Is it Bear Hunting Time? | Technically Speaking: Trading Stocks & Options
[Music] [Music] good afternoon everyone welcome to our webcast on uh technically speaking trading stocks and options i'm connie hill i'm happy you're here today we're going to combine a couple of my favorite things which are technical analysis and deciding what kind of traits we should put on now i'm going to ask you do you feel anything different in the air is it changing to you last week we had the first official day of autumn and since then i've had to wear my long sleeves shirts and my long pants because it's been a little bit chilly around here now i'll ask you the same thing with the markets does it feel like the markets have changed a little bit say in the last month well we're going to take a look at that we're going to make a decision and then we're going to do some things based off of what that decision is but we've got so many friendlies here i want to say just a quick hello to some of you if i can catch you uh first i want to welcome barb armstrong to our chat she's going to help me out with questions she's a good friend and very knowledgeable and so between the two of us hopefully we'll catch or capture all the questions that you need answered so let's say hello to john vijay el diego bill ganesh jack todd david lu tim craig osborne pedro dylan wayne jeff this is awesome we have so many of you here mike ernesto mia larry perfect and there's others of you here that didn't speak up and some of you are joining us here on the archived webcast welcome to you here as well and if you have questions barb and i aren't sitting around to take your questions i know so go ahead and put those in the comment section and then we'll go back as coaches and review those comments and questions that you have so feel free to address us there or you can also address us at our twitter account my twitter handle is at chill underscore tda barb is at b armstrong underscore tda we'll post educational content throughout the day things that we notice maybe some things that you have come up in classes we'll try to answer in our twitter feed as well so please feel free to join us let's lay out our agenda let's go through our disclosures here real quick and then we will work on our agenda lay out what we're going to do because i have a full session packed for us here today now what we talked about today is intended for educational and informational purposes only not investment advice or recommendation of any security strategy or account type options are not suitable for all investors as the special risks inherent option trading may expose investors potentially rapid and substantial losses paper money is for educational purposes only and i think it's a fantastic tool for you to use as you're practicing strategies as you're getting to learn the thinkorswim platform while this webcast discusses technical analysis other approaches including fundamental analysis may assert very different views mass performance of any security or strategy does not guarantee future results or success very good well i mentioned to you at least in our neck of the woods here in utah i'm sure barbara's felt this as well in her location she's a little bit closer to the mountains we've been seeing some changes in the air and let's see if we are seeing some changes in the market as well first of all for our agenda we're going to do a quick market posture and not spend too much time there spend a couple of minutes looking at some trade that needs some attention that we want to follow up on and honestly that i think is one of the really beneficial things from our our sessions is that we can go back see what we did see why we did it and see how it's progressing and how you actually manage that trade i want to show you a bearish scan that's going to bring us back some bearish results to look at and possibly do some trade examples on all right let's hit it hard let's jump out let's do our market posture first we're going to jump over here to think or swim and on my finger swim i have up here the s p it's a good gauge for the overall market uh it doesn't mean we can't use other indexes like the dow or the nasdaq because sometimes they'll be a little bit different but just for what we're looking at here today we're going to use the s p now last week we talked about the rsi and i've got that study up here on our chart as well and we are going to take that into consideration as we're examining the market and as we're looking at different stocks now last week we did spend some time on bearish and bullish ranges with the rsi and if you missed it and you haven't been able to catch that video i'm going to go ahead and i'm going to post a link out there in the upper right hand corner in our post production work so that you can select on it and be able to follow uh the information in there so that you feel like you're up to date on what the rsi does although there'll be a little bit of repetition today from what we did last week all right so our smp you can see i had it trading in this nice channel here let's get to the right one there we go this nice channel we've got it in green and it was going back and forth and back and forth for really more than a year this is a one-year chart that i have up here if i zoom in here and we see what is happening more recently last week was the 23rd of september so that would have been this candle right here we had formed a little bit of a lower row it had fallen out of the channel busted below it was trading clearly below it on for multiple days here is where we were last thursday and then we had a little bit of an attempt to continue up but ultimately it pulled back and we got what we have another lower high to go along with our lower low which could be the beginning of a