Seeing the Market Faster | Technically Speaking: Trading the Trend

[Music] hello and welcome to technically speaking on trading the trend weeks to months my name is james boyd we welcome you here today alongside with me got my good friend michael fairborne in the chat as well fellow instructor he and i and also all of us instructors do post educational content on twitter we'd like to welcome sandy meddy david v j wrong george texas uh bill aka the monkeys uh juanita janet rk and many others now just real quick as we're getting started here today we'll talk as always we're talking about training the trend weeks to months i think in our discussion i think trading kind of looking at the short term trend is important in relationship to let's say trading the trend weeks to months as well so we're going to kind of emphasize that here today now as we're getting started want to give us a quick reminder that the content is intended for educational informational purposes only options if we talk about it which we will will not are not suitable for all investors special risk inherited trading options i also understand we will demonstrate the function of the platform we will be using actual symbols and when we also actually talk about for example the paid money platform that is for educational purposes only allows you to actually trade let's say a strategy uh to practice and also kind of just give you some just you know practice to kind of how does the platform work so make sure you're using that we always do and also remember remember when we talk about the option greeks know what those are sensitivity to so first off before we actually get started uh let's kind of just get the lay of the lane of what we're actually gonna cover here today number one is we're gonna take a look at uh pull that back up there we go so first off we're going to take a look at the markets in the sectors we're going to kind of talk about how today so far is is something different than we've seen in a while and we're going to kind of go through that you know thoroughly but we can do it quickly second thing we're going to talk about is we're going to bring up some management examples i have eight examples that we're gonna look through and we're gonna talk about the management of them now when i say eight we're gonna actually hit all eight i don't need i don't think we need to actually talk about them five minutes a piece but two to three minutes i think we could actually hit probably half of them just when we look at them and then also what we're going to do is we're going to look at some new examples of stocks and options so let's actually go ahead and actually go to it so i'm just going to go in no particular order i'm just going to take the dow first and if we actually look at the dow we have been in this kind of downward channel we talked about for example last tuesday saying hey could we actually start to get maybe a bullish macd divergence and that does not necessarily mean that for example the price will not make a lower low it did last thursday but the one thing to kind of note here in this case is the price whenever the macd gets up uh let's say if the manti is turning over time like here here here price was making lower lows the maxi actually started to stay above the zero line okay if it stays above the zero line it'd be green and those histogram bars are actually getting higher and higher which means it's putting pressure on resistance now what's interesting is it got above the diagonal resistance which was the channel and now it's [Music] uh when i did that i i looked and now jax is looking at the front door jax it's okay buddy okay just wanna make sure he doesn't bark so i won't do that again but the biggest actually thing is it broke diagonal and went to the horizontal okay now this is kind of a major area here if we start breaking above here here is also where that 30 period moving average is so if this actually dow can actually break about 326 96 327 96 excuse me get above the horizontal and the 30 that's something we haven't seen for a while okay and that would be kind of some good news now we also take a look at for example the s p the s p if we look and say is it up as much as maybe the dow is ah it's the same idea as far as getting above diagonal but it's not as close to the horizontal as the dow is currently so we'd actually say in kind of this order dow's leading the number two horse on the outside is the s p and if you actually look at the third horse on the outside is really the nasdaq now the nasdaq has been you know severely under pressure create a downward diagonal and finally poking our head above the area of resistance now i'm not going to say that for example all tech stocks are bad but you're it's going to be a struggle to find stocks in that in that index that really actually have an upward trend okay now when we actually take a look at the volatility okay i kind of feel like this volatility has been teasing us a little bit here it flirted with actually getting down below the 30 period moving average about a week ago that went up after that today we're trying to break that level again what you should know now is rising volatility is not your friend if you are a bullish investor okay so you want to see if you're a bullish investor you want to see the volatility decline okay we did actually say yesterday that when you actually take a look at the tnx we had seen that the rates had gone down somewhat or at least consolidated and that could actually be helpful for stocks now fast fire through the sectors oh my gosh it's like groundhog's day but i love that movie anyway so we'll talk about it uh energy to a brand new high that's what feels like groundhog's day we see basic materials if you look at base materials got above the 10 held the horizontal support and poked its head above the 30-day moving average some of the stocks in there we talked about one yesterday called nue being let's say a basic material steel stock