Results of Past Paper Trades Examined | Technically Speaking: Trading Stocks & Options
[Music] [Music] good afternoon everyone welcome to our webcast on technically speaking trading stocks and options i'm connie hill i'm happy that you would join me here today you know in the last few weeks we've been experimenting with the different types of trades different types of verticals is really what we've been focusing on and i'm going to raise the question to you today is one better than another we're going to look at some of our results we're going to see which ones may have fared the best and done the best for us but i want you to be thinking about that for yourself is one particular vertical type preferred to another one i don't know we'll see as we get get into it talk to you talk about it we've got to just say a quick hello to chuck and wayne sandeep colonel tm happy that you're here and we have also barb armstrong in the chat i love it when barb's here she's very helpful very knowledgeable she helps me fill those questions that maybe i can't get to or that might be easier for her to get to and so as you have those questions chat those in if you're listening to this on the recorded webcast just know that you're welcome to join us anytime but if you have questions go ahead put those in the the comments below with the youtube and i'll get back to those questions as well just as quickly as i can i am on twitter my handle is at chill underscore tda barb is on twitter as well you'll want to follow her at b armstrong underscore tda we post educational content throughout the day things that maybe would help you as a a new trader or even an experienced trader so don't miss out on those little tidbits that you could easily have access to um some of you might not be big social media people that's just fine but that is a way that they allow us to communicate with you and so i would hate for you to miss out on it well what we talk about today is intended for educational and informational purposes only it shouldn't be considered a recommendation of any security strategy or account type options are not suitable to all investors as the special risk inherent option trading may expose investors to potentially rapid and substantial losses while this webcast discusses technical analysis other approaches including fundamental analysis may assert very different views past performance of any security or strategy does not guarantee future results are success i'll invest involves risk including the risk of loss and uh if we talk about probabilities keep in mind that they are theoretical in nature and not guaranteed or and do not reflect any degree of certainty of an event occurring all right lots of important information there now as far as our agenda today it's going to be pretty similar to something we've been doing in the past a little bit here brief a brief market posture see what's going on with the markets not spend too much time there you're probably well versed on that want to review our open positions and in part of doing that i do want to do some comparing of the different strategies that we have been doing and of course i always like to put on some new example trades here as well now let's see here i want to show you something let's go to the full camera view you know when we're talking about which strategies work the best we've been doing a lot of credit spreads and debit spreads and it's kind of in some ways might be similar to a dilemma that i have myself you know i had my birthday last year and one of my sisters bless her heart thought i needed 10 pairs of cat socks and so you know i could have this dilemma frequently about well are the cat socks with the individual toe pockets are they going to be the best ones for me or are my little cat socks here with the little cat peeking up across the toe maybe is that going to be better now they both probably are going to keep my feet warm but which one is best we're going to try to figure that out today not so much of my socks but in the trays that we're going to examine well let's jump over to thinkorswim and i am following a suggestion that sandeep gave me in the results of a survey recently he mentioned and i really appreciated this sandeep he mentioned that for him personally that he may have a little bit of color blindness and so typically i have my bullish candles filled in green right usually i have solid greens and solid rats but he said for his eyes sometimes it makes it a little bit harder to figure out which one is really bullish and bearish because of that color differentiation now you guys just know you can color your candles whatever you want so if you do have that problem pick different colors that don't confuse you but for our purposes today we're going to try this out doing some open candles for the bullish candles and uh you guys gave me some feedback too if that's something that helps you as well well we've got our spx up we've been having some wild rides in the market we've been having some really big moves this is what we've been having in the market uh we've uh we're currently down we were up big today then we were down big then we were up a little bit we're currently down about 29 points on the spx that's 0.76 percent that's pretty decent and we can see you know it looked like the spx was hovering around a support level for several days and then here recently it's just broken through it what are we seeing here on today's candle what kind of a candle would you call this so far you know a candle isn't really a candle till we hit the close and then we see what it really turns out to be but it's looking a little bit like a doji and a doji is