Identify Trend, Breakouts & Breakdowns: Trading With Trend Strength | Active Trading Strategies

Identify Trend, Breakouts & Breakdowns: Trading With Trend Strength | Active Trading Strategies

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Marg will it last? We'll discuss that plus taking advantage, possibly of some strength due to some of the geopolitical risks that are out there. Stick around. Good morning. Good evening. Good afternoon, everyone, depending on where you are around this big blue marble out there in space. This is active trading strategies. My name is Pamela Lee and That will be with you for the next 30 45 minutes. You can follow me on Twitter at the Malawi underscore T D A and as well as you can follow bar BArmstrong into assist on the chats at BArmstrong. Underscore

T D A alright without moving too much discussing it too much further. Let's get out there and a lot of lot to talk about today, with the markets moving in some interesting things happening in the commodity sector. With that, remember, this is for educational informational purposes only not investment advice. Options are not suitable for all investors, Especial risks are inherent to options trading and may expose investors potentially rapid and substantial losses spread straddles other multileg option strategies. Canon tail extra

transaction fees, short options very important. Remember short options can be assigned anytime up to and including expiration, regardless of the in the money amount, and then the money option has a higher risk of being assigned early, but important to remember the paperMoney virtual training application. Which you may be using will not assign a short option positions early, which is gonna be very different from a real trading account. Futures are not are not suitable for everybody. As our commodities

there can be very rapid. Uh price changes volatility inherent in futures and commodities. So please be aware of that. While this Webcast

going to discuss technical analysis, there are other approaches, including fundamental analysis that can assert very different views. Please be aware of that. All investing involves risks, including the risk of loss of trailing, Stop or stop loss. Order important to remember, will not guarantee an execution at or near the activation price . Once activated, they can compete with other incoming market orders. Past performance

. Many security strategy does not guarantee future results are success. Any investment decision . You're making yourself directed account solely your responsibility. And with that, let's get out there to the agenda is typical. We're going to review that market, but we're gonna review the market in a maybe a little bit of different light. We've had this big rally. We talked about this last last week as we saw some intense selling. Pressure and then

followed by some intense buying pressure, which which typically will come at the change in direction or changing trend. It does not mean that it will be a continued changing train and we go from a bearish Buyers to a bullish bias, but most bull markets will start this way. Not always. Historical history is, uh, may not repeat, but people do. That's the thing you have to kind of remember. People have memories. And so we're going to

take a look at that and maybe look at how we can take advantage of this move in in the near term, sharp shot to the upside. And we're also going to look at in the market's going to look at the commodity markets where we're gonna look at some trades along with commodity markets. Talk about what's going on there. And then we're gonna identify those technical concepts that are going to go along with this. The ideas here

of how we may place a trade based on place or entries and exits based off of those Technical concepts, So let's get out there and get rolling here. All right. So I want to say hello to everybody that's in the in the chapter. Sandeep and VJ as well as Chris Alfred George in Texas Annapurna. Ah and wrong, Yo. See I think you said

Alfred, as well as Sienna, Michelle and everybody else in the archives that are listening or watching after the fashion after the fact, If you are new to this, we do archive. These These are takes a few minutes to get to get it set up an archive , But you're welcome to jump into those archives Rewatch the if you have clear Anything that might be going on. It might be going on in. In this session

that you want to have have questions about. Alright let's pop out there first and foremost to the to the markets will pop off here to the S and P 500. Now typically, you know we talk about Are we talking about price first, and we can see price having a nice rally day on Thursday, coming off of the lows that happened in the last hour of the day and didn't quite make it into positive territory. For that day. We were still down for the week. Um several six weeks

in a row. To the downside, maybe seven. And then we followed through on Friday. This was the important day. Let me show you the importance about about what we're looking at here if you are new watching on the archives or new today Um this indication down here is has nothing to do with price and has everything to do with New York Stock Exchange trades. How many trades are happening on a bullish bias? How many trades are happening on a bearish bias and when this line is moving to the upside there, there's a certain amount of bullish bias. Today we have 85%