downtrend and if we wanted to we could even come in here with the channel we could connect the tops because that's our resistance that we're looking at here and then we could come down here we could identify our bottom and it's nice if we can get a couple of days to touch there in the channel and it could be i mean i've got these two days touching but it could be that the channel lengthens out if the stock proceeds to trade or the index proceeds to trade a little bit lower through there all right so maybe a little bit of a change even from last week this height that we had on the spx was on september 2nd all right we're sitting at september 30th so pretty much a month ago was that peak and then we've started to see a little bit of weakness now we haven't had a great opportunity to do a lot of bearish trades we've been introducing them a little bit last week we did some bearish trades using the rsi as our indicator and we're going to continue to follow through with that notice where the rsi is right now well let's do it from last week last week it was at a high point on the rs i was on 50 and then since then our high point here although it wasn't a real big high but just yesterday was 39 and if you'll recall from last week and i left my notes up here that really falls into a bearish range all right where those lows are headed to where those highs are they're definitely down here in this bearish range you can take some notes on that that might be helpful for you to reference as we look at some things here all right so i'm going to say we are turning a little bit bearish in the market we're seeing it not only um manifest in our price action which is the most important but we're also seeing it manifest in our oscillators which usually are some combination of a price whether it's the closing price or high price as well as volume the rsi is just going to be using the price element here yeah diego so the lows were in the 20s to 30s yep the the lows in the bearish range are in the 20s to 30s and even our little peak here which is not that great of a peak is at 30 uh 39. all right we like even in a bearish range they're considerably lower like 55 to 65 but it didn't even get that high very good that's just kind of setting the stage for what we're going to move into now let's take a look at a couple of our trades through the lens of looking at the marcus being a little bit more bearish now all right we could be being a little bit more defensive we could maybe be putting on some strategies that take advantage of these conditions and it's not like it's giving us a big hard thumping yet and not that it will give us a thumping uh but right now we're just seeing some significant down days from the peak let's just see how high it was here and how low it's gone currently to today we are down approximately not quite five percent so four point seven eight percent all right is that massive not yet okay does it hurt some some very directional bullish trades yeah very well could be doing that too some of you that have some stocks that maybe you're holding a longer-term portfolio maybe you're considering selling some calls against them if you have at least 100 shares then you can sell at least one contract now let's jump over here to monitor and let's look at some trades we've got going on here we're going to take a look at both of these we're going to look up baidu which we did last week we're going to look at builder that we did the week before last now on baidu we did a little short call vertical we have 15 days till that expires so we're going to be wanting to make a decision on it by the time we get to next week we'll really be in that range where we want to wrap up the trade if we can being 15 days out we received a 65 cent credit and we're we're kind of down at 33 points so about midway through the profits would like to lock in which hopefully is as close to 65 as we can be in our profit and loss column looks like we're up 120 right now we're up a little bit higher than that earlier but prices fluctuate and we do have an order in here to go buy back our call and i want to show you this in our working orders we're going to buy back our call when it gets in the range of about 9 cents that's where we want to say system go buy it back we're happy enough with that big percentage of the gain that we've locked in let's do it move on right now it's not there it's only at about 35 cents if it were to submit that order right now so it doesn't meet the condition it's going to sit there and work until it does i will show you the chart on baidu real quick so we can see what's going on with it and maybe what we'll do here at this point let's go to three months you can see this is where we got in last week you can see we had a 30-day simple moving average it's an intermediate trend following moving average uh was sloping down and this looked like at the time that we got in it looked like it had peaked and was starting to drop and since that time what has it done it certainly has been continuing dropping our short strike price is right here at 167.50 that's the green line so is it in good shape yeah is it a trait of patience is it one that we've got to kind of hold out for yeah it is and so we're just gonna let it work now i do want to show you the chart of builder while we're here bldr now builder we were bullish on it we put this in a couple of weeks ago the date of that trade was the second of september as we already looked that was the peak day in the s p 500 and it looked like it was breaking out of a flag pattern here didn't it it was ran up consolidated kind of in a sideways flag and then it started to break out the strike price in our long call vertical that we sold was 55 and so we were looking for the stock to make a little bit of a bullish move