New Bullish Option Trades | Trading the Trend

foreign welcome to trading the trend weeks to months we'll just call it trading the trend for this session and ongoing in the future we welcome everyone to technically speaking my name is James Boyd welcome uh to January 5th 2023. let's actually go ahead and get started just real quick remember I will post I will mention some things I did post on Twitter today that I think are very educational uh we'll talk to you talk about that and how it actually incorporates into our class on on trading the trend now the difference we're going to be doing in 2023 is we're going to be talking about different types of Trends we don't care if it's a short-term Trend intermediate Trend long-term Trend the goal is to get a piece of the trend okay and and I we don't care if it's up Trend downtrend sideways Trend how do you try to benefit off the trend that's why we want to try to master uh here now just real quick as we're getting started this session will also be focusing on stocks and options I think when we talk about options it won't be anything super complex it'll be kind of just but the thing is applying okay and sometimes that might be Advanced is to actually apply and to do not just to maybe just learn about it right that's why you have a paper money account and so as we do examples here today remember that we want you to practice to really get the experience of how it could work and is that something you would consider now remember with what we discussed here today is done for educational informational purposes only not investment advice recommendation of any security strategy or contact you get to choose options are not suitable for all investors also remember that when we talk about uh the use of the platform we will demonstrate the function of the platform we're going to use actual symbols also remember that TD Ameritrade the broker does not uh make recommendations determine suitability of any security or strategy and also remember when we talk about uh investing we will be using the paperMoney platform you should also review the transaction costs and we will be talking about option Greeks as well quick heads up next Monday we'll be doing a class uh or I should say a workshop actually on Advanced options starting next week I post that twice on my Twitter just want to make sure you saw that and you now heard it again so just real quick as we're getting started want to give us a quick reminder of what we're going to be covering here today so first off what we're going to be covering actually here today is we will take a look at the current market yes I want to also talk about the current portfolio as well and also positions there's a couple management things we need to do already and we did reset this account on December 20th now if you will uh remember that actually on this class on December 20th let me send this out okay you're going to see it on December 20th we did reset these accounts I sent the link out in the chat and also if you say where else is that I did also as well post that on Twitter at if you said hey I didn't catch that live account uh excuse me live uh class where could I see it as well so if you don't see in the chat which you should it's also my Twitter page right here it says did you see the webcast where we updated and reset both paper money accounts for 2023 make sure you watch and I go over some of the things we actually did for 2022 where we stood and then also some of the differences for 2023 make sure you've watched that because as you see us trade actively here today you're gonna actually see that we're using that which we did on December 20th now we did on December 20th because we had a week uh off over the holidays now just real quick what we will also do is we'll talk about the Goa here today is we're going to talk about different uh Trend types and also picking various strategies now today we're going to be quite active Okay and one thing I kind of wanted uh make mention of is a lot of our classes we can have brand new people and that's wonderful and if I can give you a hug I would okay if my electronic arms could reach out and kind of just give you a hug I'd say welcome to the family but there's a lot of people that might be intermediate and there's a lot of people that might be advanced I speak to all three of those levels some of the times when you actually hear me talking you might say hey this might be a little bit more advanced that's okay I'm gonna vary and blend it as we go we'll talk about beginner intermediate Advanced okay now let's actually go ahead and actually kind of again recap the focus of today part of the agenda item as well it's going to talk about different Trend types and actually picking various different strategies and we're going to do that quite aggressively as we look at a number of examples so first off uh let's just take a quick look at the s p and I mean quick when you actually look at the s p now again we saw jobs numbers here today of 235 000 okay good people have a job right now the biggest actually thing is we have the FED uh date on February 1st I post on Twitter that with the higher than expected jobs numbers the likelihood of a 50 basis point height increase by about 20 percent the market is somewhat man they kind of took that as a negative that the chances went up that much okay so Market has absorbed that but if we said did the trend change off that it didn't it's kind of still stayed in this very neutral range okay when you look at the NASDAQ itself it still looks very very negative still lots of red candles price below both moving averages so I think maybe overweighting or having some interest in the tech space I think that's quite hard considering that that's been underperforming and the trend is still down and stuck near the support area okay and we have been in that number one Trend condition for a long time I mean my gosh I mean is there like a Guinness Book of World Records of how long you've been in the number one Trend condition because we might have just broke it Dow itself if you take a look at the Dow Galway has actually