Price Forecasting | Technically Speaking: Trading Stocks & Options
Hello and dusters. And welcome to our session here today. So interesting day in the market, you know, we opened up strong. It looks like we're continuing to move strong here today from a technical analysis standpoint. Type of opportunities that does that present with regards to training stocks and also possibly options. We'll take a
look at the markets and kind of see what's going on there. But before we get too far along, let's go ahead and pump through our disclosures. They didn't want to walk from here to technically speaking trading stocks and options. My name's Ken Rose as always, It's great to be here to discuss investment. The stock market,
particularly this year, we can use for amount of coal analysis and talk about technical analysis that relates Will stock and options trading just to remind you can follow me on Twitter. My Twitter handle is at K R. O S E underscore T V. A postings on Twitter relate to this area as well as other areas investing. Also want to welcome Barb here in the chat window. Great Parker with us today. Parts very knowledgeable in this area, as well as other areas, investing and encourage you to follow Barb on Twitter as well.
I'm super be more happy to send her Twitter handle T over there in the chat with that's gonna be at BArmstrong underscore T V a Double check. Make sure sounds working out, Okay? And it does look like it is working out. Okay. Here alright. Well in one of the stories here, investors just reminded that our content is intended. Educational informational purposes, Only.
It's not investment advice, recommendations any security strategy or account. You want to keep in mind that options are not suitable for all investors. Especial risk inherent options Trading may expose investors potentially rapid and substantial losses. Spread's straddles multileg option strategies can he tell substantial transaction costs, including multiple commissions.
It is the paper trading software and software in here. This is for educational purposes only. We want to keep in mind the successful virtual trainer in one time period. Does not
guarantee successful investing in extra funds during wintertime group as market conditions do change continuously. And investors while this Webcast is discussed technical analysis, other approaches, including fundamental analysis may assert very different views. Any words demonstrate. The function of the platform we need to do is actually similar to the military does not make recommendations or determine the suitability of any security Australia individual traders investment decision you make in your subject attempt is solely your responsibility. Well investment with regards margin here Do I thought we did just start doing review of some of the market highlights that are currently going on right now, but we'll look at the market and we'll look at different sectors and strengths and as we're looking at charts, will discuss technical patterns and related price targets. Then taking those technical patterns into consideration will look to demonstrate a paperMoney trade using the thinker, swim platform and the technical targets we come up with. As as we're
looking for those technical patterns. So with that, then let's go ahead and get under way to do that. I'm going to bring up the thinkers from platform right here to start with an overview can't see what's going on with the market here, and you can see here we have the S and P 500. Which has been moving to the downside, But this is a rather strong day here. One of the strongest days we've had in some time it looks like equal daylight here. You have to come all the way back here to may 4th to have a day of the strength of the strength we have here today.
And the interesting thing is we're going along the day we continue to get stronger and stronger and stronger. You can see this Candlestick right here That represents today's price action right now, at the very top of that candlestick when you have a long, candlestick like this And you're and you're and you're finishing your closing at the top of the candles Look like this. This is called the Bill ish. Excuse me a bullish belt
hold line. If we had a long red candlestick, and we're finishing at the bottom of the price action today that's called Barry spelled Hold line. We have a nice and strong, bullish belt hold line, and you can see with regard to that movement. We're breaking above the resistance level right here. Come right over here. Breaking above that little resistance right here.
However, we also have this level right here. I can't say I would say that would be the more significant resistance level right there. So the S and P 500 . What we have here is we have a sideways channel. Moving in that direction right there and were threatening to break out of this resistance level. Now, if we're talking about price targets, we always want to keep in mind price targets with regards to price patterns. That's one of
the nice things about price patterns versus Candlestick patterns. Fantasy patterns basically give us an indication of potential change in direction . Price pattern gives us more than that price pattern gives us not only a potential change in direction, but also price pattern gives us a target in relationship to a potential change in direction or in relationship to the current direction. And only have a sideways channel like this. This
provides us a price pattern with regards to break out of that channel. That price pattern is going to be the height of that channel extended to the upside. So we're looking at the SPX-- right here and we see this sideways channel. But we can do
is we can gravel blind tour here. Like so Of the secrets from plant for. Let's go with a different color, Shall we? It was something a little bit muted this we can tell the difference. Between now and the camel. So this is the height of the channel right here. So the break
out of that channel we can duplicate Cadillac so. And that's for give us a target in relationship to it's interesting that target basically coincides with these areas of resistance right here. We Bringing light across here. We can see right there. They were very close to this resistance level. So when you see a When you see a major index indicating sideways, Sheldon break out, and that was suggest there's a fair number of stocks are doing roughly the same thing that, of course not.
