Short Put Verticals - Recipe Anyone! | Trading a Smaller Account
Well Good morning, everyone. Welcome to trading a smaller account. My name is Barbara Armstrong. I'm a coach with tdameritrade and delighted to be here with you this morning. So today we have a jam packed class. We're going to look at a couple of our current positions and our focus today is going to be on all things short.
Put verticals. I'm asked quite often. Do you have a recipe? Or can I find somewhere a set of rules by which to trade a short put vertical And so today we're going to create a recipe card or an example guideline on trading this strategy that we trade both so often here in this class, so you'll want to stick around for that. I love to start by just welcoming all of you who show up so faithfully each and every Friday. Morning. When the bell rings to start the market. Um and DJs are always almost always one of the first ones into the chat. So good morning to VJ and
Kristen TM and Marcy and Pete and Neal and Charles and Ganache and Michael and Jeff and Flux Timer. I don't know how you came up with that handle, but I love it and Greg and Jose and Lynn and Rocky and KJ and AP, 5 14 and El Diego and Krista Um and men can song And you know the rest of the gang. Thank you all for being here and for being so interactive in the chat. I also, um Want to thank Brent Moors for being here in the chat with us this morning. It's always great to have Brent on board. So Brent
Brent brings a world of. Wealth of experience with him. So if you have questions, please feel free to type those into the chat and between Brent and I.
Hopefully we've got answers for you. Um if you are watching this in the archives as many many people do, you can just type if you've got a question, type it into the comment section or if you loved it, you can type that into. It helps boost the algorithms so that more people can find this valuable content. And I do look at those each and every day, so I'll get back to you quickly the last way. For us
to communicate and certainly not the least way. For us to be able to reach out to you and you to us is through Twitter so you can see above my head at BArmstrong Underscore T V A Brent Moors is at being wars underscore T V A. I can see that He's already put that into the chat. So um, it's
there for you to take advantage of. We post lots of great content on a daily basis. Um so. Um yeah, I encourage you to take advantage of that. Okay Let's get through are important information so we can get out to the platform where the magic happens. This content is intended for education and informational purposes. Only This isn't intermediate level class. So my expectation is that
you already understand what a short put vertical is. For example, if you don't. Um police type something into the chat because we're going to take a lot of today's class on shortcut. Verticals I want to make sure you understand what it is. Um yeah, but anyway, all of
this content is and we're going to look at lots of stock symbols. Today It's for education and informational purposes. Only none of it is to be construed as a recommendation on the part of Tdameritrade or myself. Also no options are not
suitable for all investors. There are special risks inherent to options trading that may expose investors to potentially rapid and substantial losses also know if you're new to tdameritrade you have to a apply for option trading privileges in your account. So you can do whatever you like and in on the thinker swim paperMoney platfor, which is fantastic, But I've had people get caught out in the past where they practice the strategy for weeks or months. They go to place their first live trade. They don't have approval for it. So you know you've gotta be prepared for that. So just want to give you
fair warning. Same thing with futures and we are going to talk about futures today. But you have to apply for your futures trading privileges as well know that all investing involves risks, including the risk of loss and the paperMoney platfor.
I think it's brilliant. It's how I learned how to trade. There are some slight differences between the live platform and the paperMoney platform. One of them is that a short option will never be exercised prior to expiration. In the paper money account in the live account that can happen. Have I seen it
happen? Yes, I have. So we have to be prepared for that. Okay So what's on the menu for today? Well, I've already kind of spoiler alert, but, um, we are going to have a quick look at the current market. We're going
to discuss trade management. And you know that's also known as we have a couple of trades that are expiring soon. We have a nice profit on them. We're going to, um, you know, look at those Missions and close them. And
then we're going to review a trading plan, including exit and entry criteria for short put verticals, and then we're going to go out and place a bunch of trades and we've got 45 minutes, my friend, so roll up your sleeves because we're going to be moving pretty quickly. But the good news is this is archived. So you know if there's a part of it where you're sayin, Wow, she went kind of fast. I'd
like to see that again. Just write down the time and then you'll know right where you want to go to Um, I don't know why paperMoney doesn't do assignmen, but it doesn't. So you know, that's just something that we work with, because it's kind of it's randomly assigned. Assignments are assigned by lottery. Um And so paperMoney you know is a pretend account. I
guess that's that. That would be my guess on why so the S and P 500 you know, yesterday was within a stone's throw of its all time high, which it hit. Um wow. On November, 5th and you know we're still trending above the 10 day moving average looking like we're having a smidge of a pullback at the market open but overall, um you know, it has been trending. When we look at the NASDAQ. You know,
which is our tech heavy index while hitting a new all time high today. What more is there to say? It's up Trending, um, you know, above the 10 above the 30, and if it's hitting a new all time high today, I don't think we need to debate whether or not that you know, Tech. Sector and that index are up no.
