stock is running up so as we look at this and maybe we need to actually on this one stay about a year i want to see well how long ago was it in this area okay and it looks like interestingly enough it looks like maybe maybe there's some weak support in here but it's not super strong down here about that 191 level we can see it was being a resistance area for a little bit see how many times it just ran up here that gives us the idea that it's pretty strong the more touches we have on a line the stronger it is that should hopefully we don't know because it hasn't tested it yet but it should act as support for the stock uh does that mean there's quite a ways down that it could that it could go yeah absolutely there is so just keep in mind where that comes from and let's look go back to our six-month chart here now this could have some real short-term support here that it's broken through here recently but i'm going to say it's not as strong as this 191 line is here and what does the stock do and it keeps making lower lows and lower highs now right we've got our high here a lower low ran up here a higher low pulled back tried to run up here again yesterday and it did for a little bit and then of course pulling back today we've got a doji candle which might uh interest some of you to note but uh because it's a candle of indecision right it's basically back to where it started this morning the current price sometimes that can be a reversal candle sometimes it's just a pause in the action uh i'm not overly concerned about it at this point because it's not sitting at a strong support level if it were i think we would want to pay more attention to it okay so let's see what strike prices this said on this so it said hey go look at the 20 220 call and bind the 225 so as we come over here we open up august let's come down here to the 220 call and here's the 225 so these are the two that it's targeting 220 has a delt of about 33 and then we've got a 28 day delta here now there's one thing that i am concerned about here and that is open interest it does not have mountains of open interest i mean 179 is fine but we don't want to be more than two percent of the market in terms of the contracts we buy what does that break down to basically that means if you're just doing one contract you might look for open interest here of about 50. if you want to do a couple of contracts look for open interest of at least a hundred okay however the bigger the number the better and the smaller the percent of what your number of contracts takes up of the open interest the better that is right we just want that to be a very small number now the fact that we got some volume in here today of 12 contracts uh that will probably boost that tomorrow on the open interest so we can't do a whole lot here as far as contracts but the setup is interesting so let's queue it up let's do a cell vertical and i want to spend a little bit time here on exits last week you guys did a great job filling out the survey for us that we had in our class and there were some feedback that some of you gave in and i want to incorporate that feedback into our sessions here and one of the things that somebody said i'm going to go up to that comment um was will you spend a little bit more time when you're creating exit orders and when you're looking at different types of orders okay well if one or two of you are looking for that type of thing uh then it's probably good that i spend a little bit of time on it so i want to incorporate that into what we talk about right now so as we review this some people might just go ahead and put the trade in okay some people might say run through some information to say well does it may is 120 a good enough return well the scan already met our criteria i had already basically said well it's going to give us about a 31 return and right now we're sitting about a 74 probability uh of success and then we have to kind of fine-tune the rest of it see if it has a good technical setup see if we do like the open interest uh there's a question here about you know is the spread kind of wide on this one and let's go pull this back up here uh oh that is abnormally large that was not as large when i was looking at it earlier and it's a great pick up there tim uh yeah it is large now options x or um earnings is just around the corner for so many stocks i've got about a month sitting out here so it's not going to report in the next month we can come back here and see it was may 3rd so probably the first part of august somewhere it will report its earnings more likely than not but i think that's wise for you to take a look at this we're going to go ahead and do it as an example trade anyway but i think that's smart to look at all right let's uh determine here let's do a first trigger sequential order and let's say let's plug it in for if the trade goes our way some people in a spread trade will say you know it's already a hedge trade we're already buying a leg to help protect ourselves and so some people think it's a little bit redundant put in a stop loss and may put the trade at jeopardy when you're starting out with high probability trade so we're only going