Not all stocks, but they were number of stocks costly, exhibiting the same type of price movement. That's on the S and P 500. Let's shift gears and come over here to the NASDAQ. Before the NASDAQ. It looks like
we have something a little bit similar here. Kind of got a bottoming out here. Like so only what I you know, rather than rather than your system, So on the NASDAQ, I would say we're a little bit more Berries moving to the downside, because if we want to look at the lowest close coming down here before we got this balance This would be the lowest close right here. Mr very close to this day we get down closer to that would be the lowest close right there and compare that to this. Lowest post down here. I mean that we
that we made a lower low after creating a lower high I'm gonna change. My drawings are out there just a little bit. She's a channel two instead, just because of the nature of what we have going on here with the NASDAQ. Actually on the channel tool because we haven't pulled down from here just yet. You're
probably gonna want to come over here and start off with this side of the channel. We have two points. They bring up a parallel line. And sit it right there. So this is a other NASDAQ would say that we would little bit more of a down training channel. But we're coming up here and we were approaching the top part of that channel right there. What would
what would be a targeted relationship with this? Well, if we have weakness at the channel right here. That we could take this move to the downside like this. Think that will move to the downside right there. Did I going to duplicate that? Bring it over here. And this would
give us a target. The downside. In the event. We started to have some weakness, but we don't have weakness this yet. We don't know at this point. If we're going to
move to the downside towards this target of 11, 5, 93 or possibly, we break out of the channel right there. Let's take a look at the Russell then take a look at the S and P 500 technology oriented or more growth oriented. NASDAQ Russell's an index is looking at small cap stocks. This is possibly The more aggressive investors currently. Yeah this
one we actually broke out of that down track. And if you look right here, we came down here and we created a low You know, at this point right here. This So we came up here. We created this high. Here. Here's time.
Here's the bottom of the channel right here. Multiple hits right there That represents those We swung up. We came up and we created a higher low and we're coming up and we're breaking above this high right here and possibly creating a higher high. We just clear that drawing set right there. Just a second. And let's create a channel a bullish channel here for the Russell. Right through. That would be a
bullish channel for the wrestling. As far as estimating a target up here. We could use this most recent run right here. Using our drawing tools that we have here. Don't think we're swim. Run up to about that point
right there? Yeah. Get in there and duplicate that. Then you can bring that up right over here on the bounce point right there. That would give us a target. Up
in this area. Mm. Right about there at that point right there. Another Another nice indicated that we have is to see what with this nice, solid movement right here. What kind of an impact is that? Having with regards to the cinema that's currently going on in the market. Overseas as these industries move up, and as he's industries moved down, we can use we can use a measurement. Of the implied volatility on the underlying options to determine the potential sentiment. Reason
for that is because when the market tends to move down, there's an increase in demand for the options. As investors are using some of these indexes hedges against against their portfolio positions. The market moves down and implied volatility tends to move up. We
can chart this for the S and P 500 just by pulling up the fix the V I X chart to gauge where we're at with regards to investors. Sandman is investor sentiment are we Are we becoming less concerned or are we becoming more concerned? Here. We have the VIX right here. You can see right here. But I've got a two year chart with weekly candles. You can see that we've been moving down as it's moving up or becoming more concerned as it's moving down. We're becoming
less concerned. So we're about at the midway point right now. So we're looking at this from an option traders perspective with regards to with regards to some of the premiums on underlying options. They're not as high as they were up here, but they're not as low as when we come back here and we're a little bit more in the extreme confidence area right here. What's what's gander over here for just a second. Then after the little review the market right there and see how we're doing from the sector standpoints over here we have the public. Watch this. It's
available to us from Thinker slam. This is the S and P 500 sectors have edited column that is subscription column to give us the names and we can see that right here. We can see that consumer discretionary is the strongest performing sector. Come over here. One more chart. And click on conservatives question every right here and you can see the discourage consumer discretionary has been one of the weakest sectors on moving on moving to the downside . This is an important this is an important important concept investors to keep in mind. That
is it often when you look at sector performance. The sectors that have moved down the strongest have gotten deeper and deeper into that oversold zone. And so when the market does have a correction, this start to move to the upside. He sectors that were the weakest can actually become the strongest as as we're looking at the initial move from a very smooth over what you're looking initial move from going from Barry's to shifting years and going up to bullish. We're
seeing that here with regards to consumer discretionary. We're also seeing here with regards to information technology again. Consumer discretionary is the strongest sector today was also the strongest sector yesterday.