The Dow and the dough I think is kind of a little bit of an outlier. Um it's a little bit of an outlier in that this is not based on these 30 stocks. Their influence isn't based on market cap. It's based on the price of
the stock. And you know this one pulling back again today but still You know if I even draw a line here, let me just change my drawing tool. You know this was range bound for quite a while, and at one point it broke out, and it's come back down to that support level. You know, I could actually get rid of this one. No Look at ready one of these two, So it's come back to, you know a previous resistance level. Still it's below the Chan but above the 30. Um And so you know, some
would say, you know, maybe it's just consolidating. Yeah So we'll look at that. How about our friend, The Russell? So this is small caps. And I think last week I took you out to my Twitter account where I'd reposted something from Mike Fairborn. Which showed that over
the last 43 years on average, the Russell it's the two strongest months of the year. Um, the third strongest month is January, So November and December tend to be strong for the Russell we saw it kicked off November by breaking out of a range it had been in since February, and now it's come back, and it's. Kind of retesting this support level and I find it kind of fascinating How often something will break through a resistance level and come back and retest. So is this
shocking US? It is not what might shock us as if it came back into this range and came back all the way down. Could that happen? It could. You know, but right now it's still kind of sitting right in this range around that. 23 50 23 60 mark above the 30 Still, so you know, the jury's still out on this one. And how about our friend
the VIX? Well support levels. You know, some of it is in the eye of the beholder. Somebody's asking, you know, how are those, um, determined? Um So here's our vics and our vics is going up a little bit today, but you know, it's up. You know 41 cents, and it's still like within this range that it has spent most of its time and since the beginning of April between that 15 and 20 ish Um, range. So there's a question What do I mean Lottery? Okay So Scott, That's a great question. So with options. If I am a buyer, I'm the one in control of whether or not I want to exercise my option. And if I
choose to exercise that option, then someone you know, because it gives me the right to buy somebody who's sold an option at that strike. They're going to have to sell their stock. But there could be you know tens of thousands or thousands of contracts. So which one do they pick? So it's picked kind of random. Almost buy lottery. So
you you may be picked your option maybe picked and it may not be. Um and it's kind of it's a random type of process. So that's what I mean by lottery. It's kind of the luck of the draw. Um okay, So that's that. So this is, you know, a quick and dirty. Um but basically the
market is still up trending and there's still you know, a fair amount of confidence if we look in the at the VIX. On this. Now, let's come and look at. Monitor tab and I wanted to look at we have a long call on 80 I and. This 1 85 call. We had put a target in on that. And so if we
come here, and we look at 80 I. Our target was 1 89 72, So it looks like that was filled, So I'm going to come over to our monitor Tab account statement. And we're going to look at 80. . And. We can see here that we This is our trade history. So this morning, this field basically six minutes after the market opened, and we had bought a call at 185 70. And then
another one where we paid 6 20 this 1 85 call. And so we're out with a small profit. So this first one here we had put this target in. And so how much were we up by? Well if I take 7 40 we subtract 5 70. 7 40. Minus 5 70. I'm just going to use my little calculator here. Plus so that's a dollar. We were up by $170 on
that. Now we still have one left. And so I was actually going to exit this one this morning because we were so close to our target. Um but let's look at the other one. So it looks like we have one last four December. Oh, this is the one that we bought at 6 20. It's now
trading at 8 20. And we're up. You know, $150. And so you know, this one is rolling along quite nicely. Let's see where exit is
on this. AETI So we have a stop on this, but so you know if it loses half its value, um we would get out. Um but we don't have a target on the second one.