and kind of trying to bounce off that support when you also look at let's say the healthcare area in general we talked about this kind of being maybe like a you got a low come back up middle of the w pull back down not as low as the previous low that's called a tilted up bottom look at the macd direction here okay price actually going macd going the opposite direction macd is staying above zero some stocks in that healthcare lily united healthcare anthem etc those are the ones that are bucking the trend right now we're gonna hit that in just a sec but when you also take a look at these other sectors like utilities uh we're gonna bring up two utility stocks duke and southern now that doesn't mean uh you know go look before i talk about them that means pay attention to what we're talking about and we'll bring up duke and southern in just a second but if you actually look at you utilities they've actually gotten above so when we actually look at these sectors in general what we really notice is there's better participation the area that was probably the most helpful here today was the discretionaries okay we saw dollar tree announce their earnings and what was feared was their earnings were gonna be as bad as super target or super target however you call it dollar tree comes out and says wait wait don't paint us with that same fat ugly brush we're dollar tree retinas and all of a sudden these investors are actually saying geez maybe we shouldn't have actually put dollar tree in the same bucket as target now i want to talk about costco okay and maybe is costco target is costco walmart we're gonna take a quick peek okay now when we actually also take a look at uh we talked about the indexes we've talked about the sectors let me know if you have any questions now vijay is asking the question about can the bear market rally we know that if we actually take a look at now this class is called trading the trend weeks to months so to not bring up a three-year weekly chart would be egregious okay because we're talking about trading long-term trends i don't want anybody to think here today may what's the date may 26th i don't want anyone to think that james is saying there's an intermediate upward trend now we're saying there's more of a shorter term upward move counter trend to what the trend has been lately so we we're still in the condition where the moving average cross down that's negative right but when you actually fall down like we did the number of weeks one two i think it was like seven weeks in a row this really being like a bear flag pole now if you get a bear flag the bear flag setup is not just the pull the flag is actually the where you go from a lower low to a lower high and so what we talked about last tuesday is can the market in the shorter term kind of get a counter trend rally now these rallies can be very helpful okay and i just want to show you this before we look at our uh management and our examples so like if we looked at yesterday it's it's helped this account was at a million dollars when we started out the year i mean it helps right so it's up it's down 1.9 percent year-to-date okay when you actually take a look at let's say the margin account you take a look at this and you say wow you know this margin account is up on a day like today it's up about four thousand dollars just since yesterday it's up about eight or nine thousand dollars just since where it was on the 22nd of may so these little moves off the bottom which i want to say this little move it wasn't quite a little move for the dow because that little move for the dow was really about 20 points or six percent and it's having a material impact on those balances now when we actually take a look at where the the margin account is beginning of the year it was at 125 okay and it's sitting at 123 300 it's down about three point three percent if i did that math right but down about three point three so this this counter trend move very helpful to kind of get these accounts back up now what i wanna do is i'm going to take a look at i'm going to kind of go out of order just real quick i'm going to kind of look at an example if you don't mind i'm going to choose an example such as uh i'm going to choose the example first off we're going to look at johnson and johnson now why are we bringing up johnson and johnson with what we talked about already why are we bringing up johnson johnson what sector do we actually look at that might say hey we might want to take a look at johnson johnson so first off when we actually look at johnson johnson when we talk about the trend it's actually one when you look at the trend it's actually stronger than many other stocks have been it's still about stock that's actually above kind of that two to three month horizontal support when you actually look at this we could actually kind of make the kind of point is this stock something where it had a flagpole and is this the flag okay now a lot of times when you look at this initially you might say oh but it's red candles it's not a potential setup well i wouldn't actually necessarily say that because when you get the stock to run up and flag back it ran up pulled back and now the pullback the red candles they're sitting right on the moving averages now there are some investors here that say james i like to maybe buy in on a dip near the moving averages meaning closer to support so let's say the investor said james i want to buy let's say here i don't want to wait for a bounce off support i don't want to wait for the stock to go back up i want to try to buy into a little weakness now how many of you like to buy into a red candle how many of you like to buy when you actually see the balance you want to see that confirmation so what i'm going to do in this case is we're going to kind of mark on this chart we're going to put a cursor right there at the diagonal level resistance we're going to put a cursor right at where the stock price is right now now if we actually take a look at this our example is we're going to try to buy the socket where it is currently but then what we're going to do is we're going to set we're going to do like a bracket order okay now what i'm going to do is i'm going to kind of speed it up a little bit if we actually said hey james i think the support is at 177.36 if the investor said to stop below 177.37 that's gonna be three if we did three percent below support that is in this case gonna be 172.04