been trying to get above that 3 35 but if you take a look at this it's struggled okay it's neutral as well but it's not down near the support as much as the uh NASDAQ is something that stood out to me here today we did see the US dollar so as we're talking about Rising rates maybe even more than expected the US dollar now why do we care about this well we've been talking about gold right if you get actually uh the US dollar to go up that can have somewhat of an inverse somewhat effect perhaps on gold it might be a headwind for some Commodities okay gonna keep an eye on that okay so dollar almost looks like it's going to cross over and we actually did see a color change here today on the candle why is that well price is above above both moving averages now keeping an eye on that yes I've been watching gold of course okay now gold itself down uh 18 or about a percent it went within four dollars literally of hitting the target yesterday and that dad gum jobs number came out and pushed that trade down we'll continue to watch that now let's actually kind of talk about kind of these two accounts okay now remember when we actually started uh when we started out the year we started 65 000 okay and if I go to the monitor tab what you're going to notice is we have some positions and we'll continue we're going to take a look at them in just a sec and then we also have let's say the IRA which has 325 000 or that's where it started at okay now just something I want to kind of bring up good trades bad trades okay something that kind of stood out to me a little bit was this uh now remember in this class we talk about stocks cover calls cash secured puts verticals bullish or bears okay one of the trades that we're gonna we're down on okay is actually CRM and this was a long put vertical now remember a long foot is a bearish trade okay long put you pay for it but the biggest actually thing is you TR you sold a put as well to try to offset some of that cost and that actually creates a defined risk trade given a vertical and one of those trades where it's actually gone opposite direction on us is CRM want to kind of keep an eye on this because they actually and I post on Twitter yesterday they did announce about seven thousand dollars seven thousand head count reduction this stock was up to well it got above the last four days and yesterday they announced uh that reduction in head count of employees and the stock benefits from that okay cutting expenses I know that sounds horrible and people should not be viewed as expenses but from an accountant's point of view yeah your expense okay can be investment as well now if you actually take a look at this it's falling back down but if we actually get back above the 140 we might actually consider even exiting that position we're going to watch that okay in fact get some legs if we actually can stay above that 10 period moving average that becomes a bounce point if this gets much higher let's just kind of throw out a number and I'm going to do this right now let's say if this actually gets above about 142 okay it's going to exit the position how do we actually set that trade up now what this is really doing is it's saying hey if it gets above 142 or higher exit the position now I know this is hard for sometimes people to make a decision okay but let's just make one we're going to say look if this bearish trade now how do we know it's bearish well because you can see negative Delta negative Delta bear strength okay and what we're going to do in this case is we're going to right click on this and we're just going to say you know what let's create a closing order now like yesterday when I say conditional order we're going to say let's create an exit and the exit is going to be conditional upon when I say conditional think Market data GTC and now what you're going to see in this case is I'm going to go over to the right click on that gear now what you're going to see in this case is I'm going to click on where it says symbol CRM method Mark great or equal to and I'm going to type in a price of 142. now why are we talking about this let me just tell you what I've learned okay if you don't address the bad ones it won't matter how many good ones you probably have because the bad one can eat away at a lot of your good trades so what we're trying to do is minimize the impact of losing positions I don't really want to talk about it it makes me feel uncomfortable well tough this is what happens in real trading investing if we never address the bad ones the bad ones can actually just literally uh eat away the portfolio value so we're trying to be proactive in getting ahead of it now what you're going to notice is this is not playing the probability out this is actually saying look the trend is reversing now if that stock that she got above let's say 142 what's the path of least resistance well my gosh if you get above the 140 142 it might try to go all the way up to the top of the channel now I think if you start if the company starts to recognize hey we cut uh 10 of the workforce 7 000 people Etc is there a good chance that that stock might break out to the upside if the company is practically doing things that maybe uh might help them from a financial point of view yeah I think there is a good chance that that stock could break out now if we think there's a good chance that this stock actually might break out to the upside go from 140 to potentially to 159. what might

