Index Futures Options | John McNichol | 10-28-19 | Trading Futures
And. A good morning everyone john McNichol, here and welcome to trading, futures the. Topic is index futures options, do, appreciate everyone that is here live today. Anna Jimmy. Mr.. Bingo, carnival. Eddie whether, you here live or listening to the archived session, to, appreciate, you being with us let's, take care of a disclosures, and we'll get right into it Filan, presentation, is for educational purposes only and not a recommendation, or endorsement. Of any particular investment. Or investment strategy, past, performance, of any security or strategy, does not indicate or guarantee future success now. In order to demonstrate the functionality the platform we will be used in actual symbols keep, it in mind TD Ameritrade does not make recommendations. Or determine, the suitability of, an security or strategy for individual traders any investment, decision you make and your self-directed account, is solely, your, responsibility now. While this webcast discusses, technical analysis, other approaches, include. Fundamental, analysis, may serve very different views as always. All investing, involves risk including the. Risk of loss now. Futures and futures options trading is speculative. And is not suitable for all investors, please. Read the risk disclosure for futures and, options. Provide, for you at the bottom of this page and, futures. And futures options trading services are provided, by TD Ameritrade, futures and Forex LLC. Those, trading privileges are, subject, to review and approval not all clients will qualify now, options, are also not super fall investors, as these, special risks inherit, the options trade and may expose investors, potential rapid and substantial. Losses carefully. Read the previous Avadi copy of characteristics. And risk of standardized options, spread, straddles, other multi lake' option strategies can entail substantial. Transaction, costs which, may impact any potential return also Advanced Options often, involve greater and more complex risk than, single leg option trades investors. May also wish to consider contact, and a tax advisor regarding. The tax treatment applicable. The spreads and of the multi leg option transactions, zero, Commission, applies to online u.s., exchange listed, stocks ETFs and option options. Trades 65. Cents per options, contract, a fee applies. To, those option, trades. Now we have a demo account for our practice account it, looks, or practice trades it looks, like a real account but it is not you. Have the ability to practice what you learn here today by utilizing, paper money that software, is for, educational, purposes only and successful. Virtual trading during, one time period does not guarantee successful. Investment of actual funds during a later time period as those market conditions, change continuously. Asset. Allocation, diversification does. Not eliminate the risk of experienced. Loss. There. I am for. Those you that are not familiar with me John McNichol, and, a coach since, 2004. With TD, Ameritrade education, about, 15 years there you, can see my educational. Focus as, well. As some of the live events, that I teach around. The country for those yet or in the Chicago area I will. Be a teaching. Was. At North Northbrook. I may have the town wrong north, of Chicago. There in. November. I believe it's going to be the, 16th. And 17th, it's. A Friday and Saturday, so, maybe you can join us there alright. Today what we're gonna learn about welcome. And we'll take a look at some of the futures, this morning as we, are seeing some new highs and, we'll. Apply those to index, options we'll discuss some of the characteristics, of index futures options, the. Transition, and from equity, options on futures using. Strategies, you may already know, making. Sure we're applying risk, defined, option, spreads and identify. Potential entry. Exit and trade management techniques. We. Do have some open. Practice, trades from, some other asset, classes that we've done in the past we'll take a look at those as well and apply, some of those exit. Principles, and as, always, determining. Appropriate, risk and position. Sizing is paramount.