almost of the Trades, somebody buying and somebody is selling a stock on the New York Stock Exchange that are happening on an uptick if it's down there happening on a downtick. So what this means is about 15% of the trades happening on the New York Stock Exchange or On a downtick are considered somewhat of a bearish bias. The importance of what we look at here is what we saw last Over the last week or so towards the end of the week before the end of last week. We

saw lots of selling down below this red line. That's the 10% area, which means anything below that 90% of the trades that are happening are happening on the downside. Which is somewhat bearish. If it goes green like we saw here. Last Friday that is saying that over 90% of the trades happening on the New York's danger happening on the upside and when we see that occur within a short short period, a climactic selloff as we see with price here on the S and P And then we see some buying coming in the it could be just short covering and that's what we're gonna talk about today with some of our trades when we say short, how far can it go? Well who knows right? It could go all the way up to new highs. It could just reach down

trending line one down trending line there. Or you could draw a longer term downtrend in line. Here. Those are gonna be those dynamic areas of trend. That are going to be an issue. Other area

that we're looking at is where we saw buyers come in. To play. In the. Past and that's this horizontal horizontal support area up around the 41 66 areas, So we look for price possibly move back up into that zone, and we're going to take that idea to the trade table here. The trade desk here shortly Uh And if we look at the continuation of the this McClellan oscillator, which is different than price, it's different than volume. It is how many stocks are advancing so far today, moving up not the trades, the stocks themselves. Are they moving? Are they hire or are they lower on a net basis? They are higher for the day. So some

some continued strength, not a surprise After seeing a lot of selling over the last few weeks, and a break of The support areas. So this Horizontal line becomes fairly important. Out there in in tech for technical analysts out there, so we'll watch that area. The NASDAQ similarities here. We've broken

below longer term resistance or support. Now it's Now we're back above it. So it's we support again. We're back above the down trending Lower channel line.

Seeing some demand. Come in. We'll look for similar similarities or look for some Similar price action. Just like with the S and P Up at these April. April May lows and the march lows as well as the February 24th low right in here, so looking to see if that can continue to the upside, the rust 2000 Kind of lead the way you talked about this yesterday. On

last Thursday. It Gapped a little bit to the downside, rallied back up closing higher for that day, but really did not not giving too much up. So it was. It was strong pretty much all day followed through on Friday. A little a little Relax

ation yesterday. That's something that you need to understand about. Price action, psychology or price action. You get really strong updates. Expect some kind of pause when we say strong updates. Those 4%

updates that type of thing 3% 4% You may get some pause the next day, maybe even for two days. Well, We didn't get two days worth of pause in the Russell It rallied and is continuing up into this resistance area, which is intermediate term resistance in a what is starting to become a long in the tooth. Intermediate downtrend bouncing off of a Fibonacci level, So we're now we've bounced off of that Fibonacci level. I want you to recognize this and let me squish some of this down here.

These areas over here. On the Russell. 38% Fibonacci 50% femininity So we're coming back up into 38% the old 38% retracement, which was zone of support. For a while. We'll see if that is going to be some resistance. There is as well so

let's remove that. And do this the opposite way Since we are having since we do see, uh, lower highs and lower lows come up here. Left click. Draw this down here to these lows and you'll see this short term Fibonacci 23.6% coming into play in that same area, So look for some resistance in that zone.

All right. Hello. T M P M is in the room. All right, Let's jump over to, um The trades that type of periods I want to discuss today we're going to put on some relative strength here to come back to this idea of trade with AMG. We're gonna look at a M D s, uh, try to get all three of these AANDC CF. In C B X, and they were gonna There's reasons that we're going to look at these. Um and before we jump

into the reasons Question. I'm gonna ask you is to think about Hopefully, If you've been coming to my webcast, you'll understand what's been strong. Out there in the market. What has been longer term? The strongest sectors, the strongest areas in the market. And what's been weak. What's been weak out there in the markets and then we're gonna look to, you know, look for areas where we might see changes in momentum. Remember if

