Spots of Relative Strength? | Technically Speaking: Trading the Trend

[Music] [Music] hello and welcome to trading the trend weeks to months my name is james boyd we welcome everyone here today we got uh grace brenda fez vj bill uh we also like to welcome len crispy annette medy rebecca doug and many others hello and todd and welcome to you just real quick uh this is your first time here we welcome you as we talk about trading the trend weeks to months we always call thursday trend thursday and here's the deal you always want to ask yourself the question what trends are you writing if you say i'm not writing any trends or i can't identify those trends that's not a good sign okay we want to know what type of trends are we writing or considering in writing okay because that kind of gives you an idea of what you've been looking at and maybe are those trends actually some of the areas that are showing potential relative strength and just real quick uh you can also follow me on twitter i do post educational content there daily we'll talk about that here today as we get started remember that with what we discussed it is for educational informational purposes only not investment advice recommendation of any security strategy or account type options not suitable for all investors especially risk and after trading options we also talked about demonstrating the function of the platform we will be using actual symbols td ameritrade does not make any recommendations determine suitability or uh or of any strategy or security for any individual traders any investment decision you make in your self-directed account is solely your responsibility and also when we talk about uh investing all investing involves risk when we also actually bring up options which we will here today remember that the option greeks dealt the gamma theta vega know what those are measure uh sensitivity to so just real quick as we're actually getting started here today uh we'll take a look at the market i want to talk about sectors i actually want to talk about diving into those sectors i want to talk also about past uh example trades stocks and options maybe some management and exit of those positions and i want to talk about putting on some new positions stocks and options so we got our hands full here today i want you to kind of be involved in the process here today that we actually go through and uh with that said i'm actually gonna go ahead and bring up just briefly uh my twitter page now right on my twitter page you're gonna actually see it right when i actually let me resync that should be good so first thing that you want to do just real quick is uh len made the comment earlier on twitter uh regarding that he likes the green color you'll notice i actually said that i it's not a recommendation that you like the green color some investments maybe like flat performance some investments maybe like red so they could actually maybe try to buy a little lower some of you actually get that and a little fun there len that was for you buddy now now let's actually kind of talk about this i want to actually bring up the sector update and what i want to do is i want to actually see if i can't kind of zoom this in a little bit more if i can and i'm going to kind of guide your eyes through what we're seeing here so first off when we actually take a look at the sectors okay what we are really trying to assess is where's the where's the money flowing okay now we got our typical sectors now some people actually look at the indexes some might look at a different type of product whatever you like for yourself i talk about indexes okay because that's what i need to do for a presentation purpose and what you're going to notice is here we got our we got the indexes uh sector indexes i call now what you're now going to notice is what we're really trying to really assess is we're going to go over to this column right here where we start really getting into rs okay the rs is really relative strength okay now we know when we take a look at relative strength we are comparing it to the benchmark okay so we're looking at the relative strength compared to the benchmark of what the s p 500 okay now what we're doing is we're trying to get a grade of really how these have been performing over different periods of time okay so when we talk about different periods of time we say five days which is one week ten days two weeks 21 days one month 42 days two months you know where i'm going with this right rs uh 63 three months about 21 trading days in the month now what the investor might be actually saying yes so what how are we using this well the reason why we actually talked about these sectors that we did yesterday is i just looked at the sector list and said which of these sectors has been the most consistent well one of the sectors that's been the most consistent across different time periods really has been industrious okay that is actually where we've actually been seeing over time green green green green green now does that guarantee that it's going to be green next week the week after that no it's just showing a recent trend history of the relative strength of that sector compared to let's say the s p 500 okay now if we said what other two neighborhoods kind of might be up in that area as well well you'll notice that the top one is actually basic materials it was red red in the last three and the two months but about a month ago 21 days it actually went green green green so base materials in the last let's say 21 days has actually been stronger than actually the s p might cause some investing ideas there and the last area which has been really four out of the five weeks has also been