where the opening price and the closing price are very similar okay so that there's hardly any body there to work with opening price and closing price or current price are about the same now the one thing i like to look at when i'm looking at candles like that is i like to look at how long the shadows of the wicks are if they're kind of long that gives us the idea that the price has been swinging around a little bit and maybe the index or the stock whatever the chart you're looking at is a little bit more volatile and so this is kind of a similar look that we might see in a lot of stocks here today where they were initially they ran up they looked like they were going well within the body of yesterday's candle at which point earlier today they look like a piercing line but right now looking more like that doji let's take a look at the dow jones dji and similar thing here too i lost my outlines for my support and resistance levels not sure where those went in any case market dropped down it tried to rally and it was up here pretty high but now it's just fading so now we're seeing the dow down about 300 points uh tm says the russell 2000 is at the 50 percent fib line since the march 2020 low we can take a look at that let's look at the nasdaq first then we'll look we'll jump over to the russell 2000 which has definitely been the weakest of all the indexes so on the nasdaq again kind of our drilled in version here we can see it's not really a doji that we're seeing but we do see a long shadow here at one point this bullish candle was well within the body of yesterday's bearish candle but now what it's fading as well it's down about point seven percent we'll see if it fades even more if it fades even more and gets into kind of a doji or a little spinning top looking formation it'll look more similar to what's going on with the spx now on the russell 2000 yes it definitely has been our weakest index and uh i'm gonna just do our fibonacci here real quickly from these dimensions or these date time date frames that tm put in um so you said it's close to a 50 percent retracement which is kind of right smack in the middle of that uh fibonacci since the march 2020 lows okay we're going to need a little bit more chart here let's find our march 2020 lows we're gonna have to get a little bit longer range chart let's come out here three years and it's okay if it's a weekly chart that's just fine uh our march let's go back to march here's our 2020. here we're here in january so here are our march lows here now i'm going to take it from that very low point up to this high point here and let's see what it looks like so i'm going to go i'm going to eyeball this i'm going to try to get it as close as i can except i forgot to click my fibonacci all right we've got our fibonacci i'm going to go to the low point i'm going to run this up we're going to go to the high point as close as i can get it i'm going to release and you can see what he's talking about here here's the 50 retracement level and so the market from that very low point yeah it's pulled back about 50 percent uh even though technically 50 is not a fibonacci number it is a very common retracement point and so maybe even look at a little bit longer range that can give us a little bit of context there as well appreciate that tm crazy foxy says in the 38.2 level for the spx fingers crossed okay we'll see if we really get a bounce there or not now a next point on our agenda is going back and looking at some of our trades and i really think this is an important thing for us to do so that you're seeing the whole trade because oftentimes it's easy to get in but it's harder to manage it's harder to make decisions about what should i do with this trade now that i'm in it hopefully had a game plan at the beginning but sometimes things get a little uh market goes a little bit different the stock was a little bit different than what you expected and so it's helpful to follow up on that now in this class we talk about both stock trading and option trading and i'll try to make sure there's something here for everybody something for the stock traders something here for the option traders all right i did notice just barely well actually let me go back and answer steve's question here says how do you get the drawing toolbar added to the top yeah i have a bar here that i really like using i got i'm a habit person and i've gotten habit of just using it it's not the only way you can get a drying tool up right you can come over here to drawings come down to drawing tools pick off of here or you can also go to your chart and just click in your mouse button okay if i click in my mouse button it gives me the choices i can pick it off there saves you one click but you know one click is one click i'm going to show you something real quick we won't do the whole toolbar but if you go to your chart settings you come down here we're on the general tab come over here to the bottom right and where it says my tools yours is probably set to off because that's the default i like to have mine on each chart so if i have multiple charts i still have the drawing tools on each chart so i like to have it there so you turn that on and it'll come up with a couple that you can it has like three or four in here and so you can go change them out you'd come over here to the gear that's on the same row as now that toolbar click on it it puts this little blue background and then that lets you know okay it's going to allow me to personalize it you can put your favorite drawing tools and or studies stats and or styles very uh lets you do a lot of things you could put in there you pick your seven favorites