You can see our strong move here. But you can see by this Strong move to the downside that it has been one of the weakest sectors begin strongest yesterday and today, same thing could be said for information technology. Not quite the extremist consumer discretion but still moving down strongly. Looks like consumer discretionary has found a little bit more of a base down here.
Coming out of base here, actually creating a double bottom right here. We could look at this as being a double bottom. Came back here and we created this bottom right here. This part of my here Those are fairly close to each other.
Maybe not exact. In fact, let's bring over horizontal line right here. Right there. Well, you know, I'm looking at it now and I'm saying OK, it's close to a double bottom. But Actually, I probably go with a little bit a little bit more towards a lower low on that. We got this
resistance level between the two. We're looking at it from a double bottom perspective or from his channel perspective. It's basically the same price target we get a break out again would be the height of the channel extended to the upside. This technology. We have financials. Interesting thing about financials is clearly here . We have a nice, strong breakout on financials. If I
bring a horse online across hera nice, strong breakout right there. We're looking at here as far as the double body. Well, sort of a double bottom, but not perfect. But you know, double bottoms and double tops and like they are seldom perfect. Come over here and look at us. Double
bottom or sideways Channel. We've got to break out and with regard to target on that break out. Grab. No, no. Rectangle tool right? There were duplicate that. And we can bring it right up here. That gives us a target
to the upside. Right in this area right here. Investors in in looking at these different sectors, we see that first of all, we looked at the overall market looking at these different sectors because if somebody's sectors are a little bit different, with regards to the price action and the related price targets that are showing us As we look at this from a stock perspective, we look at this from an option perspective, but investor can do is they can think about the type of trading that they enjoy doing. Possibly the type of trading that they feel would be appropriate given their current portfolio and, like some investors may look at this and say, You know what looking what's going on here? I can think of an options strategy that tends to tender lend itself well to the current market action or the investor may say. Looking this market action. Maybe I perhaps perhaps I want to establish a position in the financial area and look and look for a vehicle of financial vehicle started has broken above resistance. And possibly set a
stop loss at some point below below That breakout point, which is now a theoretical support level. We're looking at it looking at it from that standpoint, Dan Again. We can Look at the other ones. Here We've got financials here. Financial is more of a downtrend and bouncing move up towards the upper part of the channel right here. Communication services. Is
more of a what this sometimes referred to as a bear market bounce back over here to industrials here. We have a low lower load here we have a high Lower height, removing up here in the expectations, possibly rolling over it again, another lower higher. However we haven't started to do that. Yet this possible that we could end the day off breaking out of that channel right there. Exact Let's grab it Channel two right here to assess this. I'm going to use
because we have these touchpoints. Come up. Bring that along and talk right here. And that does give us a different It does give us a different look best, And so when we're looking at the industrial sector, breaking out of a downturn in channel And we have a target up here then of this previous resistance level. Which is going to be. Right there, investors. Munich ations services materials materials. This is kind of interesting materials, isn't it? A nice break out here. Looks
like we have a ascending triangle. Well, actually, I'm not seeing in the second trial, they would like to have an additional Touchpoints here somewhere, Gonna sitting travel, Go fight. Come down here and grab this. Along these lines light so We have the higher lows going on. At the same time, we
have some consistency. With regards to these level high as we came here actually broke above here, Then we hit it Hit it Hit it from this point going forward. We have definitely have an ascending triangle when we broke out of that ascending triangle right there. We wanted to if we wanted to use this as the backside right here. The target would be the back side going to the upside. But if
we're gonna be we're gonna be we're gonna be honest with ourselves in relationship. This breakout right here would use this as the backside right here . We extrapolate that to the upside. In other words. We can grab a rectangle right here. Go back to the triangle as far as you go where you have a hit on both the top of the bottom.