the investor do if they think there's a good chance that this trade is probably not going to work what might they do right now so first trade that we're going to do they actually think there's a good chance that the stock could break inside the old Channel what might they do well let's kind of go back to something if they actually think there's a good chance the stock might break back inside this whole Channel they might say well James could I put on maybe like a bullish position now okay now is anyone actually thinking that now here's the deal if we actually look at this what type of bullish position well if we actually take a look at what type of old bullets position we might actually say let's kind of go back to something I posted from before let me actually kind of show you something okay so whenever we actually look at kind of picking strategies we have like what we call a scale okay and when you go all the way over to the right stock that takes the most amount of capital and it's the most sensitive to Direction if we go over here to let's say the short put verticals okay now by the way if we did no position we're in sensitive direction we don't have a position but if we did let's say like a short put vertical or a long call vertical Etc we'd probably be at a Delta of let's say 10 to 20. now what I'm going to do in this case is we're going to actually kind of make this uh we're going to put on a bullish trade we're gonna put on a bullish trade expecting that maybe this has a pretty good chance of breaking to the upside and we're going to try to flip the trade now what I'm going to do is let me kind of send this stop first we said look if this gets at or above 142 x to the position we're trying to take a fraction of what the max loss is okay we're setting an exit we're saying look if it gets above 142 exit the position willing to take the loss now what you're going to notice is it's it says Below in red due to potentially wide markets or liquidity risk at the time of activation this may be manually substituted with a limit order upon activation and worked until filled just trying to get a better fill I'm going to send the order now the one thing is what you're going to notice is if you take a look at this the Delta of this position there it is right there it's negative well if we come in and we go to the February expiration now why the February well we're going to the February in this case because well we're less than 20 days on the monthly options now if we go to actually the February which has 20 to 50 days it has 43 days remaining we come to the out of the money puts we're trying to sell the out of the money put we're selling the put where we think the stock could stay up above now option number one is here is James just sell the put if you sell the put though is selling the put more bullish than a short put vertical it is because you're selling the put only if you did a short put vertical it's selling the put and buying the put below for protection now some of you might say I'm going to do a cash secured put this paperMoney account is going to sell the 130 and then buy the 125. now if we have three contracts above we're going to go ahead and actually say we're going to try to sell three dollar fifty credit so if you take a look at this three contracts okay selling the 130. now this is in the IRA account I want to kind of just double check could we do a higher number of contracts let's go ahead and take a look in the ira we had a portfolio value of 325 000. we said that in any given trade we could risk a half of one percent half of one percent of this portfolio value sixteen hundred twenty five dollars could we go more than three contracts so let's kind of look at the per contract risk well let's actually kind of take a look at this so if we take a look and say okay the credit's 150 five dollar wide well let me just kind of back this up so we can see the one contract there it is is 350. so could we actually do more than three contracts it's going to be 350 if we actually look at the number of contracts okay all we got to do is take 16.25

divide that by 350 and it's going to give us we could really do up to how many contracts well if we got all these decimals out of the way and said what could we really do we could do uh 4.6 contracts now we don't have 4.6 we uh in this case we're not going to round we're not going to round up we're going to round down okay now here's the deal how do we know if the Stock's going to break out we don't know that okay and if you look at this position are we doing the January option we're not doing the January option this is the February option so these aren't the same positions here okay same stock but different option month and Strikes double check me on the strikes now what I'm going to do is I'm going to change this I'm going to go back to four contracts or contracts dollar fifty confirm and send now what you're seeing is this is a bullish trade thinking that maybe the stock might reverse back to the upside break even Max profit potential Max loss and does someone have to take the full Max loss they don't have to they just lower the number contracts you get the credit less actually the commission and if that's okay gonna send the order we're gonna put this right in the vertical section gonna send it now so notice is we don't know now by the way if you had a short call vertical and then you had let's say a short put vertical what does that really make the position you have a short call vertical you have a short put vertical what does that really do okay what does that make the strategy well if you have two short verticals it makes it an iron condor you're actually thinking that there might be some more neutrality okay so let's go back to this and let's kind of see that now by the way we don't have a short call vertical that's actually a long put vertical but if this if that right there was a short call vertical and we actually just are trying to enter a short put vertical that'd be not turning it on into an iron Condor okay now remember this has a stop on it so I just want to make sure you understand we're addressing the loss okay if that actually goes up more than 142 it's going to exit at its market prices this trade right here trade number one we're actually doing here is a bullish position new February option the 130 the 125. now let me actually just kind of make sure this actually fills I'm off by about three cents so let me uh kind of put that down a little bit see if that actually fills we had a limit at 150. and the mid price was at 147 so what I did is I moved it down a little bit okay good now let me also just address one more position that we're going to exit now one of the positions that we actually also did and we said look we're going to