Intermediate Trend Changes? | Technically Speaking: Trading the Trend

[Music] hello and welcome to technically speaking on trading the trend weeks to months money machines boyd alongside with me is my good friend michael fairborne he's in the chat as mf michael fairborn a fellow instructor you can find him or myself on twitter we do post educational content there daily now just want to welcome everyone hovie orlando orlando wants to talk about peloton uh tammy sandy stay len charles george from texas annette uh welcome and now we are supposed to get a little snow here this weekend that's the snow cap report uh for the day all right now hello bill and tony and many others now just real quick as we're getting started you know this class is really looking at intermediate to long-term trends which are super important that doesn't mean that we're going to be blind to what's happening in the short term we're going to also include that as well but i think we have a lot of things to talk about here when we talk about intermediate to longer term trends if someone is managing a retirement or let's say like like likes to be like a kind of a more intermediate to long term i think there's some things we need to talk about and could some of those things be changing okay i think a lot of us might be good about seeing things afterwards what about things seeing things in the moment now just real quick as we're getting started i want to uh remind you that with what we discussed here today it's intended for educational informational purposes only not investment advice or recommendation of any security strategy or account type uh trading futures uh well actually let me go back options are not suitable for all investors especially risk inherited trading options also when we talk about futures if we do have a question there trading futures and forex involves speculation not suitable for all investors and also remember when we talk about it demonstrating the function of the platform we will be using actual symbols td ameripaid does not make any recommendations determine suitability of any security strategy for individual traders any investment decision you making yourself direct again so your responsibility and also when we talk about options remember the option greeks there at the bottom now today really want to kind of talk about three things which i want to talk about hard trades i want to talk about trades that are losing okay and i want to talk about exiting protection after a drop okay now you might be in some hard trades where when i say heart rates they're probably losing or lacking momentum or in other words drawing down i want to talk about that second we want to kind of talk about bearish positions should maybe the paid money account maybe exit or should they roll the positions those have been in a downtrend maybe is that downtrend nearing the end profit take or should those examples be kind of expecting maybe to continue to fall further and roll the position and then what we'll talk about third is we're looking at new short term and intermediate to longer term trend setups and we have a number of those here today now what i want to do is i first want to actually take a look at a position i want to actually kind of talk just briefly fast fire through the indexes the when we actually take a look at this and we're going to be pulling up the the daily charts the one year daily we will also be pulling up the three year weekly chart because that's the class right when we take a look at this that daily chart looks bad and it is trying to do somewhat of a divergence but not very clear again when that shorter term moving average is let's say below the 30 not a great signal okay and that's been the case for a while now the shorter-term moving average of blue line cross below the red since then it's been more of a house of pain from many of those tech stocks okay many of them what the the significance that relates to this class is when you take a look at a three year weekly can you tell me what you see on this chart that looks maybe a little different than what we've seen before so this is not the same okay if we go back we're looking at a three year chart three year weekly of the nasdaq and this is really when kovitz started back in february of 2020 that seems like 20 years ago i've even got like two or three gray hairs on the side of my roof now okay but it's been a long time since the nasdaq on a 30-week moving average we haven't been below that 30-week moving average in forever and now you're seeing that the nasdaq is actually getting down below so now we might be thinking well it's probably going to bounce i don't think we've ever even had the moving average the shorter term in the 30 period moving average so close together it's almost starting to pinch there could be potential further risk on the nasdaq this paid money count will continue to probably shun bullish positions in the nasdaq if they are bullish positions there better be something that's standing out quite strongly but many of those are still in the house of pain and there's risk of potentially falling further if we were to look at this and say kind of where could be maybe levels or plateaus of support you know maybe somewhere in this ballpark okay and if we kind of went down a little bit further where's that ballpark again that and i think probably in this area let's say those these would be probably two intermediate support levels so the expectation for this paid money account would be that the nasdaq would continue to be soft the rotation from tech to other areas might continue now when we kind of talk about this okay and i'll just bring up the sp briefly the s p does not look as bad but albeit that that price is right down near that moving average never comfortable is it when the price is sitting on the moving average because we're asking that million dollar question right what's the