something is in a downtrend And suddenly the momentum changes to the upside and you start getting higher highs and higher lows. Well, that's a shift in momentum , right? We now know that something that was one time bullish or one time bearish. Is his changed and that's where we want to make want to pay attention to where those areas of momentum change might be not necessarily in the short term, and so we're going to take advantage of that. So to do that . First thing we're gonna do is I'm gonna pop over here. And I'm

going to just pop these Close those up for now. Energy energy energy in so I'm sure everybody else sees that as well. And that's an important thing to understand. If everybody is seeing if everybody can can tell what's the What's the trade? What trade is working? There's a couple things that take away from that which we're gonna talk about in a minute. One of it. It's one of it is that might be where the easy trade is, and we need to be very careful when certain things become very easy and because that's when everybody is in When everybody's talking about how well this is what you have to put your money.

This is the place to put your money. That can be a sign of maybe overexuberance, and we want to be careful. They're not always until we have to know where levels are and where the We're we're willing to admit we are wrong. Strong Energy Straw a week. Chips Commodities, Chris be commodities. Yes. So we're gonna talk about that because energy is part of commodities.

So what I'm gonna do is I'm come over here. And we're gonna look at What it says here. TRC CRB. That's the Thompson Reuters commodity in depth commodity index, and we're also made take a quick look at the dollar. In

tomorrow when I say the dollar. The reason we bring that up is the dollar has a certain effect on commodities, and that's something that we watch, and that's something we talk about. On in my Wednesday. Market in sector analysis analysis Class Our Webcast. I should say it happens every Wednesday at, Um uh, two o'clock eastern time.

I'll put a playlist. Thinking there because we know fairly deep into Ah, the. Intermarket analysis and how and look for ways that we might be able to discern if the business cycle or is changing. The economic cycle has changed. So we're going to put in T R. C C C Arby. Here, not Tesla. Our test trades are.

Verticals on Tesla are doing. Um okay, we'll see how they work out in time. But this is Thompson Reuters Commodity Index Now this is going to be somewhat have more heavily weighted to energy and what's energy been doing? Just like all of you have been saying it's been going up. It's been going up so we may take a look and take a look at an energy trade our energy trades in the here in our in our options portfolio are doing are faring well, The ones that are in our stock portfolio are faring. Well. Why? Because if we look at this This commodity index and I would ask you to step up from your computer's walk across the room and look at this trend. Can you tell me which way the trend is going up or down? Well from the lower left to the upper, right. We

have an uptrend. We have a triangular. Well, kind of a wedge, actually, so this might be a little bit worrisome. We'll talk about that more about that tomorrow. Um but we're going to

look at some other things, but we have strength in commodities relative to the rest of the market. So that's this. Yeah. This. Line here, if this line is rising, whatever's in This box up here. The symbol box up here is outperforming the S and P, So the S and P is up. 2% and

whatever you're looking at is up 4. Whatever trade you have on his or her stock you're looking at is up 4. It's 4% It's outperforming the S and P by another 2% So we're looking for out performance and then we have drifting sideways. We've lost some momentum. We'll see if that can break to the upside. That's

CRB one of the one of the things that will that we want to be careful of is the strength of the dollar, which has been crazy. In 20 year highs over in here and the stronger the dollar , the more expensive come on, it's become the more expensive commodities become the, uh there might be some at some point, some demand destruction. Uh and which will start to, uh, work on certain companies, margins and so on and so forth, But what we're going to look at is beyond that is what's been going on out here. With wheat. This is week. Okay and we have corn. That's cool again. You can see similar

to the TR to the Thompson Reuters That's putting forward slash Z s for soybeans, soybeans picking Feed. These are commodities Remember, commodities definitely are not are not suitable for everybody. Some are thin, very thinly traded as far as far as the amount of Contracts contracts There are in commodities lots of things to be consider before you try to get into those. There's

other ways of doing it. Perhaps and what kind of going to take a look at those those things, but Why is why is wheat popping to the upside? Why is wheat popping to the upside so strongly? Well. I'll let you think about that.