So with this second one, we were going to trade this like a trend trade. And we're coming up on earnings here. So you know, some might say, Well, if we're coming up on earnings, and then we have this volatility crush. Maybe we'd be better to exit this. You know, because it's common up. It's hit a target. And we have a
nice profit on this. And so this is kind of the conversation one might have in their head like if it gaps up on earnings that would overcome the volatility crush, so I like to run a Democratic. Class here. We're u. Almost were up $200 on this trade that was placed on the eight. So not long ago. So should we stay or should we go given? We have earnings coming up on the 23rd so beginning of next week, and we won't meet again prior to that now we can discuss this Monday in the long options class. So go ahead and type that into the chat, and then I will come back and we'll look at this. Um what I really
wanted to discuss from a trade management perspective. We have a whole whack of long call verticals on and we have a really nice profit on all of these, but the Russell. You kno, which is now pulling back right? But it doesn't expire. Um until
the middle of December. So that's the December so People are saying Take it, Okay, we'll do that. So, but we have Google which we did A long call vertical on. We did two different trades one at 29 70 and one at 29 75, where we would have our max gain. You know if
it was above 29 70 75 it's at 3000. And so when we look at this, we've got seven days to g. We are up $50 on this. So with this one, we might say, Well, you know, maybe will will wait. Um with this, 1 29 80 29 85. This one. We got for 80 cents,
and it's at 2 60. And so we might say on this one while Wow. You know, we're doing very, very well on this one Well, and this one is to 10 and 3 65 so given we have only a week to go, we're going to exit these profit of $440 may not seem like a lot, but you know, we in this class started with a $20,000 account. We're now at 33,000. And we've
got 23,000 sitting, you know, in in cash. And but we've done ver, very well. And so you know, when we look at 4 50, that's over 2% of our original account size, so we're going to look at this and say Let's not. Be greedy. We could wait and some would say, Well, you know, this is way above but you've got to keep in mind Google when we look at the ER on Google and how can we see that if we come out here And I put in Google. Our ATRUM thing can move 50 bucks and does move about $50 in an average day. Yes
I wish we could play some tracks here because I'd be playing. Take the money and run also. So we're going to exit these? Well now it's at 405 and 4 25 the max. It could be as five So
we're going to sell that vertical up four or five and we're going to, you know, take our unrecognized paperMoney gain and turn it into a recognized gain. So there we go. So that's the first one And here's our second one. We're going to create a closing order. Ah this one should be even higher. We're going to change this amount.
We're going to move this up to $4. As it seems to be. You know the first few minutes at the markets open. Sometimes it gets a little wonky. But you know, this one is even a further away spread so We're going to make that good til canceled. But all watch these to make sure they get filled. So we're gonna exit
those. Now we have another one where we've got the majority of our gain. That's also. Due to expire next week. And this is marvel where our strikes where it's 70 and 72. We have our max gain. If it's above 72, it's at 74 96. So when we look at this,
this is another one. This is one where we have earnings coming u. We're up $335. And sometimes, like this number. I don't know what's going on with bankers swim because it doesn't really make sense. But when we look at marvel up close and personal, let's change this to a three month chart. You know, it's
sitting, you know, within eight cents of its all time high, but we have earnings coming up on this. Um mind you It's after the expiration. But we've already got 80% of our max gain. And what if it pulls back for a few days? This expires in seven day. So again, This is another like solid base hit for us. The most
This number could be and you can see here the way I've created our verticals on the monitor tab. I have them show it says Vertical. We paid 88 cents to get in. It's trading now at a dollar 45. The most This could
be was $2, which is the difference between the two strikes. It's through both strikes. So we're going to put that we're gonna take our money on that one, or paperMoney. And
create a closing order. 1 45. And we're going to make that good till canceled. Also. Okay so we're just very quickly done some trade management and we've looked at three. Uh different
trades. There goes Marvel. Oh dang it. Look at that. 1 85. Okay, so we're going to come back to our mark. Monitor tab
and we're going to close out 80 I so I look at the votes it was overwhelmingly. Take the money and run, so we're going to take our money and we are going to run. And we want to get 8 20. Let's see if we can do that. Now this may not go through because I also have a stop loss in place. So let's just see. I'm
going to come up to the monitor tab. Cousin AETI. We did have a stop loss. So we're going to get rid of this order because we'd hate for it to pull back after we've sold it. We're going to