Measure that distance. And then extrapolate that to the upside. Following the breakout and that would give us a target here then. One basic materials. Right up in that area right there, investors. Consumer staples.
Superstate really got hammered right there. I think I think this is this is in relationship to a lot of the autumn. The retail stores have recently gotten power and some of my have been recovering. But now we're moving up here. Energy has been energy is definitely been the strongest sector overall over the last three months or so. Real estate. We'll break out of
that resistance level right there. Here's healthcare. Other ascending triangle with potential break out their utilities right here. Sylvester's What do we want to do here? Do we want to look for something in the consumer Discretionary area in the information Technology area financial area, It looks like we primarily want to be bullish. We do a little bit of a drill down here in the financial area and look for a stock, possibly possibly purchase of a stock or possibly also start it could possibly provide us with a potential options strategy as well. So to do that notice over here and get this is a public watch this you can pull up on the secret Swim platform. It's
just S and P 500 sectors. I pulled up a secondary watches. But before I pull that up, I want to note the financial sector right here. I want to
note the number 40 right there. Number 40 is the financial sector. And the reason I want to know this because I'm going to bring up another public. Watch this right here, which is going to be sectors and related industries, which basically will give us all of the industries under the financial sector, then we can pick out some potential candidates from that. That are
that we're looking for a break out of a resistance level. Mm hmm. Again Public. Watch this right here. How do you pull the public losses, Discomfort, Click on sector and then come down here. We have public and who you have right here. S and P S and P
500 secretary this season. We're going to go over to another one, which is sectors and industries . This we're going to be looking a little bit further down here. Gonna collapse this then. Open up this one. Right here. I'm going to eat too. It looks like
I already sorted it. It's like a sorted from highest down to the lowest. By the way. You can sort of this by clicking on this little arrows right here. I got it so sorted by lowest to the highest. Let's find our forties
, which is the financial area. Just go down here to find our forties. 22 years of forties right there. Okay There's our 40 . So 40 spill from here all the way down to here. I'm just gonna come over here and just what we'll do is we'll start off by looking at the at the strongest percentage move. With the outside today, looking at them while it looks like our strongest percentage move is in investing, banking and brokerage Oh, Um. Let's pull the chart for
this. Then there's investing banking and brokerage. You can see we have the breakout right here that resistance level. Nice strong breakout right there as far as the next target of You have that resistance level there . We can also measure heights right here. This sideways
channel. Condo rectangle tool like so. Duplicate that. Bring it up here. Like so and again.
It's taken us very, very close to this target up here to the upside. Well this is investment banking. Now we do is we can go under the hood and investment banking and look for some individual stocks and to do that , It's kind of it's kind of it's kind of a nice functionality. On the sacred swim platform. You can't you can actually pull up any watch list you want and then one from that. Watch this. You
can go in and you can go in and say, Hey, I want to look at things from from an industry perspective. This watch is that I have right here. Looks like I came in here before A session today was already looking at this, but let me just sort of a random watch this right here.
Let's let's just go with, uh oh. About Tdameritrade dividend stocks. We just have this for random. Watch this to your right . Rosa Coleman. Here. I have what? I have market cap right here. When you start When you start drilling down here a little bit. You'll get a lot of really, really small cap stocks and usually with regards to particularly options trading.