to put in one buyback condition on our orders today we're only going to put it to buy it back if we get a majority of the profit out of it so we're going to create an opposite order here and i do want to mention if you were with us last week we one of our examples that we looked at we put on a stop and a lock-in profit order and it got us out of the trade prima's prematurely uh in a situation where you know what it actually would have been working out for us and so i'm gonna just kind of uh follow up with that information that's why we're only gonna do one now a large majority 70 75 80 85 uh some people might say you know if i can get 60 in a week now i'm out of there i'm not gonna wait for three or four more weeks if i get a big chunk of it so sometimes that's a little bit subjective so for our purposes say on this one let's suppose we want to get 85 percent out at 85 percent we're happy so let's plug in our credo that keeps bouncing around i'm going to take this back to well let's just lock it in at 115 here so if we have a buck 15 times point 15 that's what you have left after 85 percent is withered away and we only have 15 percent less that says okay go buy it back for about 17 cents so we're going to plug that in there now our max loss here what could our max theoretical loss fee five dollars minus a buck 15 gives us what 385 so if we have 385 as our potential max loss on one contract series and if we say we are not willing to risk more than 750 man even doing two of it kind of puts it up in that range because of the lower open interest we're just going to limit it to one contract okay we could sneak into if we needed to and had a better open interest here so let's leave it like that we're going to make this good till cancelled we should be able to get filled on that pretty quick now i'm just going to unlock it see if it does better whoa way better okay let's do that 155 and 20 cents all right we're going to hit confirm and send look at our theoretical max last lap max gain it gives those numbers to you and we're going to put it in our account for this class trading stocks and options we're going to send that off now eduardo has a actually let me go back i think there's a couple of comments i need to touch on here steve said the next to the scan button ascending instead of descending order on the scan back here so yeah you can say put it in ascending or descending order and you can choose i have it in descending order basically saying bring me the highest ones to the top okay on the probability of profit another question there says uh jcv what are you saying here if you have a con if you have a confident but cautious view but a uh with a bit of uncertainty can you can you do a defend a defined wrist leg by leg or if i enter it whole can you break it apart leg by leg as you grow more confident in the scan itself you cannot have it just do one leg i'm not sure that i really understand your question here um when you're trading the trade you certainly can get out of the trade leg by leg sometimes that's can be desirable in certain types of strategies like an iron condor if i didn't get the intent of your question go ahead and ask me that again okay jzv um we're not going to do the oco steve because we're not going to put in the stop-loss piece of that let's see what else now steve did some looking he likes the 215 220 spread better and you can do that sometimes this just gives you an idea and you like and you go out and look at it go you know i think this is a little bit better fit for what i'm looking for what i'm comfortable with that's entirely fine and then eduardo says you know can you intercept the list with pennywide spreads so that hopefully they do kind of narrow that down for you you can okay i chose the s p 500 but if i wanted to come into the public and here's my penny increment options yeah you certainly could use that as your intercept not a problem very good in your paper trading account it is saying open interest for august is zero for all strikes shekels make sure that you are really in your trade tab and that you're not in your analyze think back tab okay make sure you're in the right spot especially if it was for this stock because it does have open interest all right next up let's go back to our scan results uh let's go see what else we might see there was one here on atvi that i looked at and we also looked at lrcx i'm going to do atvi it did show up here it was showing up as a probability let's go see what it looks like here and i'll tell you what strikes it told me earlier and notice that list is continually updating isn't it oh this bet this one's better as far as top 50 oh this one's better and it'll continually struck uh update as the price of the stock changes all right again focusing on the august options and on this one what did it brought back previously was a 77 50 80 um 7750 80 short call vertical or now this one has increments of dollars and fifty cents which is a little nice but it isn't single like sometimes you can get in the weeklies uh the delta really the only delta that that some traders might try to identify is something in the 30s as far as selling so this one's at a 39.