all that is is just taking three percent below 177 okay not new data gtc for the stop day gtc for the target now when we actually see so 172 okay now when we actually see like kind of a flag like this let me reset this chart auto when i see a flag like this the idea is maybe could we use the fibonacci to kind of get what we call an extension target this is where the pull started this wow got to go the other way we're going to go from kind of the tops of the bodies of the candles down to that low where did this flagpole start so where we drew it from is at 100 if we're talking about a target price we actually might say 202 94. now this is not a short-term target if we're talking about a short-term target we actually might say 185.75 if we're talking about trading the trend that would actually be that that target's probably going to be deeper and let's kind of say we said we put it even at a price of let's say uh let's just go 202. we're just trying to get in the area of resistance okay now trading the trend that probably means that the investor actually has bigger or higher targets okay we don't know if it's going to get to the 202 number we don't know if it would be next week till next month the investors trying to trade the trend they're not trying to get in and out they're trying to own a stock position half the stock appreciating value maybe even pick up a dividend going over a period of let's say weeks to months which is the name of this class try to get a decent move greater than 10 percent now if if the investor said james are going to buy those shares confirm and send remember how the stock works if it goes to that price or less sell the stock it's not at that price it could be filled at that price or less on the stop okay now not a commission but there is the capital that's involved so this type of entry is really based upon the stock really kind of pulling back down to the support level potentially the moving average trying to buy into that drop of the price okay if the stock just ran up and made a higher high and then it pulls back the investor is trying to anticipate that if that stock actually pulls back and makes a higher low they buy into that little pullback a little short-term flat and they try to ride the push back up now what i want to actually do is let's kind of see if there's any questions now uh all tug says why can't that order entry b pop up well okay so if we said a pop-up you're saying james i don't like to buy into the pullback i want to see it push back up okay now what i'm gonna do is for that type of question let me see if we can't get an example of that okay so one of the stocks i mentioned we talked about utilities okay johnson and johnson phil's ding now if we look at the stock like like duke which is in utilities let me kind of draw the support level just real quick kind of get our feet underneath us old horizontal resistance okay check you had an old prior high right there you fell down to the old resistance new potential support and now investor says look i might consider on getting in but i want to see the stock maybe get above a certain price like where so let's see the investor said james i want this stock to go at or above let's say 113.75

what type of order is that well we know what it is it's a buy stop order we're going to right click on the graph go right back to buy custom oh we're going to go to uh in this case we'll just do with a stop not every trend written has to have a stop we're going to go with stop and now this order is going to say look don't buy this stock until we go to 113.75 that's not a limit order that's a buy stop order buy the stock if it gets to this price or higher data gtc and now we got the stop so if we actually go back we might say as a trend trader james i'm going to set that stop underneath the 107.61 price and set my stop 3 below there okay now the question was from all tug could we do a buy stop yeah uh so someone is doing a buy stop when they want to really see the stock push back up maybe they want to see the stock do what's called a close above the high of the low day or a breakout or they just want to see is that stock gonna actually close there not trade there close there okay so if the investor actually said i'm going to do a buy stop i want to see the stock push into the close or get above that price that's what that order is have a stop like we normally talk about at that price or less by the way where did that number come from 104 38 well it's just three percent below support that's all it is now james could the investor maybe take three percent below the moving average that is i like the idea but it just hasn't really been tested yet how do you know this line has been tested because we sat on it for about two to three weeks and held up above it okay now not every trend trade actually has to have not every trend trade actually has to have a target on it okay if we wanted to talk about the target we could but not every investor wants to have a target on something okay we're going to go confirm and send now what you're going to see is there's the kind of this trade this is a stock trade not a commission remember how the stock works if it's if it goes to that price or less it's going to sell the stock now send the order now what you're going to see is how come it's not filling well because the question was on a buy stop order buy it if it gets at or above really a certain price it's what it's really doing there okay now let's kind of go back to so we did two examples number