You want to want to look at the larger capped individuals. Again Any watches are used quick on right here and come down here and I can say by industry And then I come over here and I say OK, what industry do I want to go with? Well, I want to go into financials. Under financials. I want to go into Investment banking. I believe this would have Through. Let's see we've got here. It is right there. Investment banking and brokerage . Okay So I have this watch to get more members right here. I
haven't sorted by markets absolute. Here's the largest market cap one right here. Which is M s. It looks like that's Morgan Stanley's. Let's go ahead
and pull up Morgan Stanley as the largest market cap right there. You can see on Morgan Stanley that we are breaking out of this resistance level. Right here. And we also have an ascending trained overseas going on here as well. That's a nice
cleaner. Sending triangle to the upside. And what is the target on an ascending triangle? Well, the target on city Triangle If you want to go to the point on the ascending triangle where we have hit hit at the top and it hit at the bottom. But we could come. We could come down here to be a little bit more conservative. Come here because here's a hit on the bottom hit on the top. Let's play a little
bit more conservatively. This is Yeah. You say Wait a minute, Ken . This is a hit on top. This is actually just a breakdown of that level right here. This is
the bottom. This is good on the top measure from there to do that Come over here and Rectangle like so. Going to duplicate that and let's bring it up here. Create a target like
So. Investors want to possibly just second gonna go. I'm gonna take a gander over the chat when I appreciate your being here to address your questions always does a great job. There may be a question over there that I may be able to answer by use of the platform. Departments have the availability that so let me just check. Come over here. Take a peek here. There is a question I
can help out with the platform right here. Okay Thanks. Thanks PJ. Appreciate you doing that survey is greatly appreciated.
Lori and Bow and Saul and everybody else. Looks like we're doing good. So far. That's fantastic. By the way again, Uh , just just just just a little bit of encouragement. If you can take this moment and open up the survey now. So the survey is
available to you. Following our session here today. If you could complete that survey that is always greatly appreciated. I know that when those surveys come in, I am notified of those, and I was like to go in and redeployments and see how we're doing on things again. It's
really appreciated even if you even if you don't surveys before For me or the other coaches. It's always appreciated. You can do those on these individual sessions as well. Okay well, so what have we got here vessels with regards to potential trading strategy. Well one thing we can do is we can simply buy the stock instead of stop losses. Some point below the support level right here. Maybe
give it a little bit of room. And in doing and then buying the stock we could possibly look to get an alert. When we come up here and we hit this resistance levels a potential point in time to possibly exit the stock.
We're looking to do a swing pattern trade or if we're looking to just do a trend tray To say, Hey, you know what if we breaking above here, coming up here on, Okay, just staying in stock. As long as we come up here and do something like this. I'm going to risk using my drawing tool here. Challenge at
this point tool. Sure Oh, let's just hope it doesn't It doesn't It doesn't. It doesn't cause us grief. But with this breakout
right here, then you can come up here. Maybe we hit our resistance level. Hold back. Come up with a higher low make a higher high as we come up and address this resistance level back here and come up here to address this resistance level back here as well. We have a choice. We want to buy the stock
treated as a trend trade. We can treat it this this week trade if we treat it as a swing trade than right here when we come up and approached that resistance level right there, That would be a potential exit point right there. From a from a track from a stock trading perspective.