But what we're going to do here is we're going to look at stocks that can can benefit from strength in commodities right from strengthen, Weeps soybeans, corn It takes a lot of nitrogen and stuff to grow Wheat Not so much so, but they all need fertilizer, So we're going to take a look at it possible trade here, based on the idea that TM says week because. The war of the war. Ukraine Russia, UH, have a having a enormous amount of wheat they put out under the markets and as well as sunflower oil from from Ukraine. Hype high quality proteins coming out of Ukraine. They have some of the

best soil in the world. And so, obviously that's an issue. Well the countries like India if there's gonna be an issue with supply, their decided they're not going to export wheat anymore. And so TM is right because of the war in India bans on exports on wheat as well so And B. J says the same thing.

Everybody's got it right shortages worldwide. It's a not a good thing, so men says Mosaic and CF. Yep. So we're gonna take a look at Ah, that CF. And when

I look at this, and we can see that CF has been in this in this uptrend. I think we Closed our position. We bought some CF back in here. I don't think We put a I think this was a trend trade without a stop, But that's neither here nor there. What we're gonna talk about today. What I want you to notice is a couple of things will start with price first. And price had been

in this nice channel. Actually That's right. That's what we did. We took profits on CF when it got up into the When it.

Touch the top of the channel over in here. That's what we did on that. And you as you can see, while it's penetrated the top of that channel. Has penetrated the top of the channel over in here and now it's kind of making its new Consolidation areas, so it's continuing to show some strength some somewhat unwillingness to break down from from the back below into the channel. That is a sign of strength may be a sign of accumulation that we're going that we're seeing right now. Only time will tell. But over

the last couple of days let me want to remove The Channel line now and take a look at the moving averages. Well, we're back above the 50 Day and the 20 day moving average. But what happens? We run right into Some resistance right over here. We're running into the resistance area. So what do

people do it resistance? Have a tendency to sell it resistance at least until they don't anymore. So we get rejection a strong run. We know it broke out to the top of the channel. So

this was more of a climax buying climax. Some people may look at this and wonder about the double top or possible triple top, and it's nothing yet until we can look back six months from now, or however long it takes and say, Yeah, that was the end. That was the top. So what we're going to do now is going to draw a channel line in here. And or Excuse me a channel in here. And start to identify support and resistance areas, and this is where we're going to take. Some

risks and want you to think about this in a couple of different ways. If it breaks out to the upside. Some some people might buy a breakout. Why would they do that? If it breaks out to the upside, they might do it. What would be their reasoning behind that? Well, let's take a look. Down in the in the lower pains in here. Well, it's Here

when we talk about Relative strength. So CF. I didn't have a narrow path CF divided by. The S and P 500. Okay, so this is the prices. CF. Which is one Oh 7 30 or 107 48 divided by the S s p X , which is draining it 40 46 right now and on a relative basis if this is moving higher CF is outperforming the interesting thing that we're seeing in this chart. If I zoom into this is if I were to ask you has this broken out from its consolidation yet? What do you say? Is this broken out from its consolidation yet? And we're going to start doing this a little bit of comparison that some some Relative strength purveyors of relative relative strength. Ah! Consider. A strong

, you know, a strong indication So I'm gonna draw this line across here Shooting star hanging man at resistance. That's exactly right. So, um That's what this is here. We've got kind of the inverse of that as well. So hanging man, these

are these are called, You know if you gotta dig down deep into candlesticks. These are part of what's called Umbrella patterns . Okay so umbrella pattern, So there's hammers. There's inverted hamburgers, hanging men, those types of things, so it's an indication of uncertainty if you will, in decision at in this case that resistance, which is Which is fairly important. You can see the last time we saw something similar was right here and we saw some some selling right some some selling. And so Yeah, it's