cancel that one. And so now we've got the order into cell at 8 20. It's currently trading at 8 10, so we'll just see. Okay how that one plays out. Now let's talk about short put verticals so. Is there anyone that isn't familiar with short put verticals because if there is and you know, And if you're watching this in the archives, what I will do is in this top right corner. I will put a link
into the getting started with options class on short put verticals. Um, just let me make a note of the time. Okay? And this is a neutral to bullish strategy. We currently have two
short put verticals in place here, and it looks like one of them. We just exited. So if we come and Oh, no, We've got 28 days here. So I don't know why this is Oh, it's just saying it hasn't really moved either for us or against us. The price we got in at is, the price is currently trading at now, if you don't have this vertical showing up here. I think it makes it so
much easier, so just come up here to where it says position statement, and then come over to the far right side and you're going to come down to group symbols. Sorry, arranged positions by order. And then your verticals will show up, sorted out, okay? Okay So if yours isn't showing up that way, and you want to see how have them show up that way, So Crocs is currently kind of neutral are puts our at 1 65 and 1 60 so as long as it stays above 1 65, we're golden. We have a profitable trade. Where is it? Currently sitting 1 77. And this, But this one doesn't expire for 28 days, and the reason we went so far out with crocs was because it only has monthly options. And so we're
sitting here and that one is going along. Just tickety Boo. So we're fine on that Microsoft we've got 64% of our max gain We got in for a dollar 31. It's currently trading for 46. When are we planning on getting out of this? Well when it's worth 25 cents. And why did we pick 25? Cents? While we pick 25 cents because it was basically 80% of our max gain. Technically 26
cents would have been 80% of our max gains. So we went to 25. So this is kind of particular ating along and we're just going to let it go. We have 14 days until expiration. Now when we look at you know what types of things do we look for? You know if we want to set up an example guidelines and what I'd encourage you to do is say, well, she covered short put verticals, but I wish he'd done short call verticals. Well you can just flip it or if you have another thing where it's like, Oh, I wish she do that with. Um you know, selling plot.
You can always go on watch the getting started with options class and then go through because I was go through here are things you were looking for? So here's an example guideline or a recipe card. If you will, you know, and in the idea on a recipe, um you know if you are making a cape, for example, and I know many of you are probably not bakers. I'm really not either, but the idea is, you know if you're making a cake, and you say, Well, you know, I'm in a bit of a rush. Got the flower. I've got the eggs. I've got the chocolate I've got whatever you know the baking soda baking powder. It's like
Half a teaspoon and a teaspoon it What's the big whoop? We have a whole ball full of stuff. I've got the eggs, You know that won't really matter. And then you wonder why the cake doesn't work out. And so either you have a guideline and you follow it or you don't have a guideline. And
you don't. Um but if you skip even one ingredient, it can sometimes lead to something that is less than ideal. And so one of the things we talked about a lot in this class is trend. So
trend on the market. Um trend on a sector and trend on the stock. And so if you are trying to align things to be in your favo, even though this is a bullish to neutral strategy, let me just add a bunch of spaces in here. Um even though this is a bullish to neutral strategy, um if all of these are bullish, then what are the odds that this might continue to be bullish? We're also looking for a technical entry. So is there a bounce
office support level? Is there a you know, break through a resistance level. Do we have a close above the high of the low day on a bold flag, So those are three of the typical ones, righ? So CAHOLD-. Honorable flag. Um. Um breakout above resistance.
Um, have we got, um. Yeah well, there's one thing like, have a set of rules, follow your rules and then know when it might be appropriate to break them. You know, um, breakout above resistance and a bounce office support and this is why we say it's neutral because you know we could have been doing short verticals for the year and in fact, we did quite a few on Netflix when it was trading in a sideways range. So if we look at these, like we have a trade on Microsoft that expires in 14 days, But if we looked at this and we said. You know, Might we
have an entry today? Well actually, Microsoft is hitting a new all time high today. So is this the time to put a short put vertical trade on? No. We're looking for it to be bouncing office support. Now someone else might say, Hey, just a minute it broke through above this previous resistance lines. So if you were comfortable, you can say, Well, maybe I could sell a short put vertical below here, and others might say that's possible, but I'm going to look. For you know some other potential entries and so we could look at something like, u.