one was and i want to go back to something just real quick let me know if you could actually still see me and hear me and everything like that i just want to go back to question from erica what is the difference between a stop order to buy versus a limit order with a higher price okay so if we do a buy limit it's it's it's really saying that price or less okay so if you ever go into the you know you have you buy something online uh well actually let's say you went to a car dealership you tell them look i know you guys want 19 nine i am willing to give 19 000. that is a buy limit order a buy stop order is when the investor says look i don't want to get in until the price goes higher and we said and we'll repeat this maybe the the condition to get in is based upon is the stocking to break resistance or is the stock going to do an example of close above the high of the low date so there's a condition to get in maybe that condition is not being met yet and that's why they do a buy stop order so let me actually do this what we're going to do is we're actually going to go to uh kind of some quick management examples first off i want to actually take a look at the ira and remember what we said is our goal here today is we're going to fast fire through a couple positions one of them that i actually want to hit just real quick is i want to bring up uh just examples so in our classes we don't just talk about putting on new trades we talk about past trades and we track the portfolios over time because that's called transparency i like transparency i just buy tape just to see through it okay i like it now what you're going to see in this case is this is really a short put on pgr okay the only purpose of the 85 the 85 put was just downside protection we've hit that pretty hard here today okay so really in this type of trade the only thing that really matters is not what that long put is it really matters what's happening with the put that was sold okay so we could actually just say look if the protection ever becomes worth something that means the trend went in the wrong direction so if you take a look at this it's a cash secured put sold it and it's actually at 71 percent of the maximum gain tell me what to do now we might look at this and say gee 71 percent of the max gain 22 days left the only way you get the last 87 cents is you got to hold closer to expiration but the problem is in one hand the investor has 222 dollars in one hand and in the other hand there's only 87 more cents which is their premium remaining and they might say geez that seems like i'm risking a whole lot that i've so far made unrealized to try to make 87 cents or 87 the investor might say that doesn't taste very good maybe the investor might roll the position or exit so let's fast fire this if the investor said let's go to pgr and let's evaluate is there still an upward trend so what makes the differentiation between just exiting profit taking is if someone says i don't think there's still an upward trend matter of fact i don't want to be in the position they could just try to exit the position by buying it back if they said no james i'm actually still seeing there's an upward trend matter of fact the stock actually just made a short-term higher high i don't want to just get out i want to get in another one and try to ride that trend ah get it okay so let's play it back so we're going to go back to the monitor tab we're going to right click on that well by the way this is the june expiration right click on this create a rolling order now can the investor maybe go out to the july expiration you can't the investor in this case our example is going to be buying the june back and then evaluating what are those options maybe for the july time period okay well let's pull it up the first now by the way when we actually look at this is there an option for that when we actually take a look at the july options for pgr those are really wide okay 75 cents and there's actually an open interest of only six okay that does not look good so these are we're just going to say no thank you to those julys we're now going to go back and say well what are the june show we go back to the gyms and we say geez a little bit i think the only thing we might do is actually stick to the june options but maybe in this case just say we're going to stay to the junes but really kind of look to just go up in strike from 110 to the 115. the reason for that is the julys were really non-existent okay now this is not a lot of open interest but the spread 20 cents is more doable okay now i'm going to go ahead and confirm and send rolling that option gonna send the order and that's what it did there now the other one i want to bring up real quick before we look at another example is the exxon mobil okay sh cash secured point when we talk about riding trends do not think that it has to be only through stock it might be through the potential obligation or the obligation to buy their shares at a strike price but maybe the investor says look i i i want to buy the stock but i want to try to buy the stock at the strike price that the investor sold the thought about that is if that trend were to go up back back back gone the investor really only gets the premium received 251. now remember i want you to say it like this and i want you to say it with the southern accent you want to sell high okay practice that sell high and you want to buy low sell half and buy low so the reason why we want to sell high is that's what the investor gets to obligate themselves to actually buy the shares potentially at the strike from now to expiration the reason why they're trying to buy low is they're trying to buy low because they're trying to make the difference from here to here and that's why that 213 shows up the more they can buy it back low they make a bigger potential profit now if we actually go look at exxon tell me what you see about the trend should this be an example of just exiting that the trend is