Regardless. Of what we're trading being, able to define, risk, is very important. And. When. Our learn objective, for today, will be is by, the end of this session. Now. The Nasdaq, last week had broken out, and made some new highs the. SP. Was just kind of pushing there and we, can see that intraday. We've made those new highs if. We go ahead and take a look at, support. Support. Continues, to rise so, you know as far as that pattern, that is still a bullish. Pattern. Still. In the earning season there also I believe the Fed is coming, out with, some. More, announcements coming. Up this week I believe. And. Let's go ahead and take a look at some of the other indices. On. The. Drop down. Looking. At the Dow the. Dow is well looks, like it's pushing, higher, they're. Making. Highs but. That is not that is the SP again let's try and bring up, the. Dow I don't, think the Dow was quite there yet. Looking. At some of those previous highs now, Dow has been weighted down with stocks, such as Bowen also. With the, China trade and all of that but we are seeing some positive movement today and support. Is still, rising. They're. Looking. At the Nasdaq. Bring. Up that. /nq. On the futures we, can see as well. Price. Break it out of those highs for. The second, day and. Last. But certainly not least ofin, those you that may, follow me on twitter, if, you, go ahead and look at the. Over. In scratch pad you can see my address right there @j, McNichol, underscore. TD a you. Can follow along in. A lot, of the chart, patterns we discussed, not only here but also in our technically, speaking we'll. Share, some examples on. That twitter feed also. Update, on the indices. Each and every week and you allow to talk about the Russell you. Know still struggling to try and reclaim, some of those highs but. We're seeing a. Some, good moves today in the small caps as well. Well. They're still off the previous highs we've, seen a very, strong. Retracement. Of that, downward move, as. Retraced. Well over, I think, pretty much almost three-quarters, of that correction, there so the Russell is still setting, up to possibly, attempt to reclaim those highs well, see if that actually occurs this week, but. Still. Lagging. The. Rest of the market as far as making those highs but still a very strong move over, the last couple of weeks now. If those of you that are looking at some of the intraday. Charts let's, go ahead and bring, up the S&P. Futures, again. We're. Looking at a daily chart let's go ahead and switch to more of an intraday. Chart those, you that have followed, us in, the, past, looking. At some, of those pivot, points, intraday. Looking, for some of that support and resistance, as. We go ahead and see. You. Know strong move between Friday, and also. Going into the opening, now some traders may go ahead and you'll look at a larger, intraday, period, of time let's. Say we'll bring up an hourly, chart and. Look. At some of this price action I'm going to go ahead and zoom in a little. Bit, on. As far as with the run-up. From Friday. Here, and. Then. Go ahead and identify, some support. And resistance, now the pivot points which, are representing, some daily, and weekly. Areas. That may act as support and resistance. Kind. Of some of the key notes here is looking. At the weekly. Periods. The. Weekly pivots I should say. Which. Had previously been some, support a little bit of resistance now, has been rising each, and, every. Day and with, this run-up you, know well above that weekly, pivot. And as. Far as for, the dailies. Also. Well above that there, so. That, range as far as support you, know around that 3:10, to 3:00 sixteen area. If, we go ahead and identify, just. Some. Trend lines drawing, tools. Looking. At a parallel. Line. Price, Channel, traders. Can go ahead and identify, that. Support. They. Go ahead use my right hand on this now quite as ambidextrous. As I thought we're, gonna go ahead and plot a, line.
Off Of that support. Kind. Of drag that up. Going. Off of some of the lows, will. Mark that and. You'll have a parallel, line or should have a parallel line that comes with it some, reason didn't seem to do that let's. Try it one more time. There. We go. I'm. Just going to go off of some of the highs and. Then. We have some resistance, right there now notice, as far as going in the opening, prices. Have already kind of broke out of that, hourly, channel there. So. We'll see if prices actually slip back and retest or form, a new, channel alright, let's, go ahead and get our discussion on. Some. Of our spreads. Looking. At. Options. On these indices. So. We're going to go ahead and bring up our slides again. Here's. Some comparison, for those you they are fairly new to futures or at least with futures options some, of the comparisons, between, options. On futures versus, options, on equities. Some. Of the the, big pros is, various. Asset, classes as, we've reviewed, each and every week that, one has access to. More. Capital efficiency. As, far. As with with. Margin, and as far as with risk. Also. Trading. Hours. Virtually. 24 hours a day six. Days a week on. The. Underlying as well as on the futures, for. Those of you. Who. Made a trade there is no pattern day trader and rule that applies to at. Woodie's and equity. Options there, and. As. Far as expiration. This is one thing to understand, is that. The. Options. Will. Settle. Into. The underlying, contract. Or. To, potentially settle for cash now, the important, to note is that the. Underlying futures, contract, also expires. So, if we're, if this were calls, into an assignment or an. Exercise. One. Would have to close out that, underlying, futures. Contract, much like they may do with an individual, stock if. They're assigned. Now. A couple of different contracts. Espy. Futures contract, now as you look at these, individual. Indices. Make, note of a few things particularly, the multiplier. Because. That's how we're able to calculate. The. Not. Only the value, of the contract but. Also, the. Anticipated. Moves or the value, of those moves by utilizing, the multiplier, the. Tick size. Which. Represents, the minimum price fluctuation. Typically. It's going to be about a quarter. Although. Can, be as low as a nickel on. Options. That are priced lower. Than, five dollars but. Typically each tick is twenty-five cents which represents, times 50 that's, $12.50. Notice, of trading hours. Again. From around Sunday, evening, up through about Friday afternoon, with, some brief trading Hawks and. Also. The daily settlement now. Since. These are equity, futures, they. May look somewhat similar or. Closing, around the. Equities. Market however. Other futures, contracts, and options may have different, settlement, times in. This case on the equities, typically. Around, just. About 15 minutes after the hour, when. The equities market closes. Now. Other things keep in mind as far as with end of trading. Is. Looking. At. On. Standard. Some. Standard contracts, on American options expire. At the 8:30, a.m. Central time on the third Friday of the contract, month. And. The. Weekly options and. End. A month options, are going to be european-style. Now. With that, as. Far as settlement expiration, the, options, exercise results, in a position in the underlying.