not a huge one a little bit of a bullish move so that by options expiration it could be above 55 that we could be in a situation where hopefully we could lock in a large majority of our gain as we wind down to options expiration what was the stock done since then well we know what the s p has done this stock is actually held up pretty decent considering it's in the building sector and the building sector is one of the worst performing sectors in the last month or so and so what has it done it pulled back and what did it do it rallied up to that 55 area that's looking to be a point of resistance right now isn't it so we've had almost the whole month of september to get his body above this short strike price and it did it on one day but it didn't close there did it we're definitely seeing some weakness now let's consult our rsi with this as well as we look at the rsi the high on the rsi here was 65 and that's at the higher range of our bearish peaks right 55 to 65. so it was there and then it pulled back it has an an attempted rally here and it's not very high it's a value of uh 58 so it's definitely in that bearish range and it's continuing to drop so as you look at this trade i want you to ask yourself the question if this were in your portfolio or your paper portfolio what decision would you make on it right now would you say oh let's be a little patient it was a spread trade uh we we don't need that much much movement from the stock to actually get where it needs to be which is 55 or would you be saying you know what the writing is on the wall let's go ahead and close this trade down because it's not looking to go bullish anytime soon and we want to re preserve our money that we can and live to trade another day all right what go ahead and just tell me what your response would be in here bill says how did you get it to show the trade position on the chart if we come back over here to monitor and we see builder i have a couple of things going on to help it be organized up here at the top i'll show you i've got a section here and this is a group that i made called trading stocks and options so we could keep track of our trades in this class and then further i grouped it into the types of trades so here we have the stock trades we have facebook's a single trade we've got our two verticals right here that we've talked about today and so forth so the first thing is putting it into a new group which you don't have to do for the following and then i might have to poke around on this just a little bit to get to the right spot if i come over here to this menu that's on the same size or same line as position statement i've got it selected to new layout and then i have it arrange positions by and then i have the order now you could do instrument if you wanted you could do trade time if you wanted i like to do it as an order so that i can keep those spreads together and you can see here group symbols by i just haven't set to none okay so that's the organization on that let me see if there's other questions i need to answer here all right well i asked you kind of what you thought okay vj says exit for a loss uh john says bldr may have a high correlation to interest rates and it very well could be let's go back to the chart here it uh maybe an inverse correlation is that what you're thinking there maybe uh john you said correlation it's not as weak as the spx has been is it spx has formed lower low lower high this is it just basically has an equal high right maybe a double top formation for those of you that are aware of price patterns but maybe see this is an m pattern the top being right here the second top being right there if we were going to trade this as a bullish reversal pattern here we would wait to get in until it broke through this midpoint all right in order to say hey we're going to trade it based on that price pattern so we need it to break below what fifty dollars and seventy cents or so to get in and as a bearish trade uh feldman says how did you get the instruments to group them into vertical for example maybe i am not showing you everything i need to and leslie says are volatile times good to buy or sell options in either direction it can be but one thing to keep in mind is when the market is starting to become more volatile then what happens to the price of auctions well if implied volatility is going up the options are going to be more pricey they're going to be more juicy and so many times it's going to favor a seller but look at each stock individually and as you look at it on the trade tab just kind of see is there a lot of implied volatility priced into those options or not and then take a take consideration of when earnings is going to be is because that might be a factor in the pricing as well now going back here to the question of feldman family says how do you get the instruments to group into vertical for example i don't want to do this uh but i really think it's going to be from group symbols or arrange positions by order okay i think that's what got him on there i don't want to take it off because it's just nice and clean in the way i wanted it all right let's see john says is to be j is the inverse head and shoulders pattern i don't know that we're seeing an inverse head and shoulders pattern i'll tell you why as i bring up my drawing tools here we can see let's use a little paintbrush we could see maybe a shoulder like what you thought then we maybe have a head yeah that it goes higher than the shoulder but this next one would need to have a rise that goes lower than where the head is and since this one came right up to where the head is that's why i'd say you know what it's more like a double top here versus a head and shoulders pattern but i'm glad that you are paying attention to that and trying