dead or should it might or could it be an example of james the trend is still intact roll now when i kind of think about rolling i think we're going bowling okay and i'm trying to get a steamrate which only happens if those if we play the kids lights or the little bumper the gutter bumpers okay that's it so if the investor said james on a stock like exxon i still see the trend going up well that investor instead of saying i'm just going to exit i don't see the trend going up that's exiting potentially if they say james i i have a large percentage of that max gain and the trend is going up still they might choose door b okay which is roll that put well let's look at it right click on that the 85 put we're now actually now by the way what percentage of the maximum gain does it have about 84 85 gonna now go to where it says create rolling order sell well sell what well it's buying back the option that is there now but let's go verify if we go out to let's say the july expiration are there is there any open interest on those and my goodness gracious we like things that have commas in them and if you take a look at this what you're gonna see is about a thousand nineteen hundred why does the investor like something maybe that has a higher open interest higher open interest probably a better spread this does not guarantee that when the investor exits that it's always going to have a tight bid-ask spread that's not true you have to see what that liquidity is at that point in time so if the investor says james i want to go out to the july expiration and they want to maybe sell the 92 and a half how do we do that going to go right to the 15 july check what strike 92 and a half and this is the language that you use as you're rolling out in time from june to july and you're rolling up on the stripe from 85 to 92 and a half so why was this chosen well that's the one that really has that delta between 30 to 40 and what you're going to notice in this case is we could also say is that an area of support is that where the investor thinks the stock can actually stay above that price level now if the investor says yeah i want to do that confirm and send now remember what the commission is it's buying back the one contract buying it back and then selling a new one so that's why the commission is really a dollar thirty okay now now robert actually says funny in this market may need kitty bumpers on it would that be a protective put i'm gonna show you robert a protected but in just in a moment okay now if the investor says okay i'm gonna do that send the order when they if if that trade were to fill okay let's go back down to positions uh we're gonna actually look at that so if we actually looked and said okay which one phil it's the 92 and a half put that's what just filled and it filled for two dollars and 80 cents and you don't see that on your screen because it's cut off but let me try to push this back up if i can oh it just doesn't like to do that but it did actually get filled we'll show it another way it got filled for 2.80

okay let me take a look at that yeah there it goes it got filled for two dollars and eighty cents okay now let's go back and let me see if there's any questions okay steve actually says why did you leave the buy on the pgr okay well so first thing if we actually go look at the pgr the long put okay it has 22 days remaining now if the investor actually has the long put still could that reduce the buying power on the position especially if we if we're talking about an ira everyone kind of put your head down yes and go up and down the answer is yes if this wasn't an ira still keeping that 85 put as long as these are the same expirations this is still protective in nature the risk is not down to zero the risk is down to 85. the key is are these the same expiration okay 17 june 17 june now other part of this is it's going to reduce your buying power the third part of this is well geez you know steve if we said bang we're going to hurry and sell this thing we would actually say sell what how much is there to really sell and so this is actually where we take the common sense 1010 class and we actually say geez i'm going to go in and sell and then we actually ask the question geez but what is there really to sell if there's only 12 cents and so the investors say i'm not going to get out of something that's only 12 cents it's gonna it's gonna cost me you know uh you know a commission to get out they might say this is already so close to zero already there's nothing really to sell if this ever became worth something that would be unbelievable okay unlikely but if it did it'd be great because well it could actually maybe get the premium back okay unlikely but there you go now speaking of someone actually says i'm married put or a protected put okay well let me kind of bring up an example how many of you when you actually maybe look to get into stocks you're a little nervous you don't trust the market okay you're thinking yeah but okay now and i think that's actually fair to say i think all of us we're always kind of a little nervous just to get in okay now i'm kind of like this when i have someone maybe come to my house and they're fixing something i don't know who they are i'm kind of a little nervous i kind of want to ask him a million questions okay because i really don't know can i really trust these people and i think a lot of times when people get into stocks it's the same way they maybe have limited trust okay the other part of this is the entry that's where the investor tends to have the most amount of risk they haven't had the stock go up at all they haven't had a dividend at all they haven't reduced the average price right it's just risk right at the beginning and they it just feels uncomfortable well let me kind of talk about how some ways you can try to get around that well we know that for example mo altria it's a stock that has a low and then a low who might say well james is kind of like double bottom