You know, Yesterday we looked at a company called Len are. And so and I posted something online are so we're going to back up a little bit. So if we look at Lynn are, which is a home building company? What pattern? Do you see? You know, while we see a double bottom, right? I spy with my little eye. And now
what's it done? It's broken out above. And if you're not familiar with one are you could just come to the analyzed tab. Okay So we've got one outlier and three that love it. It's a homebuilder Has, you know home construction Been strong. Many would argue yes. And so do we have an entry here now. What are
the options trading like, so This is another thing we might want to add to our recipe card. What's the volume like on the stock? You know in some might say, I want that to be at least a million dollars. Sorry A million shares a day. Well, currently we're at 2 43. But we're on our way. Um And how about the options? So if we come out here to 21 days have we got volume on the options. And you
know when we look at this zero and zero Yeah, that's not so hot. At the 1 10. We've got 31. We still have a, you know, an okay bid I spread. But you might say, Well, this one. We don't have enough action on the weeklies. What about the
monthly's well here? We've got 1100 contracts at 10 Cent Bid Ask spread. So if we look at this, and we say, Okay, this has broken out. I want something below this support level of I can get it the juice birthday squeeze. If I did the one Oh, 5 100. Is there enough? Well 75 cents on 105. Now When I looked
at this pre market it was over a dollar, which might have met our criteria. And but this one does not. But that's another thing we may want to add to. Our recipe card is return on risk. What is
our minimum? Acceptable Now, some might say, You know what? Um my minimum is to make it apples to apples. If I'm going out 28 days, I want at least to 28% return on risk, And this is a way that I can. I can look at it and compare it to maybe doing the January where I'm going out 40 days. You know, and then I'd want to 40% return. But is this
acceptable? And so if we look at this, this wouldn't even be 25% So we'd say okay, it may have met these other criteria, but it doesn't currently meet this one. Now, if I did the 1 10 if we were really bullish on this. If we did the 1 10 1 Oh, five. 1 5. Well, that's tons. So because
we're saying 1 52 divided by 3 50 basically 3 48 If I take 1 52 divided by 3 48 Whoops. 1 50. Divided by there goes our Google. Buy Google. Thank you. Well, that's a 42% return on risk, But now you have to come up and you say that's our if our delta you know in some might have a rule around Delta. What's the probability of success? They might say? Well I want it to be between 20 and 40. Um I tend to kind of look at it and say, you know, with Delta or with risk I wanted to be below And you know, this is just an example between 20 and 40. If I can make it 20,
I'm way happier than 40. Because you know now I've got a 60% 61% chance kind of more or less that this will stay above. So if we come here and we say Okay, the 1 10. About Where is that? You know, it's just a Bob. So if we think that this is going to continue to move, might we be okay with that? We might. And so we could put this on and do one contract. We're risking $350.
And then we could put a note in right click first triggers sequence and often it's like, what is your default? You know, When do you plan to accept at what percentage at 90% of Max Keen at 80% of Max gain, and this is one where we will often put in 80 or 90. But if a stock goes up and looks like it's about to pull back. Um and we've got 75% in a week. We might just say You know what? I got 75% in a week? Why do I want to stay in it for another two weeks and risk losing that? Um, so this is one that you know, just because it's a guideline doesn't mean that you can't change it. So if we put this in, can't come to confirm and send all sorry.
First trigger sequence. Right click. Opposite order. So we might say Hey, when this is worth 30 cents, or we've got 80% of our max gain will accept. Short put vertical. Um group.
How much can we lose? 3 50 now is it possible to lose more if you would totally ignored this which I would not recommend, and it went to expiration enclosed between the strikes. It is possible to lose more. Um you know, is it probable? Not necessarily, Um, but you know, we position size based on on this max loss. And if you're managing it, you know, one would hopefully get out prior to that we might put a note in and say are short strike is not below.