still consolidating crazy Fox, he says, Uh and. Everyone needs to start a farm and do their own composting. Hey let me tell you that the every Yeah. Tm tm TM says everyone needs to start a farm and do their own composting. Victor what he says there whether you whether you realize it or not, is a very important statement because when there is a shortage and a lot of demand We're going to see people plant that the old the old saying is, you're gonna plant from fence row to fence row, right? Fence row Defense row and some point there's going to be a lot of supply plants from fence row to fence row. You're gonna

need fertilizer. Now That's from a fundamental standpoint, but what we want to talk about here Is this relationship price? At resistance not broken out yet. And the relative strength at new highs. Relative strength at new highs, prices not broken out yet , So the indication from that is that. Price may know there's no there's nothing says it has to, or will may break to the upside right. We have inherent strength. Outperforming the S

and P 500. I want you to think about when something is outperforming the S and P 500. Fund managers, fund managers.

Some fund managers, not all of them are don't go to cash. They have to be totally in the market if they had to be totally in the market. Do they really want to be? Buying what they can if they want it, But if it makes fun sense, But do you want to be in stuff if they think the market is going to continue to the downside, do they want to be in in in investments? That will drop less. Then the rest of the then the growth stocks or the rest of the market are and with the possibility of moving higher so there may be some bias to move into these types of stocks . I'm not saying there will, but just think about the psychology. Of a fund manager who is told you can't sell anything but don't lose money. Um and so what

they'll do is possibly rotate into, uh into stronger areas, and that's what we're looking at, possibly happening here with with. CF industries when we look at the relative strength momentum using the R s. I The one thing that we've seen. Since last September. In December is that was the last December was the last time it was dropped below 40% until recently, So it's starting to push back above 60% on the rse. This is

considered these. These dots in here these dashes or what we used as signified bullish and bearish biases and if we are in a bullish bias Then we should see what we're seeing here. The ability for the RSC to get up into the 80% area. And the

inability this close below the 40% area, so we have a bullish bias with some near term weakness, right? So we want to see some more strength We see strength out as far as our performance. So things are pointing to the upside but quiet. You hear the prices, King? Then volume. What do we see here with volume volume is rising. Ever so Stealthily. Along here, losing a little bit on the 50 day moving average of volume up against resistance. So do we buy right now We're up against resistance. That's where

people sell or do you wait for the breakout? So A couple of things can happen here you can put in and the way to kind of manage yourself into this trade is you might Put a in order to buy Above the market. Above where it's trading above the breakout area. Above the old highs over here. Or you could look for And be ready to change your tactics. We could look for

price to stutter here. Pull back down into this area. The bottom of the gap here where we can see In the top of the gap over in here. Resistance. Support.

Resistance and we might look for this to pull back down. Into this area, find some support and then take off. It doesn't have to. We can break to the upside, really, really strong. So let's take a look and put a trade on with this. Here right now. Um crazy Fox. He brings up a good

point, and this is something we talk about. We'll talk about tomorrow in my market and sector analysis. We also talk about that in the my Friday getting Excuse me, Uh, Technically speaking, advanced charting techniques, and that is price ratios. Price ratio is all price ratios are Is a. Relative strength. It's just relative

strength. And, um. It's just a different way to look at relative strength. You can manipulate it and put on, uh moving averages and such. So,

yeah, it is redundant, Crazy unless you want to. We'll talk can't go deep dive into that, But that's a great point. So relative strength price ratios are the same thing. Learn about those tomorrow or you can go to my Fridays We talk about those on Fridays ratios are very important. And there's my link to the Friday, technically speaking, advanced charting techniques on Fridays at two o'clock eastern time. Alright let's put a trade on We've got this high over here. Were Some

people would like to see price pushed above the high, So that's 1 13 50. Let's say so. Maybe 1 13 60 with an exit below the midpoint of say out at 99 if it drops to 99, so one Getting in at 1 13 50. Yeah Commodities? Yeah and the continue to continue to be strong than maybe this will push continue to push to the upside. So let's go ahead

and put that in 1 13 1 13 60, We're gonna right click. And we are going to, um, come down and buy custom with a stop loss. Remember, stop loss and I guaranteed to Yeah. Executed the activation price, And then we're gonna come over here and then click that lot there so Then we're gonna manipulate this. First of all, if we're going to buy a stock, 113 60. And have a stop loss at 99. What's our risk

Their What's our trade risk? That's $14.60 $14.60. If you had $1000 that you were willing to lose in your portfolio. You're going to take that $1000 and divided by $14.60, and that says you can buy 68 shares if it gets to this level up in here, So let's talk about that. We'll come over here to the order. Down to the order Entry tool.