quite strong has been those financials and if you look at the financials they were actually softer really on the 63 column but really in the last let's say four out of five columns you've actually just seen strength so the reason why we talked about those yesterdays i just on a daily basis look and see where that strength is and then dive into those areas now as we actually do that one thing i want to actually kind of bring up is can the investor actually dive into the industry groups can we actually kind of say yeah but what part of the base materials what part of the industrials sure if we actually go down and i'm just not i'm not going to make sense of it i'm not going to go right now on it but if i actually looked at the industry group list number two and i actually broke this down into two lists number one what you'll notice is when we look at the industry groups okay same idea what we're doing is we're trying to get a pattern of where where is the money flowing to okay now when we actually look at this what you're going to see is chemicals right oil and gas which watch you talk about especially chemicals construction materials paper packing metals and mining copper steel so when i actually just said all that what what sector have i really said without saying the sector name my gosh i mean i mean you just look at that okay let me keep going since no one said anything i'm gonna keep going until you get it okay building products okay construction and engineering machinery capital goods right air freight logistics right railroads truckee industrials so oh my gosh we're we're seeing industrials and basic materials left and right here so what's so funny about investing is we act like oh my gosh i'm totally shocked i just don't think people really look at it okay so if they actually looked at it i think they would actually be less likely to be shocked and they could actually start to actually get a picture of what's really happening which actually forms potential investing ideas in terms of where to find trends now when we actually look at the trends just briefly so i talk about sectors i talk about in industry groups now i also invite you if you say i'm actually not on twitter well get on twitter okay i actually uh have a lot of people i actually follow across the investing universe and i actually share all those things i retweet them actually right out on twitter some of the things that i see across my desk that i think is interesting i share those and i share some things that i look at too as well for educational purposes now we actually take a look at let's say uh the index of the s p what you're really going to notice is we broke above the 41.64 and then today we actually made another brand new high it is not unusual that when you get a breakout and you make a new high that some bulls might want to test really let's say the horizontal support level okay or maybe try to flag back near that area so if we actually take a look at this we got about 11 points on the s p above the support brand new high here today when we actually take a look at the nasdaq down slightly 35 points brand new high still above the 10 period moving average russell up 12 okay brand new high here today and what you're gonna notice is sometimes we can kind of over analyze a it faded back to here today but you gotta remember it still made a higher high okay and so if you look at this when we talk about trend shorter term up and we would actually say instead of kind of being so bearish to the downside we'd say the trend from an intermediate to make the intermediate would be more neutral which by the way that's that's good because the trend up until about a month ago had really been short turned down and intermediate down which is not great if you're trying to be bullish now what i would like to actually do is let's kind of take a look now can anyone actually think about a company that announced earnings today and any company within the dow that announced earnings today that raised their subscription cost which means for many investors across the well many consumers i should say means that their bills went up today if they subscribe to that platform so now if you actually take a look at this you're going to see that we're going to pull up a stock and let's kind of take a look at disney first okay now if i ask you a question i say hey what type of trend has disney been in okay i don't think that'd be too hard to answer that and say the trend has been just yucky okay awful and if we were to kind of draw some diagonal resistance right coming off the high coming down down down down down i think we could actually say that probably this has been kind of that angle of resistance if you will and then on the downside what you're going to notice is you got lows lows lows this had been really in a downward channel but and that's where it's been but where but what about right now now if we take a look at this this stock actually gapped to the upside on the news of the rise or the raising of the subscription cost which you actually could add revenue which could have potential profits which is never a bad thing okay unless you get consumers where they actually say i'm not gonna pay for that service okay and you control cost okay now if we actually look at disney we might say could disney be breaking out of this downward channel now on tuesday i did a class and it was actually we talked about using a cash secured put sample plan and i want to use that strategy here okay now that was actually done on using options as a stock investor if you did not listen to that class i repost on my twitter okay i post things that i think are noteworthy to kind of maybe re-go back