million-dollar question is it going to bounce okay now no one knows if it's going to this has been the area that it has bounced but what we might kind of be thinking as i zoom in is the longer we're down at this support and we're not really bouncing back up the more concern there becomes that maybe we're lacking buyers and if there are buyers are there just people selling into any of these little rallies for the upside we have now james you sound very bearish no i think it's important just for the investor to look at these uh indexes assuming they have no positions and kind of like with no biases what do you see so on some of these stocks there is a concern based upon what we're seeing in the indexes okay that's reality okay now let's kind of take a look at let's say a stock and i'm going to kind of go right in line with what we got we looked at the nasdaq and i want to for example talk about kind of going to our first agenda item and i want to kind of talk about trends and you probably have had stocks where they were doing well and then the index drug those positions down okay now one of the stocks that's in the paper money portfolio is a stock called micro micron had been a stock that had shown relative strength had and what you're going to notice is it had a plateau of support about 91.5 yesterday it's really slipped down below that support level let me move that 89 off and now what you're going to see is so it closed down below the support and now it's gone even a little bit less and so that next potential level of support is maybe let's say 85 68. now when you kind of take a look at this position by the way what is the position the position is in the ira account and that is a long synthetic position long synthetic is just really a long call and a short put and what you'll notice is both of those positions are down now what i want to kind of talk about here is just because the stock is only down let's say a dollar here and this is maybe showing what some technicians might view as hammer is it necessarily out of the woods is it fine now is it okay to say good thing i didn't have a stop and because i would have been stomped out and now we're seeing that shadow on that tail bounce back up in her day is it out of the woods well when you kind of take a look at this you don't want to underestimate right if this was the old floor okay we want to kind of be telling the truth and saying what is now likely going to become resistance 91 and a half is probably going to be resistance okay if the price gets above that kind of feel a little lucky if the price if it broke support it made a lower low the lower high tends to be up near that 91.50 now option number one is the investor could say i have a stop and you're going to see that it says enter below 8310 but the biggest actually thing is learning how to protect even option positions now what you're going to see in just a moment is selling calls by itself doesn't do a whole lot especially if the stock goes down quite a bit and especially if the stock uh has the implied volatility go up quite a bit that's probably matching what the vix is doing so i need i need you to first just realize that selling a call is not a protection strategy it's an income strategy and selling a call isn't gonna probably do a whole lot it's like putting on a band-aid on something where the leg is broken as you're gonna see here in just a sec okay selling cover calls they're band-aids buying puts is a cast collaring is a cast it's kind of giving more structure okay to that hit of the price action of the downside now if you don't take me serious on this sometimes what happens is people just go through a whole lot of pain and then they finally realize okay so we want to be honest with what's happening on the chart we also want to kind of say how do we actually kind of uh define the risk now the one thing is when we take a look at this trade is how do we really protect this now a lot of you have asked about this so that's why we're going to talk about this so first thing that we could actually do is what expiration is it it is in really the june expiration we could and we will so we're consistent the paperwork account is going to really sell really in this case now what you got to be careful with is here okay when we go down to the junes we're going to look at let's say selling uh in this case now if we sold the 92 and a half can't do that because that's really the call that we have in the paper money account now option number two the paypal account could actually sell the call that's above the purpose of selling the call is to create some income generate it to use that premium to buy the put now a lot of investors probably you have stocks that sometimes are more volatile when those stocks start to go down people say by the puts on something that has volatility like that because it's too expensive i know that's why people typically sell a call buy a put okay it's the second thing i want you to realize oh yeah no getting okay now when we take a look at this does the investor have to sell 95 of course not if they said james could i sell maybe something a little bit higher than that sure provided that there's liquidity okay so if the investment said james what i'm going to do is i'm going to sell the 97.5 and then what i'm going to do is i'm going to buy the 87.5 no not buying the put because if you buy that 87.5 put it's going to exit that

position right there be careful on what the investor is selling and buying okay now it's going to sell the 8 97.5 and then it's going to buy the put with a delta of 30 to 35. now this is no different than a regular collar but it's doing it on an option position cell collar synthetic now what we're going to see in this case is there it is okay 97.5 that's good change that to 85