and then you've got it um [Music] okay this is what i was going to say i noticed just now they've posted a survey in the chat and we'd like to get your feedback from time to time i think this week might be a good feedback week because i've seen several of those posted out there now some of you have seen this before and you've filled it out and we so appreciate when you do that for us some of you haven't seen the survey before it's really short it doesn't take that much time uh you click on it you fill in the radio button up for three questions you just go pop pop pop whatever your fillings are on a scale of one to ten and then there's two places for you to put in comments and i also encourage you if there's something you want to communicate with me to put it in there as well and that's exactly what sandeep did saying hey could you change your candles so i can see which ones are bullish and which ones are better or bearish so i can make that out a little bit better so feel free to do that i'd click on the survey link right now but just hold it off in the background we're not really done yet and i'll remind you at the end too if uh to give you an opportunity to fill that out for me all right next up these trays that we've been working on let's go take a look at some of them i'm gonna go over to the monitor tab here first and last week we put on a trade that worked out well we put on several trades but the one i want to highlight here was on amazon and i'm going to go into my account statement and we're going to pull up amazon here make sure when you're looking at your account statement that you have a particular account selected versus say the total you want to make sure that you have that because otherwise it won't bring up this detail for you so i've got it selected on my margin account here i've put in amazon and i'm going to pull up the trade history here now last week was the fifth cinco de mayo and we put in a debit spread and a credit spread in our class in our debit spread uh we we did a uh 20 point wide spread because those are the strike prices how they worked out it's kind of an expensive stock but if you want to participate in the move spreads is a great way that you can do that so we put in a long put vertical it cost us 8.65 and our max potential gain on that was going to be 20 minus 8.65 so that leaves us with what um 11 35 of a potential gain so on on that uh what happened the very next day it hit our target if you believe this uh this was these are on pretty short dated options the ones that expire next week so they're going to be very sensitive to stock movement okay it it gave us our i think we put in about an 85 percent max gain to go buy it back so the very next day what did it do it sold us out for 19.25
and i wanted to see what the the percent gain was on this and so some of you may be familiar with running the numbers some of you this is a little bit more new for you and so i want to walk through that process we'll use our calculator here on the screen so you can see it but like i said we had uh a 1925 was it ultimately what we received but we need to figure out what our gain is so we're going to take that 19.25 and subtract our cost basis there of 865 should call it cost basis but our net debit of it okay gave us a profit of 10 and 60 cents we divide that by what we paid for it 865 and we run those numbers through here so we have 1060 i've got my decimal 1060 divided by 8.65 that's going to give us a return of about 122 percent whoa okay uh let me put in there if you're trying to type these numbers down uh 685 122 percent that's a pretty decent game pretty quick move on that one uh it's helpful if you put those orders in when you place your initial order so the if it hurry and goes there it captures it for you let's look at what the chart looked like if we change this up to amazon and let's go to say just a three minute three month chart here so we can see the details this is when we got in on the 5th of may boom uh it kept dropping throughout the day it continued to drop here got us out that very next day fairly early in the morning so pretty much uh it was a quick turnaround trade now is that better than i expected absolutely it was better than i expected it went a lot more quickly than i thought but we got the desired outcome uh and if it wasn't there to sit there and watch it you know fortunately it kept going down and so yes it probably would maybe we would have saw it later but just having that automatic order in there locked it in for us now what we also did let's come back to our monitor tab we did a little credit spread on it we did a short call vertical okay the 2460 the 2480 strike prices so again 20 wide we had a credit of 610 on it and it hasn't gone off yet in fact if we go to uh activity and positions we pull up our working orders um i don't see it in there something must have happened to it we better get an order in there all right so we very well may be in a position where we have a a nice little profit on that as well so on our call spread uh it was 610 as a credit if we wanted to go by that back right now what is it 60 cents now guess what probably yesterday it was better than that because it was down a little bit lower i think amazon is it currently up yeah it's currently up 12 20 okay nonetheless it certainly is a pretty decent profit uh is it about 90 percent yeah i think it is pretty dang close to 90 is that a majority yes could we wait around for eight more days to lock in that gain we could i mean how likely is it to go back above 24.60 okay 2460s this green line here i like to draw those in on my chart so i know where the short leg was uh