practice okay how do you get good at anything you got to practice one now what type of strategy is this sold the call which is bearish and then you bought the call now what type of trade is that well that that right there is your classic short call vertical okay and what you're going to notice is it has really in this case a negative Delta all right Jackson Jackson hey enough yeah I know okay I'm trying to train him on uh not barking when people come to the door good okay good James the dog trainer here or the Dog Whisperer okay now if you actually take a look at this Microsoft a bearish trade tell me how to manage the trade now remember you can get almost anybody to put them on and he manage the position now now a lot of time we don't necessarily need to even go look at the chart we could kind of look at the profit loss we could also look at kind of what the short option value is we went short that trade on the 22nd it was sold for 460. now notice I said just look at the

short position and if you look at the short position of sold for 460 and now it's 48 cents that means about 90 percent yeah Jax might be excited about the trade he's thinking okay if the paper money account makes some gains I'm gonna go buy some dog bones which I usually do anyway now notice what you're going to see in that's about 90 percent gone now James why don't you go look at this one on the bottom you don't need to okay if this trade is going to make money it's going to be because of the short side of the trade it's a bearish trade so if we only have 15 days remaining might that be an example of maybe profit taking would you agree with that or disagree would you agree or disagree now you might say well I need to look at the chart I'm going to push back in there I don't think you need to look at the chart okay if you have 84 percent of the max gain with actually 15 days remaining you can only make 15 left you can only make 15 and you have 85 percent now would you risk the 85 and more to try to get the last 15 that's not very good odds so the investor might say you know James I'm going to go ahead and profit take on this because it has 381 dollars we're going to right click on that and we're going to create closing order and we're going to buy that back now I know some of you are like saying please just show me the chart fine I'll show you the chart okay if we actually look at this chart I want to kind of show you uh let's get these lines off where was the trade placed and the trade was actually placed right there and if we actually said geez looking back at the timing how do you feel like the timing was uh we would actually say the timing was actually pretty good it actually was a bearish trade when the moving average crossed below now we don't want to Pat ourselves on the back and break our own hand but we actually say in this case ah there's a nice bearish trade and from here Bears cross Bears entry of trade and then down to here that was an 85 percent of the maximum gain okay so we're gonna go ahead and actually uh confirm and send buy that back and the one thing we want to double check is is that also in the in the smaller account as well let's double check and if we actually look as Microsoft in their account and what do you know it is and we could do the exact same thing in that smaller dollar account the Microsoft will go ahead and say create closing order we're going to buy that back as well same idea there confirm and send okay so we talk about CRM we've talked about that could be on the cost of reversing out of its downward Trend guys and gals that's very important if you never identify the changing of the trend the losses can just magnify so one we want to address here that we're going to keep an eye on is CRM we set an exit why did we act why do we set the exit well because if it breaks 140 it's Katie potentially Bar the Door this is a classic swing trade if this actually breaks the 140 it might try to fill in that channel part of that trade we also did is we actually put on a bullish trade that if it did break to the upside we might be able to offset some of those losses with the bullish trade okay now let's also kind of for example bring up some uh questions are there any questions now we're going to spend about the next 20 minutes we talked about a pass trade we talked about a new trade but I'd like to also kind of bring up something here as we spend the next 20 minutes and talk about new trades of the neuron in the portfolio and as I do this what I want to do is I want to kind of bring something up if I can and I want what I want to do let me actually resync that just grab something here now one of the things I I posted there it goes it's now going is I want to bring up something because there's been some questions about different types of Trends okay and something I want to really bring up here that I'm going to focus on because this is part of our learning outcome is really finding the trends but also actually with this is actually picking strategies okay and the one thing I want to kind of focus on is this picture right here okay on the left hand side you'll see that it says labeled one two three four oh just a second just one second just check taking a look actually okay so I think we might be good someone actually uh the power cord and hopefully I'm going to watch that I saw that actually draining down to the red status that would not be good because that would be the end of the class uh had cleaners here today and I think they hit the cork so now let's actually kind of talk about this now if you take a look at this we kind of labeled Trends as one two three four five okay basic English language so it's no one's patented those okay or copyrighted them so when we actually look at different types of Trends right we classify them as looking at where the price is in relationship to the moving averages and when we talk about the moving averages we express them okay if you take a look at this the 10-day EMA which the purpose again is subtract momentum the purpose of the 30-day moving average is the track trend now if we're talking and I'm talking about