Ah! That support level. Yeah which is hopefully old resistance. New support. You know it. Would we be surprised if this came back and kissed it? We would not. I mean, it's it continues to amaze me with technical analysis. How often
something will come back and touch his support level. But all there are some who would say I see the bottom of today's candle as the first level of support. So we're below that, but what we'd really like to be as below the second level of support, and I kind of like to put these on the chart. Um and so when we look at when are. Our expiration is the monthly expiration. So
when I come to the chart if I wanted to just change that line to 1-10. I'm going to put down short put vertical 1-10 One. Oh, five. December 17th. So then, as soon as I look at the chart, I know what I've got going on and where I'm expecting the stock to stay. I'm expecting it to stay above one town. Okay so we've
just added some more things to Are a recipe. And that was accepted. Talked about entry. Oh, earnings. So some people will trade this over earnings. And why might they do that? Well they might do that because we're it's a selling strategy and the premiums are going to be. Um
higher and others say are saying I want to do a conservative base hit strategy. And so if my expiration date comes between now and earnings, I'm not taking the trade. Period. You know if earnings is in the middle of it, I'm not taking it. And others will say or I want to take advantage of. The higher premiu.
So you have to decide what you're doing with that, Um, in our class. We tend to avoid trading over earnings because we're looking for a base hit strategy. And you know, we don't want to be taken by surprise. We are also meet weekly. So as much as something can gap up and put us at you know our 80 or 90% quickly. It can also gap down and put us at our max loss. Just
as quickly. And so you know, we may look at that and say Yeah, I don't want to take that chance. Now there was another one d h I let's see. Now Does this look
familiar at all? Like so again? You know when we look at this. You know, is this strong compared to the S and P. It's been rising. Again We have another. It's been in a basing pattern. And you know how much might we expect this to move when it breaks out? You know, we'd expect it 82 to 96. That's
a 16 point Move. Sorry I can't seem to write with my cursor today. So you know, we just needed to stay above that, 98. So could we sell something at 9? So if we come to the trade TOB. And we come get, you know, could we go out 21 days? And come down like one of the advantages sometimes is that with the weeklies now, if your rule on volume here is, I wanted least 20 times the number of contracts that I'm going to trade. If I
come to 15 contracts. You know, I've got a 20 cents spread here If your rule is you know, for this is another rule we might have is we want to tight bid Ask spread. And what does tight. Meanwhile for some people they might say, You know, I don't really care. Others might say I
wanted to be a max of 10. And you can make it whatever you want it to be. But if we come and we look at this 98 That's 20 cents now on Google. That's a
rounding error. You know, but on this, that's 20% So then we might say that's a little high. But if I come up here, I want to be, you know. No. So now I'm coming out 28 days an extra wee, But my bid ask spread is like 10 15 cents. You know here, it's 10
cents. So if I looked at, could I get enough premium and we've got hundreds of contracts here to do? Maybe the 97 50 and the 95. So right click. So Vertical. We get 50 cents. So if you do
enough of these, you know that it's 50 divided by $2. That's a 25% return on our risk we'd be in for 28 days. So you might say, Well, that's just a little shy of where I want to be. And am I willing to go up to 100? And so we might look at this and say, you know, 98. It's another 2% higher. I know it's trading
at 1 to 95. Maybe I'll wait and see if it comes back down and, you know. Choose. To wait on this. You know, or you could say, Well, you know, it's close enough. It depends on how tightly you trade your rules. Um
Here's another one. I guess. Today we're sponsored somewhat by the letter. D um, here we have door dash and what sectors door dash part of consumer discretionary. You know, Have we seen a boost indoor dash while if we come back to this analyzed tab. Oh, this one just recently IPO. Um so because if I and how
do I know that, So if I come out here and say, let's look at a year, we you know this post here back in December of last year, so it hasn't been traded on the open market for you know, a long time right network coming up on its first anniversary, So if we kind of hone in and look at thi. You know, we could say, Well, we have an entry here broke out above you know this, Um, resistance level here and here came back to retest and is moving to the upside again. And so if we look at that, and we say Okay, now, how much does it trade and are is there? You know enough on the options for it to be worth my while. Well we've got hundreds of contracts being traded here. We're only going to do you know one And then, But this is a $10 widespread. And so we may not be able to trade this because we'd be taking too much risk. So where would we want to
be? We want to be. You know, if we could be at that to 20 level that would be kind of sweet. That would be below that support level. Sell vertical so 3 17. We're risking over $600 now our current account sizes 33 3. If
we said we could rest 2% 33 200. Times decimal 02. And what you may do is update this, um, monthly, um and you know if your account had gone down in value, your risk might go down. This is
6 64. This is still you know, this is 6 80. So you might say, Well, it's close enough. Or you
might say no. I have a hard and fast rule on that. You know, I don't want to risk $680. In someone else might say, Well, you know, it's only $16 different. I'm okay with that.