it's not that likely that it is going to go above it but what are we risking we are risking pretty much a 90 gain is what we're risking versus just locking it in right now now i have to tell you this in the olden days before commission struck uh structures changed he had a flat fee pot plus the per contract rate well the per contract rate went down and that flat fee altogether went away and so it makes it a lot more enticing for somebody to go back and say let's go buy back that obligation and let's go ahead and lock in the gains now let me see what questions we have there okay steve's asking a good question do you have a hundred shares did you have to own 100 shares to make the trade no we do not have to own any shares to make this trade it's a hedge trade we know what our max loss is we know what our max gain is and basically that hedge leg of a spread trade of a credit spread that's what allows you to not have to go and buy 100 shares of the stock that's one of the beauties of spreads is we can work with these expensive stocks take advantage of the price action whether it's going up or going down but not having to fork out a ton of capital so great question those of you that are new may have that question and steve's also wondering is it time for a bullish trade on amazon well let let's hold off on that part of the question let's go ahead and close out our credit spread let's go buy it back for peanuts right uh right now do not it's a good habit to get into to close out your orders when you've got a majority of the gain i've had situations on me that have gone from a max loss or i take that back day before the options were to expire where they were in a max gain situation and i thought there's no way it's going to make that kind of a move there's no way it's going to go clear back up there clear down there and sure enough news came out had the stock moved that direction and i went from a max gain on a trade to a max loss on the trade now you only have to do that one or two or maybe for some people three times till you get the message maybe it's not worth the risk to do that even though the probability is pretty high right now if we look at this short strike on amazon 2460 if we go to the trade tab here open up our may options let's come down here to two it's not quite on here yet let's have it show us 40 strikes or okay let's have it show us 50 strikes come down here here's our short leg there's a 95 probability that it would expire out of the money that's what this column is right here so the odds are pretty high that it would work our way but the other thing to think about is you know if we have more time more than eight days say we have 14 days you're tying up your capital in a different trade for just peanuts to gain versus moving it over maybe to a different trade a brand new trade where you have a lot more to gain for that two-week period of time all right so again we're going to go close that out i want you to see kind of all aspects of it for our purposes for our trade we're going to go buy that back for 65 cents that's the midpoint price we'll hope to get filled there we don't know for sure if we will but we'll send it off hopefully as this price of the stocks moving around we can do that uh so to answer steve's question about is it time now for a bullish trade on amazon one of the big things that i will really pay attention to as a trader is the trend and since the trend is bearish right now for anything we might do in this class no we're not going to do a bullish trade on it you might do an analysis you might come up with different information but for our purposes here yeah benny says well how do you close the whole credit spread i think you may have been typing that in benny just as i was doing it okay and so essentially it just came over here uh and said create closing order then it went ahead with it okay our lennar trade let's just take a quick look at it we just have on a little credit spread on this one we brought in 55 cents if we wanted to buy it back now it's 32 cents so we really are only up in the trade 45 uh could we let it work a little bit longer we could we're in a our five to ten day window where we might say let's think about why winding down these trades versus holding them through to expiration so on lennard here we got in here the stock had been dropping lennar's a home builder home builders have been struggling to have a hard time getting in in product and appliances and now interest rates going up so this one kind of doggled along sideways for all in fact notice it went up it even went above our short strike price for a little bit and then it dropped down now today looked like it was starting to potentially potentially reverse here okay we've got a shadow here the prices pull back and that has helped our position but some people might say you know look how quickly it if it got a little momentum if we got like a two or three day bounce in the market look how quickly it could go above that strike price so some people might say i'm gonna watch it closely we're not gonna be together for a week so i don't know that i want to hold on to it that long but i'm going to go ahead we're going to close this trade out we're going to say we would prefer a a partial gain to having a partial loss or max loss okay so we'll take our 45 not what we were shooting for again that process just come up here where it says vertical right mouse click create closing order the top one is always going to be the two legs together uh you could if you wanted to you could even come out here and say well let me see if they'll give me a little bit more for it or maybe they won't make me pay as much maybe i can take this down to 25 or 30 cents you can do that and see if you'll get filled on it but since we're not going to be together i'm going to follow best practice go ahead close it out and i will put a gtc on it i don't know if it's going to happen right now or not since we're going for the midpoint but we'll hit confirm and send notice there's going to be commissions here two legs so two times 65 yeah buck 30.