and kind of re-lo revisit that now what i'm going to actually go ahead and do is going to go to trade tab now we know that when the investor sells a put a cash secured put it's an obligation to buy the stock now sometimes when we actually talk about selling puts the investor might want that let's say for a shorter term time period but if the investor says you know what james i i don't mind to maybe go a little bit farther out historically i've shown examples of selling put 70 to 100 days out where the investor might say i'm not a trader okay i'm not in an app there could be days where i'm not really watching okay the market as much from a day-to-day standpoint so the investor might want to try to consider maybe a strategy where they might instead of going to september they might say james i'm going to go to the octobers the obligation is the obligation okay if the investor actually goes out farther and they say you know what james i want to actually sell a put where the investor says i don't want to really own the shares of the strike price net from now until expiration because there is actually far longer time associated with that there is a bigger premium the purpose of actually going out to 70 to 100 days is to try to start out with a bigger premium where there's actually let's say a less likely chance to roll if you actually do get to roll the option you're actually rolling the option potentially for a profit if that stock were to go up and it's actually a bigger potential gain relative to let's say the september which starts with a smaller premium okay so i think about 20 to 50 days options like trading when i start thinking about 70 to 100 days options i start thinking about more like taking an investing mentality okay now if we actually click on the 115 notice actually what that actually delta was for that and the delta was 38 okay so if someone actually sells a foot at a delta 38 or 39 they're really saying i don't even mind to own the shares of the stock at the strike price now let's show on that chart where the 115 is well the 115 is probably going to be in the vicinity of the breakout area 115 is going to be right there now if we took 115 and we actually subtracted really the premium of four dollars and fifty cents we're going to get a break even of really in this case uh a thousand we're gonna get a break even of 110 50. now roy actually says what if i already have a full position of disney now that kind of actually is kind of an interesting comment because sometimes the investor might say james i already have an allocation to that the investor might use maybe trading around that so let me give an example let's say the paperMoney account had fifteen thousand dollars in stock and that's what it can invest put in an investor maybe use like selling puts as a trading vehicle okay a couple weeks maybe a month or two could they try to use that and if it broke down they exit that okay to try not to add to the position i think some investors might consider that right now what we're going to show in this example sell actually the one contract to the 115 premium is 450. break even

110.50 potential max profit 450 and now what you're gonna see is that max lost a thousand dollars and fifty now we're in an ira so the investor might say james that's a lot of money to set aside now a lot of money for who okay all of us are different if the investor actually said can we actually maybe buy a put out of the money to reduce that buying power the answer is of course it's a simple thing if we actually go down to the strike we say okay let's go back to what we said on tuesday which is which strike actually has a delta below 10 i said that which strike actually uh could the investor buy to reduce the buying power and make it where the risk is not down to zero well if we kind of use the criteria given on tuesday we'd say the delta less than 10 the 95 strike and we can actually say we're going to actually just change that from the 110 and we're going to go down to the 95. now when we do that the risk is not down to zero and it's not going to actually tie up as much collateral so if someone said hey james i'm in an ira account and i was really kind of interested in selling the put notice since we bought the put two the premium is less because the investor's buying the put but they might say that's 70 cents less than what it was but it's significantly less collateral it's only setting aside really 1600 dollars to do the investment okay what's the risk it's what the potential max losses now when you say what's the risk we're saying given this short wide vertical now this is really a short vertical but it's actually widening out the strikes so it could actually buy a cheap out of the money put for downside protection and collateral reduction this is in an ira now if the investor actually under also understands what's one more con about that well the one more con about that is you add 65 cents so if the investor says okay i got to pay the 65 cents or consider it i got to be willing to accept about 70 cents less on the credit but that saves potentially about ten thousand dollars so you can weigh those reward to risk okay for yourself now if the investor was okay with that and by the way when we go back to the position sizing this is going to do three contracts it cannot do four would like to but it can't because it would be over the acceptable threshold limit okay confirm and send now gonna try to get it filled okay now so trade number one was selling the 115 buying the 95 okay now if we actually go back to now judith actually says i have an iron condor on disney need uh need it between 104 and 118. so this is kind of where someone's in an