that 85 as i'll show you in just a moment this so we'll talk about this first because when things start to go down we need to address that okay if i just close my eyes and i say i hope that in five days from now i hope my positions go back up so it masks my own stupidity i'm talking about me here okay or ignorance okay if that happens that can be short-lived usually investors get exposed to trends okay now if we take a look at this what is the cost well since it's selling actually the 97.5 and the 85 there is a debit here of 1.85 185 you can move that around a little bit and maybe make it not as expensive but it's going to cost 1.85 for that protection now what i want to do is we're going to actually go back to confirm and send it's going to say illegal here's what does the paper money account need to do if it says sell elite legal 100 shares just needs to cancel the stop so we're gonna go back click on that right click cancel order and it's gonna it's gonna make it now when it sends the order okay now when we actually take a look at this position this one right here is this position is it bullish or bearish how would we know well when we take a look at this delta this is a bullish trade if we apply now the selling of the call and the buying of the put what is that really going to do that's going to decrease how bullish this position is now think of this as we're going 84 miles an hour and we're seeing above us in front of us maybe where the the street looks a little crowded a lot of brake lights maybe an ambulance right and we're thinking do we want to still go 85 miles an hour or do we want to decrease the speed by selling a call and buying the put what that's going to do is it's going to reduce okay let me actually uh put that there it's going to reduce how bullish this position is notice the commission of a dollar 30 because the selling call buying the put send that order now when it does that if that were to fill this delta is going to decrease this position now becomes less sensitive to okay price movement and the investor has the right to sell the shares at the strike price okay so the third thing i need you to really understand is by buying the puts it really controls where the investor can sell from now to expiration and then third is it stops that vega or the volatility from being as damaging okay now is there any questions with this okay a lot of you have asked about kind of doing the protection on option positions and what i want to do is i just want to kind of make sure that actually fills uh i want to see i'm going to kind of push the price it moved about 10 cents on this of course it did we'll see if that actually fills if that fails i want to look and see that number that number should probably about drop in half okay now the other question that vj said which i'm so glad he said this is james can the investor not do an option maybe with a shorter expiration absolutely can okay but i'm not gonna go there but that is an option okay now if we take a look at this what happens with this 87 this 57 foot well i guess i want to i want this position to fill okay okay it's just because we're missing it by like two two pennies is all it is okay and actually the price is moving a little bit let me see if i we can't get filled there we're literally moving around by two pennies so now what you're gonna notice is if the stock were to go down there's actually two puts on it okay which is adding additional downside protection let's see if that actually feels and we'll come right back but i do want to see really what that position is going to be as far as delta okay now what i'm going to do is we're going to kind of do one bad trade one new trade okay and we'll see if that position feels if it doesn't in two minutes we'll come right back we'll take a look at it now i want to kind of talk about the third agenda item because we're going to do one bad one one maybe new potential setup some of the stocks today that kind of stood out a little bit from a daily and a weekly chart perspective was traveling companies okay when you take a look at trv travelers and we actually go back to analyze and i'm gonna actually pull up fundamentals this is actually in the financial space but you're actually actually a misspoke so this one travelers would be in the financials which would be in commercial personal property casualty insurance and those stocks would be like aig and met so those that industry group and let's show what these look like so i misspoke i kind of went ahead of myself we're going to go to the three-year weekly chart and this is what it looks like okay now if you if i were to ask you find me some stocks on an intermediate to longer term basis that are really showing where both moving averages are up and the stock is still above support and maybe even above the short term support okay finally mu phil's okay now when we go back and take a look at this is this is one of the few that you'll actually find so when you take a look at this it's above horizontal resistance and it is also in this case above that diagonal support i was talking to my friend from wisconsin today and i'm just jealous of their accents okay wisconsin now if you take a look at this what you're going to notice is it kind of has like an ascending triangle on a weekly chart it's trying to pull it i will go back to micro in just a moment okay it's trying to engulf what it did last week okay now what we need to really kind of understand is when we have markets that are a little bit more fragmented or weaker should the investor maybe consider just staying with stock positions or might the investor say you know what i'm going to do positions that are not as bullish and define risk now i want to ask that as a question okay now this is where i think some investors can add some hurt to themselves they just keep doing the same strategies ah i see stalking bullets i'm gonna bond stop i see the stocks the bulls are gonna buy something we know a stock position is a better type of strategy we know that a stock