here now bullish strategies if we're talking about bullish strategies I think a lot of times we like to at least see the stock probably above uh at least above a 10 to Ema okay if that stock is not above a 10-day EMA probably not very bullish would you agree with that now if a stock was more bullish okay but the stock was actually more bullish what you're going to notice in this case is we like to see the stock above not just the 10 but maybe the 30-day as well so in our examples that we're going to actually pull up here today what I want to really do in this case is I want to look for some stocks that are at least above the 10 but also above the 30. now let's kind of take a look at some stocks that might be showing these types of Trends now remember we're talking about building a portfolio and this is a question like it happens all the time hey I'd like to actually attend a class where you actually cover how to build account from nothing that's what we're doing okay so sometimes even though I kind of yell and I even say that sometimes I'll get a question of hey have you ever would you consider resetting up the account and actually starting the account from nothing uh that's why I've gone for two weeks in a row that's what I'm gonna do right now I'm gonna spend the next 20 minutes and pound this so buckle in let's go now here's the thing this might be you might say well I'm a beginner and you can follow along but I'm going to be a little bit more intermediate to Advanced I wouldn't sometimes you don't need to kind of talk about one trade for 20 minutes okay because I think a lot of us if we have experience that's probably just too long and it's just abusing the one example now if we look at this is this stock in an uptrend okay is this stock for example something that has a short intermediate longer term Trend now if I were to show this to many of my friends they would say yeah just feel like I'm too late well you could have said you were too late a week ago two weeks ago three weeks ago four weeks ago right and honestly if we think back we're probably 20 years too late micro uh mercs maybe at a 20-year High who knows I don't really take a whole lot out of it that the fact that the stock is at a recent High I mean we don't know if that company is worth that it might have great fundamentals and maybe that's why it's fetching a higher price now what I want to kind of do in this case is there is upcoming earnings right cheer now if we want and I'm going to kind of talk about stock first and I want to kind of bring up the example of a covered call in this case okay now what I want to do in this case is I show this the reason why I want to kind of talk about a potential cover call and I'm going to bring this back up this diagram right not there here the reason why I want to talk about buying the stock and considering selling a cover call is in our Market if you go back and look at the last two or three weeks the the what's been constant is a constant sideways range does that make sense so the biggest actually thing is I want to look and see could we actually buy the stock itself 100 shares of stock and could we also sell or call as well okay so first off is what's the volume like 5.699 let's just say 5.7 minute when we actually come down here and let's say look at selling the out of the money calls what you're now going to notice in this case is well you really actually have let's say uh you could do the 115s and those 115s are fetching three dollars now how much upside do we have on the stock well from 113.50 up to about 115 it's about a dollar or forty or so on the stock itself and about three dollars on the premium now what I'm going to show in this case is what we're going to do is we're going to right click okay we're gonna right click on this we're gonna buy and what you're gonna notice is we're going to do a covered stock now I know some of you are actually saying a different strategy trust me I'm going to hit that in just a second I'm glad you actually brought it up and this is a perfect example to talk about that 100 shares of stock fine thinking maybe hey could that stock go up a little bit higher selling the call now here's the deal when we sell the cover call okay that those shares of stock could be taken at any time from now on to expiration now debit here is actually the stock less the premium that's why that price is lower than the current stock price we're going to go single order first triggers seq and guess what we're going to do with this we're going to set a stop we're going to right click on that line create an opposite order and when we do an opposite order we're just going to say look if we get at or below a certain price we would like to exit the position because well it might not be trending in the intended Direction anymore what is acting as a potential level of support what would you say what's acting like a potential level support could you say that 30 period moving average is acting like a potential level of support and maybe that 110. maybe that level let's say

about 108 37 those might be areas now if we're talking about a cover call we probably don't need to set it so tight but if we took 108 37 less two to three percent that's going to get us a stop at 106. 