iron condor like a neutral strategy julie's probably really watching to see if this stock stays above 115 and we start to see buyers actually come in that investor might be a little bit more concerned and maybe say this is maybe not neutral anymore potentially maybe it's becoming more bullish and maybe trying to exit out of one side of the position or considering it now i'm also going to go to uh let's actually kind of do what we call one and one i want to actually go back to a position and one of the positions i want to actually really really bring up is on a covered call and i want to bring this up because well because it only has eight days remaining we always talk about once we're inside four to ten days expiration we're planning on either a exiting the position or maybe rolling the position so i want to kind of talk about this and this being a hundred shares of exxonmobil now why are we talking about this well when you actually take a look at let's say what uh filled on disney filled for 377 we actually take a look at uh the ixe which was the energy energy was one of the stronger sectors out there and it went down it went up it fell back down to the 30 and then it started you know it's trying to actually go up again and almost making a brand new high now what two stocks in that energy sector represent the biggest chunk of the pie in the energy sector name the two companies that you drive by almost probably almost every week on state street or main street in your local area now we actually said well geez what two companies represent the biggest chunk of the pie we might guess that it's probably exonmobile and that's the correct answer and it's the second one is really c uh cbx which is uh chevron now notice actually this has a 93 call and we're now eight days to expiration so this is your classic cover call classic and now the stock with today's move okay is above the strike so what can happen at any time now anytime well if that stock is above the strike and not just because it's above the strike they could take those shares at any time so let's say the investment said you know there's eight days remaining and james i'm actually kind of thinking that i'd like to be more bullish on exxonmobil how could the investor make this trade more bullish on 100 shares of stock it's 100 delta okay but when the investor sells the call sell the call not buy sells the call that's negative delta so how could this position become more bullish now i would actually pull up exxonmobil xoa so when the investor is actually thinking about becoming more bullish they might ask themselves a question like is this stock breaking out of resistance and if that stock is breaking out of resistance and they want to become more bullish they could simply just buy the callback now every time we actually buy a callback is it going to be for a game not necessarily not if the stock has actually started to go up so the investor if they they if they're willing to they could say look i i want to buy this back i sold it for 184 i'm willing to buy it back for 242 and i'm willing to actually realize that loss of 58 now overall have we lost well no the gains are in the stock right so the gains have are offsetting this 57 loss but that loss is offsetting overall some of the gains so what we're going to do in this case since this four to ten days expiration we're going to buy this back we're not going to roll it if we roll it we're talking about selling another covered call in the future the investor might do that if they actually a said i don't mind and really selling the shares at a strike price but if someone has more of a bullish viewpoint on the stock they might say i don't want to have a cover call on the stock i just want to own the shares we're going to right click create closing order we're just gonna buy the call back now if you buy the callback is there downside protection what's the kind of the risk management well what we want to do is we're gonna buy that call back try to do it at the mid price 241 and if we buy that callback now what you're going to see is we're going to say confirm and send we're losing money on that trade realizing that loss plus paying a commission 65 cents and now what you're going to see is if that is purchased back okay you're now going to see on that when we actually do that it's now just going to have the shares of the stock so if we now just have the shares in stock there's 100 delta so we're going to go back in and say okay where do we see support well and this is where there's not usually one answer okay that's right by itself there's probably two answers okay so if we said where are some potential support levels we might kind of say james these are some areas and we know that if the investment set a tighter stop there's a greater chance of the stock being stopped out so if the investor said james i only want to get out if the stock goes at or below 86.65