we can handle it i suppose in our account uh laxmi has an interesting question here about do you think amazon will come below 100 after the split now some of you may know amazon has a 20 for one stock split scheduled let's go back to amazon and i might not have enough room out here to see when the split is i think it's june 6th i could be off a little bit um on that and when it does a 20 for one split it kind of depends on without prices lakshmi yeah it might come down below 100 for the first time ever i don't think these guys have ever split their stock i could be wrong on that but i don't think they have had a split but the idea people split their stocks companies will split the stock if they have every inclination to think the stock's going to continue to ramp up okay now amazon's been in a pullback with the rest of the market here so yeah maybe it might go below 100 bucks there we'll have to see all right uh let's continue on here so we've taken care of amazon it kind of took care of itself we just put that spread on lennar love we've got going on here a trade that's down a little bit uh but i want you to see the whole trade here before we make a decision we have what we call a diagonal we have a longer dated september option still 127 days we were treating it like a stock okay and then we sold a call against it to help lower that net a debit that we were putting out for the stock and the idea with this is you try to sell a call against it if you bought a long call and eventually you bring in some credits you bring in more credits the next time you sell bring in more credits the next time you sell and hopefully it lowers your your out of pocket expense for the cost of that long option now we brought in 88 cents credit when we did it and right now we could go buy it back for 20 cents or for two cents no 20 yeah two cents we could buy it back for two to three cents uh we do have eight days there's probably a high probability it would expire out of the money if we go over here and look at love but i want you to look at the bigger picture here i want you to just tell me and i want you to chat this in should we still be in this trade uh let's give us a little bit let's go about six months here so we can kind of see a little bit more history with it we got in here on this day as it has was breaking through some resistance here uh that's southwest airlines some of the airlines really took off about that time what has it done since then well it pulled back it rallied again and then in the last week since we've been together it's definitely pulled back so you have to ask yourself the question do you still want to be in a long position here on love or not what do you think go ahead and chat into me for the uh for the airlines they're very much susceptible and tied to a lot the price of crude oil right jet fuel is their highest uh cost that's variable some airlines have some good strategies in place for that to help offset those higher costs southwest i believe actually i don't think it's them that i was thinking i think delta airlines has a particular strategy they work with that i'm not positive on southwest in any case do you still want to be in a stock that's made a lower high and here just recently made a lower low that's really saying short-term trend change isn't it now there's not a clear-cut answer here to some of you maybe you're thinking yeah summer the travel's picking up those airlines they're some of them well some of them are having a hard time staffing they've had to kind of reduce you know the number of flights okay so let me just see what some of you say here wayne says well yeah maybe stay in the trade get rid of that short may lag and maybe sell another one that's what roll out means basically it says extend this trade but we're going to swap out one of the options okay well steve or wayne you're the only one to express an opinion and i appreciate the fact that you did okay let's try it because that was the intent however i will say this if southwest gets in a situation where it's like for example makes another lower low you know some people if i if it gets past say this point here where it looks like it bounced off the the uh ascending support like here basically was a triangle that was forming if it busts down below there then there might not be a good reason to stay in but for now i'll play the i'm not going to say play the game because it's not really a game this is your you know your strategies are trying to get really good at them these could be at some point more of a real decision you have to make now i could see a scenario going either way for sure we need to buy this back for peanuts and let's go sell something else i like to decide what to sell before we actually get there so we're going to go to the trade tab and let's go out to the june monthlies okay about a little bit more than 30 days which is nice if we look at what kind of as a strike price we want to sell and see what kind of premium we can get in now the monthlies have a decent bid-ask spread lots of open interest okay uh our long leg let me go back there was a 50 call and so more likely than not where are we going to go here if we go out to 50 we probably don't need to go quite out that far