Cash-settled, Contract. Now. Going through and looking at the Nasdaq very. Similar characteristics as far as except, the multiplier, is going, to be 20, times the premium. For. /nq. In. The. Case of the Russell. 2002, small caps, multiplier. Is going to be $50. And. Now. Notice, that we didn't have one for the, the. Dow. The. Dow believe. Is optional, they. May have recently allowed, trading, on it usually as far as the accessibility. As. Far as options trading, has, a tendency, of dealing with liquidity. Let's. Take a quick, look, we'll go to the thinkorswim platform again. And we'll. Go to, trade. And. We'll. Type in. /y. M. Hit. Enter. And. Then. Here's a list of various, option contracts. Now. Notice that there are some quotes there. Now. If I was to go ahead and let's, say right click, on. One of these contracts. Notice. Currently. Even though there's buy and sell that it's shaded out. So. That's showing that currently. Options. Trading, for the the. Dow futures. Options currently. Not available on. Thinkorswim. Platform whereas, if I go ahead put forward slash let's. Say NQ. And. We'll, go to a contract, month just. For illustrative, purposes notice. We can go ahead and bring up the. Buy or sell there. Alright. Now, some of the considerations, as far as looking at indices, as we can see with. The markets, making some newer, highs. The. Fed being, accommodative. Economic. Strength, all. Can, point towards positive. Movements. In the market so, three. Main things economic, reports, interest. Rates and inflation. We. Can look at the economic, calendar for some of these various reports, from payrolls. GDP. Gross domestic. Products. Reproduction, retail, sales durable. Goods and, housing. Data. Interest. Rates. More. Guided, by the, Fed as well as inflation, keep. An eye on Federal. Open, Market Committee, FOMC. Announcements, as well as with Treasury auctions, looking at the bond market, seeing. How that is performing, and then. Gauges, for inflation. Such. As CPI Consumer Price Index the. Impact, of the. Cost of goods and services on the consumer, the, PPI the, impact of the. Cost of materials, on, the producers, as. Well. As how individuals. Are consumed, in various. Products, so. If we go and go to the calendar. For. That will go to market. Watch and. Select. Calendar. Now. One can also go to TD Ameritrade website as well, and. Look. At the economic, calendar under research and news but. Here on market watch calendar. On. The. Left. Side you can see a checkbox for all the different events, dividends. Earnings if, we want we can, uncheck. All. The boxes and, focus. On at caño day events, and. From. Here go, ahead and look at some of the different reports that may be coming out during the week now, thing to keep in mind you.