we're gonna set a stop two percent below that so all i'm gonna do is i'm gonna go back to the monitor tab i'm going to right click right on that stock create closing order and i'm just going to say with stop okay now so all i'm doing is i'm saying if we go at or below this price that i type in 81 84.91 took the support less two percent stop dated gtc you're now going to see that if we if the stock goes to that price or less sell the stock so let me kind of recap this so when we look at the sectors if we actually see sectors like energy that our habits you know done quite well over the last couple days the investor might ask himself geez do i have any exposure to that area if the investor says i have neutral ish somewhat positions like cover calls they might be thinking do i want to stick with the cover call or do i want to try to buy the callback if that stock is breaking on a resistance or where the investor says i think that overall space is going to go up find the callback not rolling and we're looking at this because we say when we get inside four to ten days we're either making the decision to exit the position or roll the position okay and you might also say what that is playing in the probabilities all the way to expiration he can do that but we like to talk about exiting or rolling the position notice that this is saying if we go enter below this price sell the stock notice with stop orders there's no guarantee that the execution price will be equal or near the activation price so in english that's saying if that stock were to get down let's say 80 it can be filled at a lower price that's how stops work you don't like that you might consider maybe buying puts where you least have a defined risk or at least have a right to sell at the strike price now or consider a stop limit i'm going to send that order now are there any questions roy actually says uh imo uh rolling a bullet uh rolling a bullish willingness or let the shares go higher roll again yeah so by buying that call back the investor is really thinking there might be more upside on the stock okay now losing 57 really is not dramatic okay i know sometimes people like to win on everything but the investor might kind of gives that's like be willing to pay a higher premium to get out so that way they have that unlimited upside to the stock okay now i'm gonna also go back to let's look at a new position i just talked about xram and i'm gonna kind of look at maybe the top well this is probably the third or fourth stock in that energy space and it's actually conoco phillips now let's imagine that the investor says james i see conoco phillips where it went down and you'll notice when that price was below the 10 period moving average man it wasn't good okay it was house of pain okay when the stock actually went up above the 10 it seemed like it wasn't as bad and then the price pulled back down one time to the 30 period moving average and we had a bullish engulfing candle and then went doink doink doink use the 10 period moving average bounced off that and then now what you'll notice is there's an upcoming dividend of 46 cents now this stock in the shorter term has actually started to really get above this area of resistance now i'm going to actually talk about the uh the ira account because in the margin account we hardly have any money left okay and i'm going to go the ira account and what we actually talk about in the ira account is using a position size of forty thousand dollars now forget forget that i said forty thousand dollars what it really comes out to be is each position really represents about four percent of the capital of the portfolio that's what you should be thinking about what percent is that and when i talk about forty thousand dollars people mentally check out and think oh it's too big of a position that's not the point i want you to think about just like a regular investment what percent of the account is in this one position answer it's gonna be about four percent which is not a red flag with anything we actually talk about in terms of position sizing it's actually even a little bit less now what you're going to notice is we're going to go to the trade tab and by the way we don't have to but if i i could right click on this chart right click we're going to go down to where it says buy custom and then we're going to go to with stock now notice that my focus right now is i'm trying to use the capital in the account so one of the ways to use the capital is actually to buy stocks and those stocks have that dollar for dollar risk exposure but they also have the capability where if there was upcoming dividends where we could actually try to get some dividends which you know trying to get capital appreciation number two if there are dividends some investors probably wouldn't give them back right they say thank you very much and the other thing about the stock is the investor might be thinking well could i maybe do things like cover calls potentially that's the idea which is another income strategy like dividends now what are you going to know since we're going to go to buy custom with stop and what and by the way i want to take something back i'm going to right click on that chart right click we're going to go buy custom we're going to say with oco bracket now i am not right now really thinking that the stock maybe in a month is going to go up here to 121 but if it did some investors might say james if it went up to that 121 a month two from now some investors might say james i'm going to take that rally and i want to sell into strength so some investors might put a little target there and say if you go up to that area you do not have to twist my arm set if it gets to that price or higher now can a trend trader have a target can they actually have a spot where they don't mind in selling those shares sure does that mean that they're a trader no it just means they're actually saying i that would be an acceptable upside potential for the investor consider taking profits now if we actually talk about the downside and we said where's that potential level of support we got 96 or 96 and then below that we got about 89 58. now i'm going to kind of move this down a little bit and i'm going to try to use let's say that 10 period moving average okay about right there okay now that level if we took let's say a stop three percent below now some people like that three percent we'll use that in this example it's going to be 92 21.