position might be better if there's a stronger trend maybe a little dividend as well but wonder if there's more vacillation or fluctuation in the stock price is it really a better type of strategy maybe the investor says look to account for kind of weaker market conditions i want to kind of do a strategy that's maybe not a sensitive to price movement okay i want to account for that volatility maybe the investor says i'm going to go down and maybe consider on selling a put but then buy which is by the way a potential to buy the stock at the strike price but i also want to make a define-risk trade that if the nasdaq or the s p were not to hold that support i want to have a defined risk trade okay buying the stock and setting a stop is not a defined risk it's theoretical because you don't know where you're going to get out the stock doesn't guarantee an exit price it's a market order now if the investor says what i want to do i want to sell the put and by the way we're going to look at the marches as well and i think this is okay to do a little compare and contracts when we actually take a look at let's say this you're going to see that there's not a ton of open interest at all in the marches so the paper money account is going to close the margins and say no thank you as hannah was saying we're going to know the february's and we're going to go to the open interest right there and we're going to kind of look at let's say which ones have some open interest now the payment account's not going to sell 27 because the that's the total number of contracts it's going to sell the 165 and then buy that 155 below that now what we're now going to see is we're going to right click on that bid sell we're going to go right to vertical now here's what kind of happens is people try to push their agenda on the market they want to be more bullish right well sometimes the market doesn't give you that type of trend what's important as an investor is to realize when the investor might consider adjusting the market has been more choppy sideways to down which we already said that's probably likely going to happen the investor has experience and realizes that they might say i'm going to do strategies like a vertical that is not as directional or in other words what we mean by that is a lower delta by selling the put at 165 buying the 160 there is an initial credit break even at 160 360 max loss really at three 360 five dollar spread now if the risk okay was example given a thousand dollars in the ira hypothetically it's really going to do about three contracts now you have to imagine that many investors and i would include with this portfolio managers they're looking for areas that are still short intermediate and longer term up okay they're probably not saying give me a stock like peloton that's at a 52 week low because i don't think it's going to go any lower okay so this area maybe the property and casualty protection companies might that be an area that still might have some outperformance we're going to look and see now remember that's underneath the umbrella of financials when we actually come back we're going to put that right in that section of verticals right here now hannah you knew i couldn't say exactly what you said but i was close okay because that's what hannah says now if we take a look at this the commission is 390 because that's the three contracts it's going to send that order now i want to kind of talk so that's on travelers but i want to take one more okay i want to kind of go back to the area which was in what i wanted to show which was another area that's showing unusually strong relative strength has really been also the traveling spaces now if you're like me and i haven't traveled a whole lot i think i maybe traveled in a plane since cobit started twice i have traveled by car down to arizona stuff like that a little bit more not much people are sick of literally being in their homes my neighbor just left to hawaii many people are just bursting at the seams to go somewhere don't even care where it is just get me somewhere now oddly when you take a look at stocks like expedia you take a look at those those look like you're sending triangles booking same idea just different firm that also looks quite strong but when you actually also go back to let's say something like a cruise line when we take a look at one versus the other i'm going to go back to something like that we are actually taking it here now historically if we were to ask which one has a stronger trend is it expedia or royal caribbean there's no comparison okay none when you look at let's say royal caribbean it's a lower dollar stock and when we pull the three your weekly chart it's not as strong as expedient if we had a little bit more time we might look at the example of let's say doing expedia 2. we're going to go take

a look at let's say royal caribbean now what was awkward is when the cdc and that those three letters have never been so up and down lately when the cdc says we would not recommend anyone to get on a boat the stock was up okay interesting this discussion can go so many different directions right now but i'm gonna go right down the middle now some investors they like to use the higher volatility of the market to try to sell something maybe they said you know what james i want to actually kind of look and see can the stock stay up above a certain price maybe i don't want to buy the stock at where it is now but maybe i think the stock could actually stay above level now we have been coming through omri kron which was really contagious my local area i got to say uh there's been a lot of people sick that maybe they didn't get sick with delta as much as this but if we can get past this armor cron okay could which has been a lot more severe or contagious than the other one was could this maybe be kind of a welcome sign for some of these traveling companies like expedia