that would turn it back into a calendar but we might stick with a 35 delta or a 22 delta maybe something in that range let's go ahead let's sell the 45. okay let's bring a little bit more premium we still have our coverage if we needed to exercise our long leg but let's go ahead bring in a buck 29 that'll help lower our net debit on that so we're going to come in here we're going to do we've got two contracts we're going to say create a rolling order and i'm going to pick the top one here don't worry that it doesn't automatically know what strike you want to get into okay so it's going to buy back our 5250 lag and we said we were going to do i should have written it down because i forgot already we said we were going to do the 35 delta one which is the 45 strike price all right so let's bring this back up so we're going to then sell the 45. let's come up here and it's going to give us a net credit pretty close to what that prices was on that option we're going to end up between the two strike prices buying back the one selling the new one about a 61 credit some of you might be at a place in your your trading understanding that you understand how diagonals work there might be some of you that are kind of like i'm not so sure okay i'm not so sure about this nonetheless follow along with it all right in this situation we're going to go ahead we're going to send it in and it goes to our trading stocks and options account now let me look at some of the questions here real quickly uh before i hit send because it might influence it as steve says i'm trying i'm still trying to get this embedded in my brain sometimes trades are referred to as credit debit spreads and other times they're called verticals any suggestions on how to get those down pat well why give it one name when we can call it several names right and i say that tongue-in-cheek essentially just know that there are two types of verticals there are verticals that you can create a bearish position with there are verticals you can create a bullish position with and so the ones that create a credit all right where you're selling the bigger leg that generates a value there that's bringing money into your account you just have to know they're called credit spreads and there's two varieties a call and a put short call vertical or a short put vertical and so as you stick in these classes steve it'll start to come easier to you maybe even just writing yourself a note uh might be helpful but you'll get it'll you'll catch on i have no doubt i'm not worried about you and it's not a silly question uh crazy says how do you get the price label on your chart lines let's go ahead and send this in i'll go back to that and then i really want to make sure we have time for a couple of trades here for example right here i think you're seeing the 4115 when you go into your line and you do edit properties it'll show you the value here and then what you do is you can say do not show or show the show it on the left on the right or do not show i'm sorry that i went to the wrong spot for you on that price this is for the extension sorry the left extension or the right extension so so i have mine saying show it on the left and so it does but that default is to say do not show that's how you just turn it on if you want to save it with all your lines then make sure you hit the save as default button okay next one let's take a look at united airlines we're going to look at another airlines here united airlines some of the airlines were doing really well it broke out of this triangle was running up there it was staying at this support level here but now it's not okay now it has dropped through we had three days of short-term support here on what's happening today it didn't get it got a little rally like some of the market but it's definitely it's on its way down again okay so then the question is which cat socks do you wear do you put on the one with the toes or do you put on the ones that just show the little cat we've seen here today we've had some profitable trades with our long verticals and our short verticals but the return is a little bit different now one thing i wanted to show you is this i'm going to collapse our calculator for a moment here and i want to bring up a watch list that uh is a dynamic watch list going back to my uh scan i've showed you before called early morning movers bearish if you haven't seen that scout i'll put a link in the description to it so you can see how to create that scan but i have these columns one month three months six months if we're looking stocks and we're looking for the ones that are really moving which many times option traders will do and and swing traders will do then you might find these columns helpful to see well which stocks are moving a lot so for example on here i was looking at earlier i was looking at city it's down eight percent this month and 31 over the last three months so fairly significant but some of these have a lot of momentum right now in the month that we're in so ual was on our list here uh not sure where it went but i think it's uh still on the list here united airlines and let's see if it highlighted it here for me oh it did not it must have dropped in any case it was on the list today and the number for the one month percent was like down 20 percent a month so i could see yeah there's a lot of momentum going on with this that could be one thing that helps you decide if there's a lot of movement on the stock maybe you go for the debit spread maybe and you set it up maybe a little bit more aggressively if it's not moving a lot but you like the technical setup of it or this is the strategy you know how