20. so on that conditional order all we're going to do is going to go back over click on the gear we're going to go symbol merg method less or equal to we're going to type in 106 20. how did I get the number I took the lower support level and subtracted or took two percent less now what you're going to notice is the number that we're seeing here is down here okay now this is not a class where this class is I'm talking about how to do cover calls and that they don't show any cover codes and I see that sometimes on the internet okay it always bugs me I'm more application oriented like I I believe 50 percent of the time or more should be showing examples of it so this is a bullish trade but it also has some upside potential but it also has some income Potential from selling the call strike okay now I want you to also notice when we actually take a look at this is we bring this up we also set an accent on this now sometimes people might say things like well I'm not good at exits well did you have an exit on it no I didn't so you're not bad at exits you just didn't set an exit so if we want to be good at exits we just need to set an exit and we have an exit if this goes at or below 106.20 by the Callback and sell the shares now the con on this trade is there's a cap but maybe the investor says you know what if that cap was 400 or Etc or four percent they might not mine the cap okay and I'll talk about that in just a second now if you look at this we saw that first line on the previous trade it says this order will be worked until filled to try to get a better price the also a reminder as well with stop orders there's no guarantee that execution price will be equal to for near the activation price meaning it could gap down below that 106.20. the fill could be lower than expected okay gonna send that order and what we're going to do is we're going to put this in the IRA account because it can buy a hundred shares of those stock of the stock and what we're going to do is we're going to put that in that cover call section let's send the order now the other comment that came in and I'm going to flip this okay and there was a comment that actually was well what about Verizon okay now I had a funny experience I bought something over the weekend and I asked the guy what does he do blah blah blah he was a VP of Verizon and now now in a day where everyone has a VP uh you know you know all these different types of titles uh I don't know maybe maybe how many VPS are at this company who knows okay but if you take a look at this uh and we're just kind of talking about Verizon T-Mobile this is actually a stock that's actually been kind of maybe trying to reverse how would I know if it's really reversing trend well I mean not to State the obvious but my gosh when there's a downtrend there's so many red candles you almost need sunglasses okay fair and then if you see it starting to go up you're probably going to see those lime green colored candles and or you're probably gonna see those darker green candles more of them than not if we take a look at this and by the way I'm going to change this color background if you actually kind of say hey can we actually go a light background so I can see those colors yeah sure okay we'll change it not a problem now what you're going to notice is what how many of you would actually look at a stock like this and say yeah but wonder if I get in only to see the stock go down again well let's kind of bring up this example okay let's say the investor says James I want to go along that stock maybe Verizon might be trying to reverse that downward Trend and where did that Trend really really reverse it was probably right about 39 dollars and if we actually go up and we back this up and say where's maybe some upside potential forty four dollars and another one above that is about forty six dollars and one above that if it got there it's fifty one dollars some investors do not like having just UPS uh cats they don't like that now I could push back on that okay and I did yesterday but but uh if we take a look at this what I want you to notice is if someone said I want to buy the stock okay now this is kind of a stock that if we went to the margin account could we buy 100 shares in there sure we could now if we took a look at this could we buy the shares of the stock so step one we're gonna buy it okay now step two now I bought my house in 2007. before I

ever moved in I bought the house okay bought the house before I ever moved in I said okay I got I got bought it got the keys before I even stepped my my foot in the door I bought protection on the house same idea here now the protection of the house wasn't indefinite okay I have to renew it every year blah blah blah same thing with the uh these options and what we're going to do is going to go single order first triggers in SECU we're going to come down to the options that really are the monthlies we got the January with only 15 days left we're gonna do the 17 Feb 43 days left and what you're going to notice is I'm just gonna buy kind of something maybe cheap that's out of the money meaning below the put We Buy in my mind I'm thinking like safety net okay I'm hoping the stock goes up okay but wonder if I'm wrong and sometimes people can be wrong now what happens is if you buy the put it just gives a contractual right from now to expiration to sell the shares at the strike price all we're going to do is we're going to say we're going to click on that and for every 100 shares we have we could do a contract okay we're going to do a hundred and buy a hundred and what we're going to do in this case is we're buying the shares here okay and the stock would need to go up by 90 cents to break even okay so whatever we buy the put for that's how much the stock needs to go up to offset now let's kind of think about this logically you bought your house let's read it for half million bucks I know something you're laughing but go with me and you pay two thousand dollars a year for protection you need your house to go up two thousand dollars more to offset the protection premium that you just paid it's the same idea okay now you hope you don't have to use the protection because something negative could have happened but the protection is not infinite there's an expiration and that protection would be used and exercise if there was value okay so if this put becomes valuable that means the stock has gone down now the other reason why I'm actually kind of bringing this up is this stock does have a six point two four percent yield now the biggest actually thing you gotta need to really understand is that is maybe a cherry on top but we're not really looking at this from a standpoint of just that we're looking at the point of the trend okay but if we could actually grab that 16 uh that quarterly dividend that would just be a little cherry on top now what I'm going to do is we're going to go confirm and send we're going to put this in the margin account we're