royal caribbean if we were to look at this that has been more volatile the implied volatility on this is really 50 okay that's the annualized implied volatility again this is i think it's important to kind of learn when to adjust if the investor says you know what in the short term it's so hard to forecast what the market the stock might do the investor might say you know what i'm going to adjust i'm going to go farther out in time given that there is let's say liquidity we could see the liquidity on the open interest and we could also see the liquidity on the big ass spread okay now if we were to take a look at this and say which one of these has a delta let's say 30 to 40 this might be kind of more the textbook from the online course but this also kind of goes back to maybe the investor says i do not want to sell puts that are that close to the current stock price okay if the investor says i want to sell a little bit lower why is the investor doing that and the investor says back to us i only want to sell the put where i'm counting on the stock might have maybe a deeper draw down and i want to have a greater chance of the stock being above the strike what is the offset the offset is that the investor is not getting as much premium okay now when things are more volatile sometimes it's important to adjust i want to have bigger premiums means the investor has to take more risk are you okay with that if the invest says you know what i'm going to change what i want and i want a greater likelihood that the trade could work on my favorite and with that i'll even be willing to actually take less of a premium the paper money account in the margin account is going to sell one contract but in that ira it's really going to go about five i actually can't do that four contracts paid one account's gonna move the mid price at 297 confirm and send single account in the margin account it's going to sell one of those in the ira four now where are you coming up with that well remember the ira could really handle about an eight to ten thousand dollar position size a hundred shares eight thousand bucks in the ira it would be like position size about forty thousand four hundred shares of eighty three dollars or eighty three hundred a piece for every hundred shares that's gonna be about thirty two thousand that's why i'm getting those numbers this is going to show it in aggregate break even max profit and the max loss is assuming the stocks go down to zero now if we actually take a look at this send that order gonna see if that fails now remember it it said sell it at 297 which is in between the bid and ask now let's go back because you had a question on it we said we would let's go back to micron let's look and see what this position looks like in this account now that the position is filled okay so first off has the position dropped in delta yes or no so when we take a look at this position the delta now is five what is that telling us well it's saying that the stock were to go up a dollar the position would only make five dollars if the stock were to go down a dollar it would just lose five dollars now way way way way way that is this was a long synthetic and by adding on a short call to long put it dropped the delta a lot it went from about 84 to 5. time decay is almost a little bit neutral now if someone said james this is a little bit i don't really want a position that is that low on the delta what could they do now what they could do is they could say james could i maybe just buy a put back if they buy a put back that has negative delta what is the delta going to do on the position well it's going to increase okay it's going to increase by buying that short put back it will add about 40 delta to that you gotta remember if you buy that short put back what does it do it would also actually leave that short put option exposed to a higher collateral because there's not downside protection there okay so just need to recognize that now if we uh so now here the investor might say james i don't mind to have such a low and by the way i want you to kind of think about this a five delta is like the investor owning five shares of stock so if the stock was down two dollars today and it's like they own five shares of stock they'd be down a whopping 10 bucks i mean i might be able to get over that right if the stock was down ten dollars today and they had five shares of stock pretty much they'd be down fifty dollar translation fifty dollars okay so you're going to see when you drop down the delta that much it's a lot the downside movement is a lot less severe why is the investor may be considering that because they're seeing a break of support and now we're thinking could even that fall further so the issue is if the stock were to fall further this is not going to lose in the same magnitude as it did before okay that's very important it's not the issue that it doesn't lose the question is how much is it losing now i'm going to talk about this other one we're going to actually bring up jp morgan okay now a question that gets asked quite a bit is james once you're actually in a position so here's long j.p morgan the shares okay and now what you're going to notice is it has a short call and the short call has an upfront premium okay which is 3.40 that's the most the investor could actually collect that number could only go down to zero okay now that call right now is at 15 cents now note that tell me what you might consider the long put which means it was purchased is like the protection i like to think about the long put like a little jacket okay it's like my warm snuggie okay it's literally where i'm putting on my coat zipping it up and i'm thinking that's my life jacket because that really gives the investor the right to sell not at 149 think evans it really gives the investor the right to sell at 155 oh that right is nice especially if the stock dropped isn't it now if that put if that life jacket was a dollar ninety two and now those life jackets are selling for 7.25