Put in 68. And we can click this little firecracker looking thing right there. It's really a chain link. Click that. And it won't click. So for some reason, it's not changing. That's okay. I have I have the technology right here. So 68. They were going to

buy this. Understand what we're gonna do right here. We're gonna buy this at one. 13.6 so 10 cents. Just today's just today's example. We're not gonna buy it

on a limit. We're going to buy it on a stop. Okay, We're going to buy it on a stop. At one at 1

13 60 cancel, So when it gets there, they took him. But that's a buy stops not to sell. Stop. It's not a stop loss. It's a buy stop to get you in above the market, but it could remember stop stops are not guaranteed to By executed the activation price so it could actually be above that, all right, So that's our entry, and then we're gonna get out 68 shares at $99. $99 If it

drops to 99. We want out good to cancel. Now This one is going to remain a stop loss order again, not guaranteed and they're going to come out here and hit confirm and sin. Double check everything. Now, If we left this to limit we'd get filled right away. That's why you want to

stop if you're looking for momentum. To show itself as it moves above. Above the resistance area. Alright so we're gonna go ahead and double check this. 1 13 60 68 shares get out here hopefully have done everything right and we'll send that off. Um Susan says I bought shares, Uh and curious about what would would somebody take profits right now? It resistance. That's

where people sell. You can do a couple of things, Susan, and that is you can take partial profits. Let's say you have 100 shares. You can take 50 off the table. You could come in and close out. 50 those. Let's say

you have Ah, two option contracts. You can close out one of those and see what happens later. Um all right. So that's CF. Okay let's pop down to, uh, a M. D. As well. Now am D, uh, coming back in? I think somebody talked about the market, perhaps starting to pull back. Well it's

kind of it's a little bit past midday. What do we have left in the trading day? We have an hour and 24 minutes left in the trading day, so Um, Am D Let's let's kind of survey the situation here. What kind of a trend is ANDST. I got a lot of

stuff on the chart moving averages and such, but price Is in a downtrend. Price has at times this blue line this blue dotted line right? There is the 50 Day moving average. And at times it's struggled up around that 50 day moving average, but penetrated it now the other line Where can we're concerned with is the 200 day. And we talked about that this type of action. Let me zoom in a little bit closer here. And let's. Put a put a colored box here. And

there's a lot of lot of action going on right there with the moving averages. Let's squish this down. The yellow is the 20 Day. Exponential It moves faster

than the simple. The other two are the simple So we have a short term exponential and what happened? Price pushed above all of the moving average is looking pretty good, right? But then it dropped the 50 Day cross below the 200 Day. The 20 Day failed at the 250 days and started moving down, right. And so those

become important this This idea is called of this moving average crossover is called. A death cross sounds pretty ominous. Doesn't mean it has to. It doesn't mean it's 100% But the expectation is that we've lost a lot of the upside momentum, but we have to remember the 50 day moving averages and intermediate the 20 days. Short term the 200 days. Long term another 200 days

flattened now starting to turn down. Now, if we look at the price action, what do we see? Here? Let me take off those moving averages now. What do we see? Will we see this descending triangle? Descending triangle after a real strong push to the upside that's considered bearish . Now we have this pocket of strength that came in here. He's a strength. It looks like it's

sold off. Yes, but it's starting to rally out of there. Pretty good, Pretty good volume. Here's the thing. Where's resistance?