line the middle of this is kind of like what we call that middle of the w and we'll actually see on the bottom something we've kind of been pointing out for about the last week and change about maybe some bullish matchy divergences on some stocks okay so here it is so let's say the investor said james i might want to consider entry but i don't want to risk the farm it makes sense i don't i don't want to risk the farm either so how do you control the risk how do you make it where the risk is maybe less so i want to kind of compare and contrast this let's say the investor who is a stock investor gets in and they say james i'm going to set my stop below 50 97. so let's do a little compare and contrast okay so someone gets in and says i'm gonna set a stop three percent below 50 79 that stop is survey says 49 26 and if we actually said okay what is that potential risk per share the risk per share is 5.43 okay from where that current price is right now down to where that stock price is now we know how stop works if it goes down to that price or less even for maybe a second three seconds five seconds etc they could get stomped out even though that stock comes back so that's kind of the risk of setting stops so let me kind of move this over but what's another way the investor might try to get in but define the risk well let's go take a look at the trade page now the interesting thing is if the investor says james i'm going to buy the stock but i have trust issues don't laugh at me okay i'm working through it okay fairborn probably knows he's probably thinking if you guys only knew so here we go gonna go ahead and actually click on the ask price okay gonna buy the shares step two gonna buy the protection that is not for infinite time it's gonna be the the protection for the next 22 days now why why would the what our example look at this well the first thing is when volatility drops in the market the vix the implied volatility on individual stocks tensions are off too they're they can be correlated and so that actually means that maybe the protection is going to be cheaper to buy so now what i want us to look at is let's run these numbers here okay and this is where we just want to be very good at saying okay if the investor buys the stock at 54.64 and maybe they buy the put that has a delta of 30 to 40.

okay if they buy the put okay at 53.50 that it that's going to be a right to sell so what would be the risk there so on the stock from 54.66 down to 53.50 that's going to be about a risk of a dollar 16. say yes if you're with me the investor buys the stock at 54.68

the investor buys a put at 53.50 which is the right to sell the stock risk is a dollar sixteen there it is now the r the right to sell the shares of the strike ain't free so you gotta add we're gonna add that dollar twelve back on top and that dollar twelve if you look at this you're gonna see what is the total risk okay total risk without total from now to expiration it's gonna be and 28 cents okay now we know people say things like yeah i'm logical you're logical really really because if we ran the numbers how logical are we really if we actually talked about someone who for example bought the stock and set the stop they're risking 543. if the person on the second example actually bought the stock and bought the put the risk is about what is it like 212-ish if the stock were to go down the one we actually said stop is at a greater risk of being stomped out and a higher max loss where the person who actually bought the put they don't have the same amount of risk now again sometimes what people say isn't what they really mean right right so we want to just kind of say is what we're saying really what we mean do we really want to take less risk for a certain period of time well we're actually going to go down and actually say we're going to click on that 53.50 click on the 109.

it's going to buy the shares in the stock buy the protected put for the next 22 days now what you're going to see is by the way percentage-wise a buck for 54 stock it's probably about a little bit more than two percent if my math is any good at all i'm coming it's gonna be about what percent it's it's two percent okay if someone buys the put it's two percent of the value of the current stock price that's not really that expensive okay now confirm and send notice there's actually a commission though okay there's a commission of 65 cents to buy the put and now what you notice is that the stock goes down to that strike price it doesn't mean that the trade is over it just means the investor still has the right to sell the shares of stock so when the vix is low it actually kind of gives an opportunity to do maybe or consider a lot of protective pulls or when the vix drops the investor might be actually looking for a number of actually positions where they say hey can i actually buy the stock where i'm a little uh i don't trust a lot and can i maybe buy a put too to make it where the investor in the short term might be risking less okay now steve actually says could you sell a higher target to offset the cost okay so so here's the deal if you sell let's say you said james i want to sell a call at let's say 56.67 what type of strategy have you just done you buy the stock and you buy a protected put that's a married put and then you already said then you sell a call on top that is a caller you could do that okay but steve that strategy is a caller you can do that the reason why we actually kind of talk about what's the cost of the put relative the stock price is sometimes it might make more sense just to buy the put and not sell something provided that put is not that expensive relative to the stock price okay now what i'm going to do is i'm going to actually go back to just fast fire i want to actually talk about these positions real quick and we're going to hit them quick conoco phillips tell me what to do in the position what type of strategy is this conoco phillips cash is a we got