From an option trading perspective. We identify this area right here, support And move from an option change perspective. A lot of folks who look look at this as a target right here. Production trade perspective, we could attempt to come down here and do a short vertical. Below the support level right here. We are quite a ways away from us. I'm not sure
what kind of return with you as far away from another thing we can do is we could do a long call. If we do a long call vertical coming in here, purchasing the at the money call and then selling a call up with this resistance level right here. We do is we do have several different choices their investors now let's just see. We can Successfully. Move away from going tools. It looks like we've
done it. Okay? Let me just let me just let me just throw this out to all of you. Here We, We have time here to put on a trade here. Paper trade just if you if
you could just chat in the window chat in Stock or chat in auction. If you like us to do a sample stock trade here, I'm happy to do that. If you like us to do a simple option trade happy to do that. I'll give you just a moment here to respond. And voice your pleasure on that stock option. Come over here and
take a peek in the chat window is usually a little bit of a delay between the time I give a question or have a request exactly. Show up in the chat window. Let me go ahead and collapsed. This right here. While I'm waiting for some feedback there. Let's take a
look at the option chain here for Morgan Stanley and see what it looks like as far as the quantity for options because we did sort based on Market capitalist like this have absolutely large market cap that we tend to lend itself well. With regards to with regards to liquidity likes folks over there . I'm seeing a lot of options over there. Okay Okay, so the same, So let's so we've narrowed down the options. We want to go for an aggressive Long cooperative call, or do we want to go for a more conservative short put vertical. The short put vertical is a high probability trade. The long call Vertical is a low probability trade. Along cover to call,
however, will typically give us a higher return on risk that the shortcut vertical will. It's not like you do is follow that option up with with ill. C V for long call vertical or S P for short foot vertical. That's the direction will go, okay? I'm gonna give you this just a moment to give us your vote there on short. You say short,
vertical short but beautiful where you could say long call vertical or just longer. Whatever you'd like to do give you a moment to send that in. I'm gonna come over here and take a peek at the option chain waiting for something. Thoughts on that. Why don't we start off here at? Um 29 days? Right here ? Yeah I'm gonna come down here and see what we got here. There's a fair amount of slippy chair, probably because the volatility we currently have, we can still put something together. That's 29 about makes
it look at our 22 days. See if that the standard timeframe maybe doesn't have quite as much slippage. Nearly down to the closer to the money right here.
So we've got a little bit better. That's actually quite a bit better. Perhaps I was just too far out on this one. Too deep in the money to see. That actually isn't isn't isn't too bad. Actually we could go through 22 or 29 looking over there, folks. It looks like
we've got long calls short, vertical long call. Short put vertical sort put I'm sure it looks like primarily have short but political. Tell you what. We'll see if we can squeeze both of them in here, okay? Okay, So what would like to do here then is we want to get protected protection here from the 80 to 93 Price point Put critical. We
want to sell our short put admirable Oh, 80 to 93. There were quite a ways away from that. Your premiums are not possibly going to be as attractive as they could be as if we were just breaking above that, But let's see what we can do here. So we'll come up here
to the trade page then. Yeah we wanted to be below the 83 levels That's gonna put us right up here at 82. I'm going to get a few more strike prices here. There's an 82 year and why don't we go on? Let's let's let's see what it looks like at at $1 wide. We may want to go to dollars, like Let's see what looks like a $1 white on the 82.
New right click on the bid price right here. I'm gonna choose cell. And I'm just going to go vertical like this. Okay? Actually If we can get a $25 credit that's not too bad. $13
credit would not work for us. Uy don't we go? Um $2 wide? 82 80 and see what that does for us that picks it up a little bit here. 82 80. That's just just about doubled it and it gave us a higher natural right here. Why don't we We'll do is we'll stay here with the 80 to 80. We're looking to get a credit somewhere the neighborhood of 50 cents, So let's look at our Let's look at our probability of success. And then let's look at
our return on risk on this. So we're selling the 80 right here. And so the probably success on here is going to be the opposite of the delta for the 80 Delta for the 80 is 26. So you take one minus 10.26 that means are
probably success on his trade will be 74% So we have a theoretical 74. Probability of success on this trade. What is our return on risk? Not to calculate that come over here and. Every calculator, some of
you some of your probably already calculated this We take the distance between the strike price is right here and we subtract our credit to get our potential Max loss. We're gonna go ahead and use 50 cents will try to get filled at 50. In fact, I'm going to come down a little bit of I'm gonna come down a little bit below that. We
have some accurate numbers from the scene plays out. I'm going to take this down to 48 cents, but we'll try to get filled with 50 or 51. Let's say we have to settle for 48 where were $2 wide? Subtract our credit of 48. That means they're theoretical. Maximum loss for investors is $152 so risking $152 in an effort to make $48. Why would we
do that? Why would you? Why would we risk so much to make so little The reason for that is it's a high probability trade we have about a 74 74% probability of success. The stock doesn't have to go anywhere in order for us to be successful. It can go up and then we can be successfully can go down and we can be successful. The ghost