there's been a lot of investors that are drowning in the price pulling back and they're saying i will do anything almost okay to buy that life jacket and what's happening is they're pushing up the life jacket price and it's also a part because there is some intrinsic value on that put now what you're gonna notice is the protection about 1600 for the put about 973 actually for that short call that's about if i did my math 16 that's about 2600 that the protectionist made that's offsetting a good chunk now remember what i'm going to say here it's not about losing 3 800 it's about losing less if the investor says and every investor is going to have losses okay if they if they say i've never had a loss or i don't have losses i wouldn't walk away i would run the heck away okay because people have losses protection companies have losses okay it's it's like berkshire hathaway let's say they own geico they say we never have anyone file a claim are you kidding me and they only collect premium it doesn't happen like that okay now if we take a look at this do i like that it's losing 1200 no i don't like it but i i like it losing less than the 3800 now i want to talk about this position so first thing we might notice on this position when again we're talking about the agenda item which is how do i kind of go for really bad situations to make him less bad okay damage control university here well first thing we notice is the short call which sold for 340 is not 15 cents what could the investor do here well the biggest thing is the investor could say could they buy that call back and realize that gain of about 9.73 and the answer is yes now if they buy that back it's like they were really making about uh three dollars per share because it's three contracts so if the stock in this case was purchased for 162 reducing the average cost by about three dollars theoretically would really make it where the investor owns the shares theoretically okay at about 159 now it makes it not as bad okay if the stock is at 149. now if we want to take a look at this how does the investor roll the call well they roll the call by simply right clicking on that line and saying create a create a rolling order and all that means is they're buying the callback now and then selling a new call before we actually look at that or consider that i want to ask this in a different way what could make this how does the investor make the position more bullish there's two ways you could well two main ways you could do that if the investor bought that call back it's going to increase the delta by how much by 11. not a lot you know you should know if the delta is that low that means you have a high probability of having a large percentage of the maximum gain the closer that number is to zero you go over and look at here and say i bet we have a high percentage of the maximum gain and we do 95 okay the investor buys this back what is it going to do it's going to right click we're going to go to actually in this case create a rolling order and all that's going to do is it's going to buy the call back and sell the shares now wait for just a moment okay just let me go to the chart if we were to look at this chart what do you now see on the chart okay the stock went through the earnings smash down and then when you said it can't go any lower it did can't go any lower it's jp morgan it did it can't go any lower and it did so that's the fourth thing i want you to remember do not fall in love with the stocks okay if you're seeing that technical analysis breakdown you might be in love with it but others ain't okay now if the investor in this case decided that they were going to roll the call they're really selling the call at support does anyone kind of feel like a rash when i say that selling a call at support has that ever been discussed not on my watch okay we've never talked about selling calls at support we've talked about selling calls at resistance we've talked about selling calls maybe right into the earnings but we've never talked about actually selling calls at support therefore the paper money account will it's just gonna buy the call back it's not going to sell a new call at support why because if the investor sells a call support and this stock bounces they're pretty much going to agree to sell the stock probably pretty close to where the stock is now which is not great now james what's the risk if the investor just buys the callback can they still grab that 973 and reduce theoretically the average price will stop sure but in this case what's the downside protection if the payment account buys that call back and sends the order what's the protection well the protection in this case is just okay the long put okay and that protection is still the right to sell the shares at where 155 so our average cost basis went from 162 down to 159 but what might the investor do wonder if the investor says james i want to exit that long put too well they might exit that long put if they actually thought the likelihood of the stock bouncing is becoming what higher but if you get rid of that long put the investor needs to make sure that they're setting a what if they exit that long put expecting that the stock is going to bounce they need to set a what now do they have to know but if they want to have some type of risk management they're probably saying hey james i if i exited this long put and took this gain right click on that how much per share is this well got about 1600 worth of gains on 300 shares of stock and if you actually look at that and say how much is it going to reduce the average price of the stock 159 it's going to reduce whoop sixteen hundred three okay 159 divided by five point nine three i think we're gonna be pretty close to a break even off 153-ish okay it was stock was purchased at 162.