a cash secured put at the hundred and we got a long put okay now remember when we talk about training for 10 weeks to months the trend trading that train weeks to months does not have to be on a stock it could be in a vertical it could be in a cash secured put it can be in a married put whatever we want to do that is bullish delta well if you actually take a look at this is about 70 percent of the premium is gone okay or uh you could buy it back for a lot less than actually what you got in for and try to make 70 of the maximum gain pre-commission so the investor might say james i'm going to right click on this and i'm going to try to profit take that 307 dollars this trade was placed about two weeks ago pretty close it's gonna right click on that create closing order and it's just gonna buy it back now that's about 374 dollars okay if the investor just buys it back they are paying the commission the commission is higher because it's on four contracts if that's okay they're going to send the order now if they do that that one was actually taken off because 70 of the premium was gone now i want to speak to just real quick here's two of these crm and there's also hd now are these bullish trades are these bearish trades bullish or bearish well this is actually selling the 185 and then buying the 190 their calls this crm that is a bearish trade it has 54 of the maximum gain and we haven't even gone to the earnings yet now why was this a bearish trade oh because the trend was down now if the investor had maybe 54 of the maximum gain and they hadn't gone over earnings yet might the investor consider exiting the position they might say james if i've already squeezed half the premium out why risk it go holding over earnings on top of that so the investor might say you know james i'm going to grab that 54 there or 471 dollars and i'm just going to grab it i don't want to hold over earnings holding over earnings is very speculative because we don't know what they're going to say okay the investor actually buys us back they're going to try to grab that 471 and as hannah would say thank you very much now that was a bearish trade a bearish vertical this was actually trading the trend weeks to months in a bearish trend kind of interesting that you could actually make potential money potentially get the stock where to go down that's what happened here now i want to actually touch upon this one that's kind of a little sensitive okay i i'm just going to just hit this one real quick devon energy 83 of the maximum gain i think we could actually hit that i think it goes very similar to conoco phillips does i think that could be an example of an exit or a roll same thing with conoco phillips we're just going to move that out by the way that's 588 with a premium of uh percentage of 83 we're going to get this off the table buy it back for 29 cents commission 520 if that's okay gonna send it guys it goes didn't have to talk a lot about that because that was pretty much the same example of devon in the same industry but the one that i think is worth talking about is what about home depot home depot is a long put vertical it's down two hundred dollars and what i want you to see with home depots is might this be an example where the investment says james this is a bearish trait and it's got above not one resistance but it's gotten above two levels of resistance what might the investor do if they're in a bearish trade barrett's want the stock to go down and the stock has gotten above both levels of resistance a stay in the stock hope it doesn't keep going up b kind of put up the surrender flag and say you know and just say you know what i'm willing to kind of take that loss of 210 dollars and not be in a various positions as the stock broke two levels of resistance so in our example here this trait is going to exit it's going to try to eat that 180 loss and say the trend might be changing now the hardest thing to actually emit as a person is to realize when you're wrong and then you admit it and the investor is willing to actually take that 180 loss and say i'm going to get out of the way because if this trend actually goes up this would lose more and more and the investor is willing to take maybe a fraction of that maximum loss if they do they take the loss and on top of that and it just adds insult to injury saw on top of the wound they paid the commission on top of that but they might be okay with that if they actually said james it's not in a downtrend anymore okay and i want to kind of show you that because that's very important sometimes to recognize when the trend is going in the wrong direction now on today's sketchy class what we wanted to really talk about is the market sectors today is actually better as far as participation in sectors in general a wider swath if you will number two we also did talk about i think about seven management examples okay four of them being verticals the two other ones actually three other ones being cash secured puts and then we also did show the example of two new examples of of southern we also showed the example as well as far as america actually it was duke and then we showed the example of uh ammo which was a married put example as well and johnson and johnson so very active class here today as we discuss these topics we talked about these in terms of new examples but also past examples as well again i want to thank you so much for your comments and your participation i like this class because i feel like we can kind of talk about it and an intermediate to advanced level and kind of really kind of tackle some good material and don't have to take three hours to do it so with that said thank you for everyone your comments and your participation thank you michael fairborn subscribe to this channel as well and with that said stay tuned for our next webcast coming up right at the top of the arrow thank you so much take care bye

2022-05-27 20:25

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