Know As far as the times being shown I believe, or local time to me. The. Only reports, that, may be coming out in the overnight. You. Know maybe tied to, Europe. If. You look at late afternoon, local. Time maybe, tied more towards Asia. If. You click on any of the reports. Fortunately. It's not on the title itself. You'd. Have to drill down a little bit to, see what that, report comes to for instance here's a GDP, number coming, out on the 31st, if. I go ahead and actually click on that identifier. Or you. Can actually click on the day and then. The news will be listed, for that day below. As. Far as what the appropriate. Dates. And times they're. This. Looks like that was an example of a GDP. If. I go and click on that it's. Given gross domestic product, and if you go into the notes it, should give, a reference as far as what. Economy. It may be looking to. Now, looks like in this case if it's not as specific then that may be actually tied to the US. So. That's coming out on Thursday. Other. Reports, coming, out on, Wednesday. Also. Have here's, a GDP, number here. That. Actually may be. Current. As well just gross, domestic domestic. Product. And. Sometimes I made for beef or another country I. Don't. See anything coming across on that. And. Here's. A CPI, notice. There's also some reports coming out of Canada. We're. Going to click on CPI there there's. Consumer Price Index, now. Notice in this case and this note it's actually looking at Germany, and. The notes. And. As. I mentioned another reference is you can go to the TD Ameritrade website. If. I go to that now by the way there's my Twitter. If. You're going through the TD Ameritrade website let's go ahead and login. Say. It was logged in but got timed out there that's okay. One, could go ahead and go to research. And ideas. Click. On that. Even. Though the TD Ameritrade website has. Quite. A bit of news, and information there, sometimes. On the domestic standpoint, if I go to the website research, and ideas and, select. Calendar. Under. The market column. You. Can see the calendar over, the next month. You. Can select economic. Events. As. It'll. Be a link over on the right. Once. Again default. To all events you can select economic, events. If. You scroll down you can see some, of the reports coming out on. The, day so. Advanced retail inventories, wholesale inventories going, the rest a week there's consumer, confidence, that's. A big one. Looks. Like the consensus, is consumer. Confidence bumping, up a little bit. Also. There is a pending home sales. There's. Some of the GDP, numbers in, advance. And there. Is the FOMC. Rate decision, where. Consensus. Is expecting. The Fed to cut once again. Which. Typically benefits, the equities market although. Also. Bring some volatility, in to that as well when, they come up with possibly, some of their guidance. Then. Going into the end of the week, personal. Spending there's, at PCE. Price. Index if you go and click on some of these you may get some more detailed information from, a historical, standpoint, as far as a chart looking. At trends you, know in spending, has been on an upward bias, at. Least going back to August there. Alright, so hopefully learned, a bit new on how to bring up some of those reports. Let's. Go ahead and talk, out some. Of some. Of the considerations, and we'll go and we'll do our practice trades and look at some of our existing, positions. There now, if you're already trading, options on equities you, can apply some of the same strategies and options on futures after, all options, and option, regardless, of the underlying asset. Now. Index, options on futures can, be America next aisle or european-style. The. Latter can only be exercised, upon expiration. So. We're looking at some of those if. You have an american-style. Option, that. Can be assigned or exercised, at any time whereas. On a European, style it, can only be exercised, upon expiration. Now. Contract specifications, are going to vary on futures.
Products, And supportin to know their specifications, before you get involved here's, links to, TD Ameritrade futures as well as the CME, Group where, many of these, futures. Contracts, trade, now, another, reference for you if, we go in and bring up the thinkorswim platform, is. If. You go to the, analyze. Tab and, on. Fundamentals. So. The analyze tab and fundamentals, this is a recent. Feature that's. Been added not, fundamentals, but on how it applies to, futures. If, I go ahead and type in let's. Say, /es. And. Make. Sure we select fundamentals, let's. Try that again for, /yes. There. Is a on. The fundamentals. Page it'll bring up some of the basic. Contract. Information, there's. A multiplier, there's, a tick value minimum. Tick now this is for the underlying. Contract. And I'll, also show the, contract, profile, as far. As the futures. That are there the, active, time is, the front month notice. That we, had just typed in /es. And. Typically. Be. Three DS out on that underlined, future. Now. I don't see any questions but if you have any please, go ahead and type that in the chat window would certainly love to hear from you. Now. Let's go and take a closer look at some, of these contracts, and let's see if we can go ahead and put in a practice, trade. So. We'll go ahead we'll go back to a daily chart. Now. Some traders you know as they. As. They look at this with price breaking, out they. May continue. To be potentially. Bullish. Expecting. That broken. Resistance. May have a tendency of acting as new, support. Some. Contrarians, out there you know may look