sometimes i think the previous one was at a 33 but sometimes you know might not look so much that way let's look at the technical setup on this before we look at the uh what we might look at this one's kind of interesting we have our 30-day moving average it had a huge gap down here okay and then the last six months it's just kind of been going sideways all right uh i'll give that a little bit more definition here and it looks like maybe 76 or so had been a short-term support and what did it do it looked like it broke down through it yesterday now i recognize this is a bullish candle right now it wasn't earlier i'll get our pxc uh filled uh what was insane to sell it was saying possibly sell the 77.50 right so i put up here where 77.50 is which is about oh that's about as close as i can get it that's interesting because it's above where our short-term support area is that now should act as resistance and so yeah that could definitely be a consideration in this scenario the stocks at 75.93 you know it could go up what two dollars a buck and a half could still roll go up there and we could still potentially bring in a a maximum potential a good majority of the gain okay because it can go up and it still could be end up being a profitable trade uh let's see let's see what ap 14 said the type of short is dangerous that type of short uh seven references something i said here ap or uh maybe something that somebody else was saying in the in the chat i'll let you work that out and uh cameron will help out if we if he can add some light on that as well okay but 77 15 50 is kind of up here out of the way and it has a potential barrier here right this being potential resistance so let's look at the numbers now atvi's uh traded 1.7 million so far
today uh ooh it's kind of moving along here we don't have a 39 delta anymore we have a 21 delta or a 41 and a 21 as our choices they do have decent open interest let's go with the ones that it showed me earlier which was 75 750 80. and let's go ahead and cue this up on this vertical uh strike price now this is just kind of at the bottom end of our range where we said let's look for probability of success between 60 and 85 this is kind of at the lower end range of that some of you might not feel comfortable with it okay but typically anything above 60 we're going to consider high probability now the open interest is good here this one is a little bit wider than it was earlier today as well that might kick some people out that that might prohibit some people from getting into the trade usually atvi is really pretty liquid and this spread typically is a lot more narrow than that um these are a little bit wider than normal as well 50 cents here 40 cents here but this is um quite a bit bigger like 60 cents so again that might keep some people from participating if you can get it at a midpoint price sometimes that can make it worthwhile to you especially if you know hey there's lots of trading activity here all right if we're going to bring in a 95 credit and earlier it was a little bit higher than that i didn't write down what it was but i think it was about a buck 10 a buck 15 looking at it earlier we could stick it in for that amount or we could say let's pass on it i want to use it as an example so let's put in something that would meet our criteria we could put in here we could say we want to get out a dollar one dollar divided by four dollars gives us about a 25 return that might be a minimum that some traders might go with okay if in an ideal world if we could pick something we might say gee give us single dollar increments here and we could maybe match up a little bit closer what might make our most ideal scenario we'll put it in for a buck here we have four dollars of risk theoretically on the trade that's 400 bucks if we did two contracts that's going to exceed our 750. so here we're going to have to stick with our one we'll still do a first trigger sequential we'll still create an opposite order and if we get 80 of the majority of this well with 80 this one then we would want to buy it back at what basically 20 cents well i think uh yeah that's right there's not a decimal there yet we're just going to do the one contract we're making it going to make it good till canceled that lasts about 60 days would say hey system if it goes and goes in that range you go get it for us don't make us have to sit there and try to catch it uh jc's jcv says a single option is called a naked option to write if you're selling it and if you don't have a hatch so if we didn't have a hedge here if we weren't buying the 80 and we were only selling the 77.50 call yes it would be naked it would be a high very high risk trade putting the hedge in there makes it more defined we know exactly i shouldn't say exactly we know theoretically what we might be out in our scenario if in this case the stock you know just flew up right we know what our theoretical max potential loss would be at options expiration now we're going to hit confirm and send here again we're going to put this in our account trading stocks and options we're going to follow up on it now let me just ask you this how many of you would feel comfortable going back to the spread hacker and putting in four details of line to run your own scan does everybody feel comfortable with that if you don't take some quick notes here go back and look at the recording and take some quick notes and maybe this could be a starting point for you and again there it's a starting point to explore it's not a point to say hey this is the best spread ever you ought to do it okay that's not what it represents all right went through our agenda we were able to track things down we put in a couple new trades that we're going to keep track of both of the trades we did were short call verticals we're going to track them we put in an opposite order that said if we get a high majority of the amount of the spread out close the trade down we're going to be happy campers and move on we're not going to try to squeeze every last penny out of it so i want you to create your own spread hacker and i want you to then take it that information and then go out and say what which one of these maybe actually have technical entries which one of these look like they might be make sense to paper trade and just kind of practice out this particular strategy okay ap says after some practice you would chuck feels good about it kathy can do it sweet uh if you don't feel comfortable go back and review this one more time as we go through the steps uh if you're newer to think or swim this might be a good webcast for you to go to kenrose teaches getting started with thinkorswim which looks at things from a point of view of somebody that's never seen the platform takes you in just bit by bit by bit all right well i appreciate your your participation here today cameron i appreciate you being here today to help out with with questions we've got a nice active group here congratulations pat yourselves on the back for investing in yourselves now as we wrap up i want to tell you trading the trends coming up with james boyd i know a lot of you would enjoy that class that'll start right at the top of the hour and i need to remind you that what we talked about today is for educational purposes only shouldn't be considered a recommendation of any security strategy or account type i also want you to know go ahead and subscribe to this channel so you can get the kind of information you're most interested in it'll bring up our upcoming webcast it'll it'll file in there for you as well some of the more recent classes that have been held on topics you're probably interested in all right everyone we'll see you next week and stick around for james boyd thanks bye [Music] you
2022-07-18 07:34