It's not double and one of the challenges sometimes is when you start having a run where you have a lot of success, it can get really tempting. To start taking more risk. Um so if we decided that we were okay with that, put that in our short vertical bucket. You know when we might we get out. You might see when it's worth 32 cents, o, you know, that would be 90% Or you might say, I'm going to get out when this is worth 64 cents and 80. At 80% I want to take my risk off the table. Good tool
canceled. Confirm and sand. Short put verticals Gone Now, guys, we are almost at a time here. Um but there were a couple of other ones that I wanted us to look at. Airbnb was one. Okay now it's pulling back today. So. That one would not be a candidate. Um, Apple. Was
another one. So this is just breaking above today as support level and so you know, might it have been better Had we done this last week? It might have we could have. You know, we would have been close to being out if we're saying okay, this is hitting a new all time high. Could we do something? Maybe around that 1 55. If we're
thinking it will stay. You know, so that's an example that we could put on or if we looked at Fang, which is in the energy sector. Okay today, that's breaking down. So we might be glad we didn't put that one on. Yesterday Um, but there's lots of different things we can look at. So are there other things that some might want to add to an example guideline? There could be. But you know, this
gives you a start. Have you looked at the trend? Are you doing a trend that goes with the market is this you know doesn't go with the sector Is the sector up trending. You know, we looked at some consumer discretionary stocks can consumer discretionary has been leading this week It's been leading the last month. It's been one of the leaders the last three months. Is the stock up, trending or do we have a technical entry? Um what's the volume like is the better A spread acceptable? What's our return on risk? Is that acceptable and do we have guidelines for all of this? When do we plan to exit? What do we want the delta to look like and do we want to avoid earnings or take advantage of it? You know, so these are just some of the things that one might want to include in your recipe card, or, you know as an example guidelin, so guys, it's hard to believe that are 45 minutes. It has come
and it has gone. Um. The note on the chart with a short put vertical. I think we ended up doing trades today on an R and doordash. You know if we come to our monitor tab And we look at filled orders. So and we want to look at orders to open when our and dash and we closed our positions on Marvel, Google and AETI. So you know, we got a lot
done in our 45 minutes, didn't we? Okay so coming back? Did we do what we intended to do? Well we looked at the current market conditions. That was a quick and dirty but it did the trick We did some trade management and discussed our reasoning behind that, And then we looked at some of the rules around short put verticals, and we placed a couple of examples trades so. That's our class for today. Keep in mind. Everything we do in this class is, for example, purposes only none of it is to be construed as a recommendatio, um to trade any particular security or strategy in any particular way Know that options aren't suitable for all investors, they carry a certain set of risks. We always like to discuss what those risks are.
You know, know how deep the pool is. Before we dive. Um and I know that you have to apply for option trading privileges. Um When we put an accident, there isn't a guarantee that you know it will trigger a market order and we'll get filled at you know the, um Yeah, we'll get filled at the next available price next week. There are no classes. It is black Friday, the day after Thanksgiving, and there will be no live classes. So I will see you all in two weeks and I will be here. So, guys, Thank you so much for joining me today, Um, looking forward to seeing you in long options on Monday up next is getting started with stock investing with Connie Hill. And
that class is at noon Eastern. Thanks Everyone. Have an awesome day. Bye for now. And many thanks by the way to Brent Moors for joining us in the chat, and to everyone who was able to join us live and for those of you and I know you know, there are typically thousands who catch this in the archive. Thank you for putting this on your list of priorities. Yes If you haven't smashed the like button, please hit the like button and guys.
You know, I know a lot of you have probably left. But if you have not subscribed to this channel, you will want to do that. Like link arms with us On a weekly basis. You can turn on notifications. So you don't know
when this class is coming up. Put it on your calendar, subscribe to this channel and join us on a weekly basis of a happy Thanksgiving, Everyone. Bye for now.
2021-11-21 00:55