for some, type of pullback. Or. Expecting prices to stay below a certain, range there. Let's. Go ahead and do an example we'll. Do an example of a bullish. Spread. Let's. Say we go ahead and look at forward slash and Q. And. We'll go ahead and take a look at apply. Some of the same principles that we teach in some. Of our options classes, now if you want some follow-up on this if you go to education on, the. Platform, and select. The education, tab so. Where you can learn more about not, only futures, but also options, point. Your attention over. To the far left. There's. Links for futures and, also. A link for options, if. You go to the options, link and look. At the course for trading, options. Some. Of the vertical strategies, that, were discussing here today can. Be learned in the trading options course and. Also. Via the webcast on, Wednesdays. Every. Wednesday I do a vertical, class, at 3, p.m. Eastern Time. All. Right so go ahead and we'll take a look at the trade. Tab and. We're. Gonna go ahead and look a certain. Period of time out. One. If, they are selling options maybe looking in that 20, to, 50. Day window. Notice. I've basically highlighted. The. Number, in brackets representing. The days expiration. If. We go ahead and take a look. And. Say at the weeklies and I remember these weeklies these are going, to be, european-style. Which. Means that they would be. Subject. To assignment. Or exercised, at. Expiration. So. Let's say we go ahead and look at an example of a put, side and see what types of premiums. May be there. One. May be looking further out of the money and, kind, of a combination of a balance between a, reasonable. Return on risk as well. As probabilities. Theoretically. With deltas in the 30s probability. Of the, price. Expiring. In-the-money, or. Below, those levels would. Be to the tune of about. 30%. Which. Means probability, of them expiring, that's. The 30%, probability expiring, in-the-money, which, translates, to about a 70% probability of, expiring out of the money some, traders may look for. These levels to be at or below support. So. We go ahead and look at our chart again. You. Know looking at 78. 70. You're. Looking at a previous low, that. Low is at. 78. 10 so that's a bit lower than, what, level, we were looking at now. An. Assumption, that some traders may make as well is that broken resistance. Has, a tendency, of acting as new. Support. So. We go ahead and look at that breakout, there.
You. Know as far as that level that levels, out around the 8000. Level, so. The 78. Strikes. That we're looking at is below, that now some traders may wait for price to pull back and form, the bounce. Let's. Go ahead and we'll put, in an example. Let's. Look at we'll start off at the seventy. Eight seventy I'm. Gonna go ahead and right-click. And. I'm going to do a sell. Vertical. Now. What one looks at these two you know there, is could, be liquidity. Issues. There's a relatively, larger spread some, traders may go ahead and go. Up to the layout, up at the top look at volume and open interest and, there's. Very small volume and open interest. Let's. Say if we go in. And. Look, at some other contracts. So. Going into on. Take, a look at December see, if that looks a little bit better there. Let's. Try to consume some other contracts, besides just the S&P which is widely traded as. You can see some of the challenges. When. Look, in, for. Some liquidity. So, they may not be much better here. Trying, to find a balance between going, enough. Further days out so, looking. At some of the standard contracts, as, far as standard contracts we had 18, days and, we. Got 53. Days there you. Got some of the weekly options in, between. Look, at the end of month one here so if there's anything different here. Surprise. They're still a little wide there as well I. May, have to go ahead and look at some of the other ones here let's look at. Go. Back and look at the EES, let. Me up stick with that one. And, let's, look at the end of months on these ones. It. Looks a little bit better here let's, look at our deltas. I'll. Go a little further let's, see. Look. At the 29 90s, and I'm gonna go and bring up the chart on this one as well. Well. The S&P did go ahead and broke out above. Some. Of those previous highs. Which. Is around a three thirty, twenty area there. So. Going back and looking. Below 3,000, a three, thousand is a psychological, area, of support of resistance, that some traders may be looking at. And. Maybe. We go even a little bit further back, here I'm, gonna go let's go ahead and look at the. Let's. Look at the 29 80s, again. If we want we can bring up, volume. And open interest as well kind. Of get an idea notice, a bit more volume and open interest there, spreads. Are a bit tighter there I'm, going to right-click on this and we'll, do a sell. Vertical. Now. You may see some variation, in prices. Here, that's. A $5 wide. Credit. Soon as we going back between $1, and 75 cents if, we go ahead and bring up a. Return. On risk let's, say if we were able to get a dollar for that. Now. Remember that is, also. Referencing. The, the. Credit, we have to multiply by the multiplier, which is 50. One. Can see that. Here. On the. Quotes there's your multiplier. Also. When you do your confirm and send you. Can see it in dollars on what the maximum profit is so. That would be a. Profit. Of $50, maximum, loss of 200, so, we go ahead and do the math on that. Which. Is going to be 50. 50. Divided. By, 200. As. A. Return on risk of about 25% now some traders may be looking to set a minimum. Minimum.