to see what else you see on the chart very good let's make sure i i wanted to read some of the other ones here so vijay said get out take a loss uh sams has lived a lot live to trade another trading day which means exit the trade salvage what we can uh jeff says just take your lumps move on if it doesn't look like it's going to this situation is going to improve there's no reason to delay things is there you don't need to get into opium you don't have to go oh i hope i hope things change when do you know what we've had three weeks here in this trade and we expected it to make a tiny little move to get above 55 and it did for one day and went back down so we are going to take our lumps on this one we're going to go ahead and close it out so on builder we paid 315 for it right now we can get 265 for it which is not that bad of a loss in terms of dollars looks like it's 105 all right and yeah you want to be cautious in terms of you know if it's not working let's just close it out and it's not working so we're going to select this top one that'll do the entire spread it's going to cue it up here for us in an order it puts in the midpoint price for us and many times paper will trade you at the midpoint price sometimes the live market is not as nice to you just be aware of that we have a little bit of commissions here as we get out of the trade and we're going to send this on we should get filled on it pretty quick and we are um al asks do interest rates affect option premiums they can in fact if you look at the black shoals pricing model it includes elements of the move of the stock the gamma which is the increasing rate of the delta the theta which is our daily time decay and the row which we don't pay a lot of attention to but it's the sensitivity to interest rates so it can play a role in there because interest rates have been so low for so long it hasn't been a big factor for quite a while but good question i appreciate you asking that well let's move on to the scam now close your eyes because i forgot to erase it i'm going to come up here to the menu and i'm going to hit reset and you can open your eyes again all right i have a scan that's kind of the inverse of a scan that some of you are aware of called early morning movers and it's looking for bullish stocks that have some bullish trends this particular scan is what i call uh get up to the right icon load scan query i'm going to go to the second batch down it's called uh i well i have early morning movers that's the bullish one e m m bearish stands for early morning movers bearish this is what the stock looks like or the scan looks like uh notice here we've got two criteria coming from the stock filter and three coming from the study filter and where do those filters come from they are selected right over here on the right where it says add filter when we come in here initially it does give us two stock filters and then we can change what we're looking at what we want to see so first of all we're looking for the price of the stock to be at least fifty dollars why does it need to be at least fifty dollars it doesn't have to okay but one thing that you might find is that if a stock has a little bit higher price and is starting to show some weakness that maybe there's still some room to fall versus say a stock that's already dropped from say 150 down to 20 there might not be a whole lot more room that it's going to drop could it sure it still could but that's why we can use 50 in here and then the percent change means today i am looking for something that is down today between 2 and 10 i don't want it to be more than 10 because at that point we're probably chasing the stock all right so that's why i have that limit and notice what side they go to so the minimum is minus 10 the maximum is minus 2 as you look at these columns then we're looking for the average volume in these stocks to be at least a million all right some of you might even raise that threshold if you want to a million five two million when you're trading options you definitely want that liquidity we're going to just use a million and then we have a couple of things here on the studies where i like it to show us the trend and the trend is basically manifest to us in the change in the price of the stock so prices that are going lower and lower downtrends and so this first one i have setting up for a downtrend but i want it to be down at least 25 then how long ago 65 bars that's about a quarter quarters worth of information okay we're looking for be down 25 is that a a lot yeah it really is quite a bit uh but we're looking for things that are going to move we want them to be able to move down the next one here the price change is more of a short term we're looking for the price of the stock to be down 10 percent over the last 21 days which is essentially a month's worth of trading that's where these come from i said show us 200 shares of stocks we're not going to get 200 back here that would be a whole lot to fish through i do want you to know sometimes i will change these parameters this is kind of what we're going to stick with what we're going to go with here today but if you weren't getting a lot of results fiddle around with this 10 and the 25 you can still make them be bearish you know maybe you drop this one to 20 maybe you drop this one here to eight percent instead of ten fiddle around with it a little bit so you can get a good group of stocks to come back now we're going to hit scan oh if you wanted to save it if you were following along want to save that go ahead and hit i take it back hit the icon to the right of the sizzle index hit save scan query give it a good name mine's called emm bearish i'm not going to update it we're going to leave it and we're going to hit scan all right we have approximately 