This downtrend line. Where is that? 200 day moving average sitting just above this downtrend line so we might be able to take in a counter trend or short the short term trend. Is now if we look at price is somewhat up. Long term trend is down because we've broken the 200 day moving average or below. The 50 day moving average to the long term, intermediate term trends are down short, very short term trend is up running into some resistance right in here When we look at the volume, you know, there's been some Some short covering, perhaps in here. Maybe we have some inherent strength, so we're going to take advantage of that in a way that we're going to use options, and when we look at what happened, What's happened here is it has become. It was way oversold back

here at the end of January since then. Well price has from a closing basis. Remember this and something you need to understand about divergence is from a closing basis. We have A divergence. So we're seeing some underlying strengths. Price

moving heart. But where is the overhead supply? Where is the pain? Where is the pain? Will the there's some pain that sits right here? Right here, Right right here. When I say right in those areas. That's where people

uh Took their got out. Uh, and in. So when we see price get back up into these areas where they've sold before. We might expect some selling to come in, so they sold here where we are right now. Prices trying to push above that. So what we're gonna do today is we're gonna come over here to AMG. We're gonna

look at the trade on a M. D. Um and we're not going to go down 94 days to look at selling. Something above the market. Okay, We're gonna look at selling a call spread above the market. As you can see with AMG.

There's a lots of action in here with the open interest, very liquid. Tight bid ask spreads. So what we're going to do is Move this into Get some probabilities going to remember. Probabilities are theoretical in nature not guaranteed. So let's take a look back over to the chart here. Where's this downtrend? Right up around 1 15 , Right right up around 1 15, perhaps price runs up into that area. Perhaps price fails right

here, right? Friend Price. Runs up whoops. Get out of that runs up and fails at the 1 15 area. Turns right back down, perhaps price fails right now, so we're gonna buy ourselves a call spread above the market, provided we can get paid well in the fourth. With the 25 at the 1 15 strike. Set downtrend line so

right at the downtrend line. 1 15 strike. We're going to right click here sell. A vertical so

that Delta of 25 basically is telling us there's a 75% or 25% chance. It will be in the money by a penny 75% chance or actually, probability show 79% chance It will be out of the money $5 widespread. We can take in a credit of Let's say, Let's pump that up to 90 cents 90 cents, or you're risking $4.10 with a 70 or 80% chance of this expiring worthless. So we're gonna sell these two times take on about $800 worth of risk. I'm gonna hit confirm and send over here. Yeah Take a look. Make

sure we have everything in place here in the essence of time Max profit loss here. Options always have those contract fees, So there's our fees in there. And as we have 1 15 1 20. $5.01 call

red so there's $5 worth of spread risk in eighties 90 cents worth of gain, which comes out to a Max profit. So remember probabilities. And reward the risk. You can't do one without the other. We're gonna go ahead and send that off. And we'll see

if we get filled. Okay, so the and we got filled. Building 90 cents. It's paperMoney. So what do we know? What do we know? We know that there has been Weakness. Recent weakness. In

the markets. In certain markets is pretty strong weakness in those in in the I T in in semiconductors, but recent strength right short term strength might just run into some longer term resistance. And so that's what we're doing is we're looking to capitalize on Resistance, the technical concept. And look to exit when

we see failure after it after price hits there. That would be a M D as far as commodities go if there's long term strength and recent strength and we get a break out Then perhaps we break that resistance. On on CF industries and see Price rise.

So we put we're looking for a change in momentum with that break of resistance and trying to trying to put a trade on if it breaks above that, capturing that change and change in momentum from that sideways action. To an upside action. Alright with that, please. Click on that button right there. Subscribe to all the Trader talks channel that will help you would help us as well. And

coming up. Next is John McNichol , please. Oh no. I think somebody's covering for John today. I don't know who I think it's James Boyd might be covering for John John today and swing trading. So stick around for that. And please follow Barb

and I on Twitter at PPI Mulally underscore TEDA at BArmstrong like and subscribe. Thank you very much. We'll talk to you soon. Take care, everyone. You're responsible for the decisions. You making yourself directed account and everything we're doing here is for education.

2022-05-19 00:51

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