Return, On risk. 25. May be kind. Of the minimum. For. Some traders trying to get the balance between the. Reward. Probabilities. Along with the risk we've. Been trying to look for examples closer, to about 30%. Now. Dense debt ask a question you ever consider implied. Volatility, percentile, on futures, options trades, to buy or sell it's. A good question we can apply some of the same principles to, options. As we do on futures. Options as we do on equity, options. You. Know for instance with the market being higher volatility, is relatively, low, so notice. We're not picking. Up as much premium, on these, put spreads whereas if prices had sold off. One. May see a greater premium. So. Absolutely. Let's. See here, now. If I went ahead and came in a little bit closer. Let's. Say we look at the 2985. Sell. Vertical. You. Know again kind of similar credits, here. Notice. As we get closer to, that. Support. Looks. Like a lot of these credits are very similar here. So. I'm gonna still go ahead I'm gonna see if we can go ahead and put in. Put. Vertical, we'll, attempt, to put it in for a dollar although there's a spread there this may not get filled as a matter of position, sizing. We. Want to position size this to a max loss it's $200, per contract. Let's. Say I wanted to risk a thousand. Dollars on the, trade whatever, is the. Amount you're willing to risk, we. Can determine that we'll do edit and we'll make this four contracts. We'll. Do confirm and send. That's. Four five. Would be a thousand. Would. Confirm and said. So. You went up a little bit there. We're. Still gonna try and put this through for a dollar. If. It doesn't get filled then it doesn't get filled you do have control over. Price. You just don't have control over again filled, so. You can determine what is your proper reward to risk there and we'll. Send that through okay, notice didn't get filled right away. Let's. Look at some other things here. If, we wanted to do a a. Call. Spread. If. One perceive that price may stay, lower. Let's. See what that looks like. And. We'll, go ahead and look at another, list. Of Greeks here. Look. At the call side and look, to sell. 30. 90s 30. 90s, or basically about. Looks. Like that's about 50 points above the current price. So. Over the next 30 days if one perceived that price would stay below, 30. 90. I'm. Gonna go and right-click on this and we'll do a sell. Vertical. Now. On the last one we actually did it was a $5. Wide now if we change this to a. $10. Why it should say dollar but point wide. Let's. Say, we make that 30 100. Right. Now it's showing a credit mid price of a buck 50 if I change this make it too wide notice. It's closer to $3, so some traders may go. Further. Out. Which. May. Help. Sell. Less contracts, or reduce the transaction, fees there. And. With. That if. We were able to sell that for, $3. We're risking. 3. Times a multiplier or, I. Should say that's the maximum gain. 3. Times a multiplier of 50, it's $150, maximum, loss of 350. It. Looks like this actually has a better return on risk than to put 1. So. We go ahead and take that, one. Try, that again 150. Divided by 350. That equate out to be in 42. Percent, return on risk. So. Let's say we go ahead in a position, size for this one here as well now. Basic and I, just did the hoops trade which. That guy filled right away. Supposed. To be confirming sin not sin sin. So. I can go back to that trade tab we'll. Go back to monitor, here's. The filled orders I. Go. Ahead and right click on that I can create a duplicate, order I. Want. To confirm in sin. Now. That is risking about three, three fifty so.