48 stocks that came up today and quite honestly earlier in the morning i was not getting quite so many i think the market's getting a little bit more to the bearish side and so we are getting back a lot more results in this uh let's answer a couple of questions here is there a wayne ass is there a way to get the custom expression to give results um i think what you're talking about might be here and you're looking to do a custom maybe a think script or something like that that you have yes you can put this into the criteria here and have it look for information on there it's not part of of this scan but it is available uh archie says should the price be less than and i i do want to address this rg because it can be confusing the way that the system works so that you will actually get results and i tinkered with this a little bit this morning okay i tinkered with well what if we did greater we want it to be 25 negative greater than a month ago or three months ago it doesn't work okay so you do have to say it's looking for it to be down 25 percent what we could possibly do although i didn't really test it out maybe we could i'm not positive put it down be down mine put it down 25 percent and then change it to be less i didn't construct this one that way so we're just going to keep it the way it is but you could fiddle around and see if that works for you uh lena says can you share this script for the scan i think i can share this script today i do need to tell you it's not a recommendation it's not guaranteed to be completely accurate all right you need to be aware of that let's come up here though share this down query uh let's hit share and i am gonna paste the link over here on the left hand side there those of you that are listening to this and on the recording and you're not able to copy it like folks here live are which i'm going to paste that out into the chat i'm going to read it to you as well and the it is cap sensitive so lowercase q capital j five eight lowercases b and t and capital s as in samuel that's what that link is you'd come up here to your setup you'd say open shared items you could type that in if you're on the archive or you could paste it in if you're here with me live okay remember this is not considered a recommendation these are some ideas all right from the ideas that were generated here i was able to go ahead and identify possibly some trade opportunities that we might want to consider knowing the market's going a little bit bearish the changes in the air things are getting a little bit cool at least as far as the weather goes in our neck of the woods now the you can you can sort this by any of these columns okay you could sort it by the percent change today you could sort it by the volume who has bigger volume has lesser volume and so forth uh we're going to just come over here to the charts and i'm going to bring up a couple that we're going to use for some examples here today retailers are just getting hammered right now supply chains are being limited they're running into snags so people aren't able to produce and give and sell what they have been when supply chain chains are efficient and delivering the products on time and so some of our retailers have been caught up in this so what i have here is i have target let's look at its rsi because that's going to be a factor in our analysis the peak here on target was at 34.
this peak was at 41. this previous peak was at 46. ah it's down here below the height of the bearish range okay so it definitely is down in the bearish range the other thing i did here is i did a fibonacci and i'm going to redo the fibonacci with you let's remove it because the stock is trending down when we draw our fibonacci and want to see where the potential areas might be that the fibonacci could come up with for it to go to uh let's kind of scrunch this a little bit we want it to project downward and so we are going to take a full move and we're going to start it at the top take it down to the bottom i take that back we're going to start at the bottom take it to the top i told you just the opposite so we're going to start here at the bottom where the low price of the move is this i would consider a completed move because this candle here tried to be bullish tried to go up another day and it just didn't have the power to do it so we are going to use this as our full move and i'm going to get as close to that low as i can and we're going to go as close to that peak as i can oops and lock our fibonac fibonacci in so up here the high is 267.06 and i'm sort of close and then our low price here is 232.86 we are doing close
i think it's close enough we can just use it well what does that tell us as far as where the expected range is that the stock might go to next where it could drop to well we're going to use this next fibonacci number 161.8 percent and that's going to tell us a potential target that we could use is it guaranteed to drop there no do we expect to drop there we expect it to go there and so therefore we're going to use it as a target but it could fall short of it it could have maybe retailers have some great news that totally train changes the trend of what this stock is doing okay but some people may be wanting to go directional would say all right around 210 is a decent target now what we're going to look at today because the market is not thumpiness because we are not seeing huge huge drops every day we're just seeing a pattern of drops that are substantial and making lower lows and lower highs we're going to look a little bit more conservatively here at strategies we're going to look at some spreads as opposed to in this case instead of buying a long put or a long diagonal or a put calendar those could be considerations uh we're going to look at verticals