down too far, though, that's where we run into some difficulty. So what are we looking at? Then? We have 100 and 52 is our max lost to get our return on risk. We take our 48 right here. We divide that by R. 152. And that gives us our return on risk, which is 31. So
we're looking at before transaction costs and keep in mind. There are two sets of transaction cost going in coming out of this. But before transaction costs, we have a 31% return. Over 29 days, probably successful about 74% If we're okay with that, then we go ahead with the trade. If we're not
okay with it, then, of course we would pass on the trade. Well with $152 is our risk. Let's play. The part of the investment is looking at being okay with $2000 of risk. Take 2000 Divide that by 1 52. That means we can do 13 of these. I don't like to
do 13. I'm superstitious, so we'll do 12. There we go. We've got 12 of them, and I'm gonna I'm gonna keep it at 48. This This is fluctuating around what's waiting around between 48 49 50. I'm gonna hold it at 48
because that's that's what we did our numbers at and if we get 49 s gonna be better We want to get at least 48 here. Do we confirm and send here? Yeah I want to send that into my short verticals class. Teachers teacher session on short vertical will tell you what I'll do that I'll go ahead and put this in. As a short vertical and I'll make it part of my short verticals class. If you want to join me from my short verticals class on actually tomorrow, Um Thursday, actually, no, actually my short verticals classes on Wednesday. You can join me next
Wednesday. If this gets built and we can review it, we'll go ahead and click on Send here. It's in there and we actually got filled at 49 so great, so we have probably have that trade in their investors. So Um, let's
swing back over here. What you want things I'd like to encourage all of you do a couple of things. Is basically is basically take Take Take a look at the process we use here today. You may have to go back and look at the archive because we did cover a lot of different different tools We have available to us here on the Englishman. But take this process that we used, pick out a stock of your choice and go ahead and do a paper trade on you can do the stock short vertical even longer to put this kind of go through this process.
Of looking at the market, looking at the technical analysis and the targets related to the technical analysis of the support and resistance related technical analysis and use that with regards to potential trade that you're looking at doing Alrighty. Well how we doing on time? Here? It looks like we're doing pretty good on time. Do we have time to do a long a long vertical here? All right. Well, let's take a peek here. Looks like we got a little bit of time. But if we want to do a long vertical That that was kind of the second choice Well, We can look at this movement right here from the bottom up here.
I'm actually gonna get rid of this rip tangle here because we don't need it. I'm just going to measure this move right here. Just like this. That's a recent move in the stock from the bottom of the channel to talk about the reason I wanted to pick this one is to get something that we approach this target up here. I'm going to take that movement right there, and I'm going to duplicate that. I'm gonna set it and our breakout point right here. And
this does a couple of things. It gives us a. It gives us a target. It gives us a target with regards to price for me now , Mr Guards to target of price, But we're going to stay with the rectangle right here. But with
this does by using this movement, this gives us a timeframe. To use I'm actually I'm going to give myself a little bit more time I'm going to come out to about here. Let's make this a different color, just differentiated. How about a
green? How about pink? Let's go with pink. There's a paint, okay? But this gives the timeframe so you so with regards to the long vertical would do is would buy a clone would buy a long call at the money when we sell a short call up around our target price right here. ANDFOREST from a time perspective. We're looking at getting out here at about about the sixth of Jim Come in here or trade page, then look at our expirations. We have here. The
expiration. We want to be out to June the sixth of jeans. We come out here to this 15 day when here, which is June 10th that would give us a timeframe. One
double check. Our target up there is an 87 84. We're going to sell problem. I think it will probably probably going to sell a 90 call. Come down here and we are right here. We're going to
be buying out the money, which is going to be the 85. Come out here. We're going to sell the 90. You know, investors that
Delta is giving us a theoretical probability The price will be at that point on the expiration day. So what's our probably success on this trade? It's going to be. It's going to be actually the delta that 90 which is 18% We have an 18% probability that maxing out our gain on this. What does that
tell us? Before probability is low like this, then we want we want a nice fat return on risk, right if we're going to engage in something that has that lower probability might have a nice fat return on risk as a result of doing this trade Well, let's see what we can get here with grocery Turn on risk, so that 1234 We got. Let me just double check that again. You know what ? We can actually go with the 88 . We don't have to go out to a 1988 87 84. So if we go with an 88, that's going to give us a probability of 30% I feel better with the probability of 30% versus probability. 18. Let's do
that. And that's that. That would be the appropriate one. Anyway At that, 88 we have a 30% probability of success on the trade. As far as making our MAX game. How far away is that? From the anti money What's going to be 123 strike prices sort of bring us up. We're here to the
ask Price of the of the money the 85 to write clinic. Will come in here will choose by will go deep and wide. One month three strikes. Vertical and there it is right there. 85 88. It's a 1 33 debit. Now how do we
calculate our return on risk and our max loss on this one? Well again. We calculate these numbers were not including transaction costs. Keep in mind on these verticals. There's two transaction two sets of transaction gospel in in and also possibly coming out.