Let's Say I'll just go ahead and put in another two contracts, on this one. To. Confirm it sin, and. Sin. We'll see if that one gets filled that may not get fill as quickly as the other one so. What we just did actually by. Doing. A short. Put, spread and a short call, spread that, was essentially, a iron, Condor, although, we kind of laid into, that at. The moment so you know someone may do an, example. It looks like that did get filled. So. That was a strike at 39, T. So. The reason why someone may do a trade like that is they believe that price, may stay, in a range. In. Our example, believe over the next 30 days. Which. May or may not happen. 30, 90, last. Quarter year does have a tendency of about. Performin, we'll see if that occurs so basically, for. That call spread the price would have to stay below 30 90, between. Now and. The. Expiration. Which. Is thirty two days from now and. Then. On to put side. Price. Would have to stay above. 2980. Which. Is a short strike on the put side. So. Relatively, narrow range there, some. Chairs going to do condors, they may go actually further out on, their deltas kind of widen out that range whining out the probabilities. This. Is just kind of more of a side. Effect of showing you an example of a short call, vertical and a, short, put, vertical. Now. As we wrap up let's. Go ahead and look at some of our existing. Positions. And talk about exits. If. We go ahead and take a look at some of our previous, trades. We. Have an example of. 6b. For the British Pound. We. Have the euro in there. We have crude and, we have, gold. Let's. Go ahead and expand this out a little bit. Now. If we go ahead notice, there is a column, here and you can add this it's called percent, P&L, by. Going. To the gear over, to the far right I can. Click on that gear and you, can customize, the column, and, just. By typing in P, slash. Percent. So you got P&L percent. You. Can add that to your columns, by. Double clicking on it and, you. Can move it up wherever, you want in the list, notice. I already have one there and. You. Can double click to remove need, B. And. Click OK, so. Notice we here we got some P&L, percentages. So. Some traders may go ahead and target, a percentage. Of their maximum gain. In. The British Pound one that we did. We. Went ahead and initiated. This back, on October 14th. So, less than two weeks ago. And. Right. Now. The. Pl is about, shy, of 70 percent. With still 39. Days, left, to go so good, look at the chart that would imply. That the, British Pound moved. Higher. Which. We. Were looking at it technically there. Okay. That is forward slash 6e. We. Talked about kind. Of more of the, downtrend. That, the British Pound was breaking, out of and. That's. What's occurred. Price. Actually kind of slipped back a little bit there, but. Still. About. 70 percent up on that now question is some traders may look to close that out, you. Know British Pound is sliding back yeah. There is discussion, continue discussion, on the brexit not sure what the latest is but. There could be some downside, risk. Trader, can choose to close out that position, lock-in, in the. Majority, of those, gains. If. I go ahead and create a closed in order to buy that vertical, back. That's. The debit but, there is a multiplier, and. If. You want to learn, that just, go ahead and bring up the. Analyse tab. And. Look. At. You. Link that. Six. B, multipliers. 62,500. So, big multiplier, there that's why those. Pennies don't look like much or fractions. But when. You multiply by six 2500. Adds up and by. Closing it out, it's. Costing us $200. Plus Commission's. To buy it back so we're basically leaving, about. You. Know 30 percent or the rest of that. Maximum, loss the question is you, know does one risk. In. This case, over. Four hundred five hundred dollars. To. Make another, two hundred over the next 39 days. We. Captured, pretty, good game so, we can go ahead and close that out and frees. Up capital for another, right, so. We can send that through. The. Other one that was a desired result is. Looking, at gold. This. One actually, expired. I believe today. Or. May, have expired on Friday there. This. Was a November. Put spread. 1480. 1485. The. Mark is at, fourteen, ninety five so. Both, of these options are expiring worthless we. Go and look at the chart on that. /g. C. And. Price. Basically, that spread was constructed, below that support and that support held, so, we have a maximum. Game, so. No action needs to be done on that as, both. Of them expire worthless we. Got our maximum game now if you look at crude. Ford. / CL. Well. It's not open it up. This. Looks like this was a call, spread, looking. For price to stay below, 56. Right. Now the mark is at 5644, so that. That. Spread, that that option, that we sold is just slightly in the money there. Are 18, days left. To. Go ahead and look at the chart. Ford. / CL. You, know Croods been in a range so.
The. Expectation, was looking for price to possibly stay in the lower half of that range. Now. Some traders may do is, if, they, believe that prices, may continue, rallying, up. They. May look to buy back that spread, and. Define. That loss as an example if I wanted, to close this one out. To. Buy a back. That's. Going to be a 25 cent debit, times the multiplier, which it believes that thousand. Basically. It's costing us twelve. Hundred, and fifty dollars, to. Close it out. We. Rather potential, gain. Believe. Would be closer to about 1250, so we got a little time on this one we'll lift this one sit and. We'll check on it again next week and it. Looks like that covers things down what we'll do is we'll continue managing the, the. SP index contract. As well and. Manage. An for exit two so. Hopefully we went ahead and you learn something new today folks. We. Went ahead on some of the characteristics. Of index. Futures options. As. You can see for, those you that are already been doing spreads, transitioning. From equity. Options to futures options not, a big deal you. Would need to apply and be a prutte for that though. We. Applied to define risk options. And. We went ahead and looked at managed, in some of those existing, positions, as. Far as on the profit side and as. Always, determining. Appropriate, risk. And position, sizing so. What would like who is go. Ahead and pick one of the index futures. You.
2019-11-06 11:37