today now uh vj says delta delton's the prime primary driver for the single long options there may be a scenario when implied volatility is increasing because the underlying price is going down very true and it will still hurt a long call position you're right it would but we really wouldn't want to initiate a long call position here when the stock has a bearish trend so let's come over here to our trade tab i've got a couple of things in mind here i've already picked through the weeklies i've already looked to see where has a lot of open interest and where we hit in our window between 20 to 50 days which we typically like to do as a time frame our winter for october is getting a little short here we've only got 15 days so it definitely drops out of the low end of that window that we're looking for so we're just going to use november november is just fine as we look at the open interest in the calls we've got thousands on on both sides here for the puts and the calls uh up here where it's a little bit more out of the money we don't have as many contracts now i'm going to construct a couple of trades here and we're going to watch both of them we're going to do a long put vertical and a short call vertical all right one's going to be a little bit more conservative the other one's going to be a little bit more aggressive but taking advantage of the price dropping if we're going to do a short vertical we might consider uh this option here the 240 because it's at a 34 delta and we're looking for a delta kind of in the mid 30s maybe to the low 30s some people might shoot for the high 20s depending on how conservative or aggressive and sometimes it just depends what do the strike prices give you so here we've got 1600 contracts that's beautiful the next strike price down the 250 that's going to be 2085 contracts so let's go ahead and construct this we're going to say sell vertical we've got a 10 wide spread here and a 240 credit now some people might want to go through and determine what's the rate of return if they were to do this particular trade because they want to know if it's worth a while they want to know if they're getting a big enough return for the risk that they're taking on so here our total max profit would be 240 so that's our max gain uh let me put it the decimal in the right place so we're going to say 240 divided by 10 minus 240 that's going to leave us what with 760. so we're going to divide that oops i hit that twice darn me all right 240 divided by 760. it's going to be this 760s are max potential loss here that's about a 31 percent return some people might feel comfortable with that uh there may be other people that if it's not high enough maybe they want to look elsewhere that's fine right you decide what meets your rules the guidelines you're trying to follow now if we're going to construct a long put vertical alongside it many times people can will structure this more aggressively do you have to be more aggressive no you don't you could can you could just construct a very conservatively as well in our scenario what i'd like to do is take our at the money strike price which is right here at 230 and buy the 230 sell the 220 d lots of open interest here we shouldn't have to have a care in the world about that and before i build that i'm going to set it up here as a blast doll all right here we go we're going to buy the vertical and i'm going to come lock this in our max out of pocket on this we should lock that in as well is 415 that's our max potential loss app options expiration date could it be higher than that sometime before options expiration d okay it could be if volatility really increases and the spreads really increase but recognize it doesn't mean you have to do anything okay because options expiration day things play out uh you would your max loss here would be 415. both those
options would be expiring out of the money now what is the gain what is the return on this it's going to be a little bit more aggressive okay than the call vertical is so our max potential gain here is going to be what it's going to be six uh not six 585 right we've got 585 we're going to divide that by the max potential loss for 15 that's going to give us about a pretty big percentage return okay 149 percent if you did not want to construct it this aggressively you don't have to you could come down here and you could say well i want to buy the 240 and sell the 230. we could say let's buy that vertical instead and then it kind of flips it the other way that you have a little bit more to lose than what you have to gain all right that was about six dollars potential loss about four dollars potential gain still a really nice return it's still going to come out a little bit higher than our credit spread now sometimes i i have you kind of vote on which one you like and somebody expressed to me in a survey and i really appreciated that person saying this that sometimes that fouls them up because they want to know what the right way to do something is and not just be have it be based on class priority okay and i get that so that's why you want to spell it out to you this way conservative aggressive first foot vertical is aggressive and more conservative down here and that gives you an idea to say okay all of these are constructed in a regular manner which one do i personally prefer do i want more aggressive do i want more conservative in this particular one what do we need the stock to do we need it to stay below 240. where is it right now it's a 229 we've got about 11 bucks leeway by options expiration date this one that's more conservative here uh we need it to stay go beyond 230 does it need to move a little bit it does it needs to move about 25 cents okay to get below 230 for that particular one to play out and the middle