the call made three dollars we reduce it to 159 okay 1600 worth of gains on on the puts spread out over 300 shares it's about five dollars each so if we're about 159 and we drop another five dollars down because the puts gained that means the break even is about 153 so if that stock were to go any higher than 153 it's above breakeven before the protection the break even was all the way up here at 162. in about two weeks it reduced the break-even theoretically by about nine dollars or in other words about six percent now i'm going to show this okay the paperworn account is going to sell the put when it does that it's going to sell the put at support okay when it does that it's going to try to get maybe the mid price selling the put okay limit saying that price or higher confirm and send sending that when it does now the investor only has the shares of stock we know how to do this don't we the investor wants to set a stop they evaluate where the support is and how we actually go back to say hey where's the support on the stock we go back and look at this and if the investor said james i see support on the stock right about 147 56 and if we set a stop at let's say three percent below that now what it's going to do is it's going to put the stop back on okay now what you're going to see is data gtc now the difference here is the stop it's saying if the stock goes to this price or less sell the stock now guys and gals i'm going to tell you something with what we just talked about collaring okay managing bad positions nice thing about collaring is the investor theoretically theoretically can reduce their cost basis even a period of let's say two three weeks and if those stocks bounce up at all the investor that applied defense defense that investor is more likely to be off than the investor that says i just hold back i get back to break even because once i do i'm getting out the defense of selling the call and buying the put can help reduce the average price of stock and this stock bounces at all okay at all you know it has a greater chance to be above that break-even point that's the point guys and gals what i need you to really understand is a father is really like a it's an income strategy somewhat but also with built-in protection it's defining the risk the investor might take that protection off if they think that support level is going to hold and or they actually say james i'm seeing the stock reverse out of the downward trend it's breaking diagonal levels of resistance sending that order and now that stop is put right back on okay any questions now i got about two and a half minutes here i want to kind of just take a quick look at where the market is when we kind of take a look at the market we kind of see a little fading here okay a little rally and then fade in this class when we actually take a look at where these intermediates the long-term trends are we think there is a potential real risk that maybe the nasdaq this could be when we go back to that chart the three year weekly these tech stocks could probably still be under pressure if we close here it'd be the first close we've had since really that fire or that that spiking of all that spiking of kobe that we had in march of 2020 that's not every day folks this is we're seeing that kind of that real risk and we're also seeing a very strong upward trend going more neutral being aware of what a cover call is a collar things like that very important here especially uh where we kind of see the tech stocks bleeding down understand that the investor uh you know if they're trying to still look for other areas these areas of let's say protection companies okay and or travel companies those might be two industry groups that might continue to hold their relative strength we're gonna continue to watch that okay now i'm out of my class my time here today for this class i want to thank you so much for your comments and your participation i want to remind you that i taught a class on tuesday about learning about bearish protection for a stock or for a portfolio on wednesday i talked about really kind of understanding callers and if you say i need practice in that area check out the tuesday and the wednesday class okay now also stay tuned for our next webcast coming up right at the top of the hour uh we do have a couple bearish positions in this portfolio based upon what we're really kind of seeing in the market here some of those stocks might go a little bit lower bearish trades in this portfolio amd lennar lowe's traveler zoom uh and what you're gonna actually travel is not that's the bullish one but lowe's was the one that we kind of talked about the other day and lennar those are kind of broken down a little bit so just understand that be aware of other strategies and you should be practicing and paid money how does an investor trade if the trend is down okay that's what the paper money account is for thank you so much for your comments and your participation also a reminder of our disclosures with that said thank you so much have a great

2022-01-22 15:49

Other news