AURAMEX gain on this or calculations a little bit different. Calculation now is to calculate our maximum gain. We take the distance between a strike prices. Which is $3, right? It's going to be 300 bucks right there. And then we subtract from that the devil that we pay. Which is our max
loss or Debra right here. Theorem. Quebec's losses are devotees from that 1 34. This
gives us her maximum gain, which is 166. So I theoretical Max gain. Is 1 66 or theoretical Max losses 1 33. If we are successful on this trade, what's going to be all return on risk? We take our Max game here. Provided by our max loss. At 1
33. Now we're looking at a 124% return. So this we're looking at 124% return with the property success of 30. Let's play the part of the investor this little bit squeamish on this with the progressive probabilities and willing to risk $500 to go. $500 right here would divide that by theoretical Max last year. You know what? Actually probably going to have to come up here to about 1 35. Many use 1 35. That
gives us a That means we can do three contracts. Also with 1 35 are return is going to be a little bit lower than what we were talking about earlier. We'll try to get filled with the mid here, but I calculated I usually come up little bit higher. Looks like we were going to do we're going to do. Three of these their rights with 3123. Of those four. Must be 3-1. Yeah
This is not a short vertical. I'm going to put this in our holding center right there. You know, Go ahead and send that one A while. Hi, folks. So now we have a longer tickle. All right. You know what I think? I'm not sure. But I think, um Next week
. I believe I've substituting for someone doing a long vertical class on this very day . So hey, if it's in there, I'll go ahead and take an opportunity to review this long work with regards to part of that class. Okay investors. Well let's go ahead and wrap things up here then, for today already So what we want to do here today? Well we want to review the market highlights. We wanted to discuss technical price patterns targets related to demonstrate using the paperMoney platform. Using technical targets on to think or swim platform, like all of you to do is just basically do the same thing. We did identify
potential candidates and demonstrate your ability to enter paper trade using those targets on the thinker swim platform. Again everybody a big thing to barter for being over there in the chat window. Barb always does a great job also encourage you to catch Barb session later on today at three P.m. Eastern time that's going to be on portfolio management basics. That's at three PM support will be there for you on that one. And then we have some other sessions coming up here as well. Getting started. Type T d
a getting started with, think or swim. I'm actually teaching this one here at five o'clock trying for that one as well. And just remind her you can follow Barbara myself on Twitter. I'm at Krose. He underscored D A barber's that far be at BArmstrong Underscore T D a Molesters again just to remind you that our content is intended for educational informational purposes, only. It's not
investment advice or recommendation of any security. Strategy or account type. Everybody Thanks again for joining us here day, Um one other one other suggestion in the lower right hand corner of your screen. Click on that subscribe button that will help you to become aware of the latest and the greatest coming out here from Tdameritrade on the Trader Talks channel, So don't get through that as well. Hope you have a great afternoon A wonderful evening. At a fantastic rest of your week.
Kids related everybody Thanks again and we'll see you later.
2022-05-29 04:16