one which is more aggressive we need the stock to move below 220 so it needs a nine dollar move okay and so i wanted to break it out for you in terms of saying aggressive and conservative and then letting you have the choice of what you want to do now quite honestly we are not going to do the most aggressive one in the middle here we're going to delete that but we are going to do these two and we're going to watch them and see how they play out uh as as we go down the road so we're going to do both of these if our max potential loss here is um what did we decide that was uh six it changed a little bit here but we're gonna say like 650 okay or 750 actually 750. we don't want to lose more than 750 on one trade so we're only going to do one contract here same thing here we could lose up to 750 this would be almost 600 we're just going to do one contract we're going to hit confirm and send just review it make sure it looks right we're going to put it in our trading stocks and options account it's going to go stick it in the verticals for us and then we're going to notice a commission there on each of them because we're trading a couple of different legs so commissions are are going to be there for that now it should get filled soon if it doesn't feel when we're finishing up here i'll go out in our post-production and make it work okay one more trade just very quickly here we're going to look at the chart here on tjx tj maxx what's happening to it today oh good we got filled yeah it's freaking down below a support level that has been here for a while it fell out of its channel it started making lower lows and lower highs and it's getting skinned today now some people might not want to get into it right now because they might say gee it's already down five percent is it going to drop anymore and it may or it may not okay but we still could put on a trade here so if we come over to the trade tab we say let's do a short vertical on tjx we could do the same thing where we're looking at the delta and see there's only really one that fits the bill that's going to be the 70 strike and notice we've got 2.50 increments here which is a little bit nicer so you can pick exactly how you want it to to play out here so we're going to do a cell vertical notice the spread is quite reasonable so we're going to choose spread vertical this time only a 2.50 difference in the strike prices and a 61 or 61 cent credit here now i did the math beforehand and on this particular trade it falls into about the 30 percent return range as well very similar to our first trade on target so that's good we're to we're going to cue that up we're going to do a blast all we're all so fun this we're going to choose a long vertical to do as well now the stock's at 66 and so our 6750 is going to be the one that's a little bit more conservative as opposed to say selling the 65 because 6750 that's a little bit in the money let's do the by vertical let's see how these numbers work out here and i'm going to lock this in place if we have a 2.50 wide spread risking a
dollar would be about a buck 25 to gain about 25 in this case we're really pretty getting close to it right we're risking a buck 22 to make a buck 28. all right so it's going to be pretty close to a 100 percent return on that and if you wanted to construct it more conservatively you could do you could start at 72.50 and sell the 70 because then we'd want the stock to be beyond 70 of options expiration date but it will not be but it'll be a more conservative return and some people might be completely fine with it same thing here in terms we only want to risk 750 now we can do a few more contracts so we could do here let's do three contracts and here we're going to do three contracts as well keep below our risk we're going to hit confirm and send we're going to watch these we're going to follow up on them again we're using one stock constructing two different trades so that we can compare and contrast them all right that got filled immediately there for us now i just want to see if you have any questions that i haven't addressed here along the way um [Music] somebody said mia said i i i these hurt a lot less more i'm not sure what that means mia uh these hurt a lot less more that could be i guess uh excellent barb's encouraging you to get subscribed to our trader talks and investor insights channels as well as to follow us on youtube barb i appreciate you doing that well we went through our agenda the market trade management bear scan and trade examples and what would i want you to do practice your bearish strategies okay uh some people if you're just trading stocks it can be really difficult for you to say i don't really know about options yet and if you don't know about options yet get to barb armstrong's classes where she teaches all sorts of strategies in the getting started with options so that you can learn and be practicing and participating when we have these kind of moves in the market all right that's what i'm going to encourage you to do if you're not an options trader yet barb's class is at el it's at uh one o'clock eastern time if i said that wrong barb you correct me okay i think it's at one o'clock eastern time well as we wrap up here i just need to remind you that what we talked about today is for educational and informational purposes only it's not intended to be a recommendation of any security strategy or account type paper money is for educational purposes only so use it that way practice as much as you can now coming up next james boyd's going to be here trading the trend and uh we'll follow up on a couple of these trades next week we'll see how they're going and get into some new information have a great day everyone thank you so much barb we'll see you later bye [Music]
2021-10-02 00:45