also going to do this in the ira okay there it is in the margin I'm going to send the order I'm going to go right to the IRA account and if we did this in the IRA account I'm going to click on the ask we're going to actually pump this up to I'm going to say probably about 400 shares single order first triggers scq same words we saw before click on that 90 cents now do we have to do four context we don't have to but if we want to protect the full 400 we're doing the four contracts gonna confirm and send now don't worry this is the same trade I'm just doing it in a different account IRA account okay gonna send it now let's actually go back to something else so we did a covered call bullish trade okay we also with this we did a protective put position I want to give you a quick reminder of what this trade looks like okay when we look at this trade on a risk profile you should know the diagram it's going to have so if you uh if I put this on the risk profile let me analyze the trade this right here is the stock position okay so let me just kind of put this on there I'm just going to say the 400 shares what is what is 400 shares of stock look like on the profit loss diagram it looks like a diagonal line exactly and what you're going to notice is down below you're going to see if we actually say add the put what does it really do well it's going to make it where this not capped upside but there is also a defined risk to the downside now what you'll notice is that the fine risk is about a thousand or so dollars okay now let's kind of bring this back to just logic one-on-one if you buy a house and you buy protection in the house does that cap your upside on the house no okay the protection has to do with the downside the upside is unlimited same with this position this is just really call a married put now I'm going to go back to another position and we're going to bring up one uh Chronicle Phillips now energy has kind of made it's it's fighting back and forth we have OPEC as we've actually kind of seen some different economic data OPEC is kind of talked about adjusting the output to try to help prop the prices how convenient okay now this is actually a stock where we've actually Fallen back down to a diagonal support level okay now the the question is always how do you know it's going to bounce we don't know it's going to bounce what you're going to notice is in this case is as we zoom in on this you're going to see a horizontal support level there and if we really zoom in we kind of we have a prior high right there and we kind of also have like some more horizontal support right there it might just try to break to the upside now I taught a class on Tuesday about cash secured puts and this was actually something that we've actually done quite a bit on currently we have cash secured puts on am Boeing caterpillar Conoco Phillips and actually Mike MPC one of the things that actually we're going to look to do right now is a we're going to set a Target on this one take Exit okay now what do you mean by that well if we have 15 days left we're going to set a Target to try to grab the gains now remember what did I say was the target on an option that has this few days remaining what was the target I gave a range I said between blank percent and this percent what was it fill in the blanks and that is I'm getting the answer I'm actually going to just trade what we talked about the other day and what I'm going to do is uh I'm going to actually just put that trade back on position right click I'm just going to put that Target on we're going to say that this can go down to about a dollar nineteen all I did is I took the 340 and I said I want to buy it back if I can grab 65 of that well if you grab 65 and there's 35 left well 35 of 340 is 1.19. now what we're going to do is do GTC okay now that's on these existing position confirm send fire now that's the pass position but I want to set up a new position wonder if this stock breaks to the upside we're going to sell a new position for February we're going to be a little bit more aggressive now this is going to be the greatest thing ever the worst thing ever okay when you sell something more at the money or mean the current strike price is very close to the current stock price higher premium higher Delta greater chance to be below but if someone is maybe more confident about the direction of the stock potentially breaking they might choose to do that last trade we're going to do here is we're going to sell one the 115 put at 525 we're going to sell that and we're going to confirm and send and notice what the break even is this is a bullish trade bullish okay credit is the is the Max profit is the credit break even at 109.75 match losses of the stock Falls all the way to zero so we're kind of transitioning out of maybe the one we have trying to and then we're trying to set up a new position bullish if that stock could break to the upside send the order now the trades that we actually did here today is number one is we did Merck second trade we actually did was CRM bullish third trade we actually did was Verizon fourth trade we actually did here today was Conoco Phillips now what we will do is each week we'll continue to monitor these accounts and we'll talk about using different types of strategies given the trend now I'm out of my time here today remember with what we discussed it was done for example Illustrated purposes only each week we're going to get practice with doing stocks cover calls cash secured puts and verticals getting familiar with those different types of strategies and doing a kind of a variety of them can be beneficial sometimes in different types of Trends and that's why we're going to kind of spray if you will those different types of Trends as well and try to actually have some time-based trades but also some directional base trades as well thank you so much for your comments and your participation remember to subscribe to this Channel and also follow me on Twitter thank you so much for all your comments and questions

2023-01-12 07:50

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