to do maybe you only know how to do credit spreads then you choose to do the credit spread okay you again one is not better than the other it just is kind of how you set the trade up so in ual this is what we're going to look at we're going to go to the trade tab we're going to use the june contracts we don't need 50 anymore here let's just put this back to say like 25. and we are going to structure a long vertical and a short vertical on the long vertical we're going to start here with what i had determined before we started here was for cell the 41 or by the buy the 43 sell the 41 and when we do that if we say buy vertical and then we're going to change this strike price here to 41 then what does that mean means we want the stock essentially to be moving lower than 41 in order to start getting in that profitable range where we're getting to max profitability will it have to move a lot well right now it's a 41.30 so it does need to go down 30 cents earlier today it didn't need to move okay it actually had dropped below 41 when i was eyeing this trade uh but let's look at it now we would pay a buck five to earn 95 cents per contract now we can risk 750 per trade and so we're going to put on seven contracts here and we're going to put in the buy back order i'm going to assume best case scenario is that it's going to work out for us uh it might not but we're going to try it we're going to create an opposite order and we're going to say let's go buy it back when we get a majority of the trade now i'm going to lock this in all right we're going to need our calculator so we're going to say on a two dollar wide spread if we're paying a dollar eight then our max potential gain is going to be what 92 cents so let's type in our 92 cents in the calculator and let's suppose if we get let's go with 85 today if we get 85 of that would be happy we would want to go buy it back just like how it happened with some of our other trades where i think i did that wrong 0.92 times .85 i think i multiplied it by 0.15 all right there we go 78
let's take 78 plus original 1.08 all right 78 plus 1.08 gives us 186. we're going to say all right we want to buy it back or sell it rather when it gets to 186 the value of that spread we will be locking in a large majority of that gain okay that would put it in what i was calculating earlier although the numbers have shifted a little bit is in a range of about a 90 something percent gain that we're looking for doesn't mean we're going to get it okay but we're going to set this up we're going to make this good till cancelled we're going to send it off we're going to put it in our bucket of trading stocks and options now if you are not an option trader yet and some of you aren't and i realize that we don't teach a lot about shorting but if you wanted to and we're going to do this on this trade we could short the stock which means we would sell it and you think how do you sell something you don't own you borrow it from the broker and uh where does it say see right there these little letters etb right above my mouse it stands for easy to borrow which means lots of liquidity yes you could borrow the shares from the broker sell them until they get to a certain point where you think they're going to drop to and then you buy them back so on this let's go ahead we're going to hit the bid price we're just going to do a hundred shares here i do want you to know this is a very aggressive trait because of great news came out like price of oil dropping through through the floor right it dropping man that could pop the stock up and if it pops it up a lot it could be that you have to go buy it back for a really big amount okay so many people will put on although i'm going to have to structure this after the class they you'll they'll want to put on a target where they think it'll drop to and a stop loss okay because if the stock moves against you and starts having some momentum and going back up you you want to have that stop loss and pray in place i'll tell you next week where we put these where we put the target where we put the stop and why we're just running out of some time here today unfortunately we spent a lot of time on our our current trade analysis next week we're going to spend less time on that hopefully more time on our situation with our newer trades so we weren't able to buzz through our agenda items here and i want you to take away from this experiment now that you're getting acquainted with verticals it's not that the ones with the toes and the socks are the best or the ones without the toes for the individual pockets are the best as it is compare each one you don't have to know right now what your preference is and you might have a preference for different scenarios like i mentioned how much down particular stock is at that point in time some of you may have those think scripts to do those columns some of you might not after a class is over i'm going to post those out in my twitter account so you have access to them so that you can use them yourself well barb i appreciate you being here today and answering questions i appreciate all of you being here today and taking time to invest in yourself to learn how to trade the markets better it's education that will pay it forward for years and years i just need to remind you as we get out of here that what we talked about today was for educational purposes only it's not intended to be a recommendation of any security or strategy i want you to know james boyd is up next he's going to be talking about trading the trend so he'll love to see you there right at the top of the hour hey thanks everyone bye-bye [Music] you
2022-05-15 07:38