okay now notice what we're going to do is 92 21. now someone might be thinking to themselves well how do i know how many shares that is i don't think like that i just go over here to the pool balls and i just click percent now and then it goes dollar amount and so this is where the investor could identify how much capital are they going to put in in us dollar terms well if we actually take a look at 40 000 that's what the budget is which is 4 of the account balance or the account size starting of the year right above the dollar amount we're going to click on that uh right there and it really gives us 395. now when you see 395 what all of a sudden is going through your mind 395. we really going to buy 395.

are we going to go down to 300 or could we actually go up maybe in this case let's say 400 well my gosh if we're five shares off okay and those five chairs are really 500 bucks you know in this case we're gonna actually move this up we're just gonna buy 400 chairs since we're literally 500 away from actually just getting well 400 shares so we're doing 400 shares of conoco phillips 10102 target price stop anything wrong on this uh yeah the the stop order is not the same so gonna go down to where it says day gtc gonna click on confirm and send okay so this is a stock trade now it says it's type stock stock stock it's stock notice there's no commission this is actually saying if it goes to that price or higher sell the stock and by the way if that stock actually opens up let's say exxonmobil buys conco phillips and the stock actually gaps up to let's say 130 could it be sold at a higher price maybe even a lot higher price the answer is yes okay the stop if it goes to that price or less read it again stop orders no guarantee the executive price will be equal or near the activation price so notice what we actually see in this case is that's the risk of a setting a stop you could actually be filled at a lower price level now there's not a commission but there's the capital involved now the whole idea behind the form the shares is number one is could the investor actually get a dividend we need to see when that etch dividend is this is on the 15th that's when it should be when the payment is we'd like to see when is the x dividend when's the first day it trades without the dividend and it looks like it was actually back on 627 which seems like a long time ago and not very close to the actual payment date so that's a little unusual but yield is actually 2.74 now the other thing we're actually going to do on this because it's right here this trade right here down below is what type of position what do we have well and since we're on we're just going to go here okay we're going to go for it and we're going to do a little thing just real quick let me move that up so we can see it so down below and so when i go to the trade type in cop anything that's in this account is going to show up down below so here's the shares that were just purchased here's our short put position this was done before before like when done on the night so two days ago so now what you're gonna notice is in two days and that shouldn't do that i mean my gosh two days ago it was sold for 294 and it's at 144 is that common to get 51 of the reward in two days the answer we probably say is what count on it okay now if someone actually had a 50 return potential in two days well they might say james could we roll this put how do we do that now by the way does the september expiration still have 36 days remaining absolutely could the investors say stay in the same expiration month but just roll up in strike well let's go consider together what we're going to go is actually say okay so the strike that is here now only has an 18 delta we have higher gains when the delta goes lower less likelihood of the stock to be below the strike so if we said well let's go back to where we started a delta of 30 to 40. which one has that well it's going to be the 95 or the 97.5

so we're going to roll the option okay we're going to try to profit create a rolling order rolling or just means we're going to buy it back which is the second one actually the second row and then we're just going to say look we're going to stay in the same expiration and we're just going to move up in strike don't mind if we do okay now the one of the things we always talk about is we could actually consider the rolling if we can do so for a credit and it just so happens we stay the same expiration we're rolling up in strike and we're still doing so for credit gonna fall right what it actually talks about right in the online course be amazing if i read the thing right so that's what's actually funny about this is if we actually read the online course we come to the online workshop we come to the classes actually where we actually talk about this type of strategy all of a sudden it starts to make more sense and we start to see the consistency of the teaching interesting that'd be that could be fun now what you're going to notice is going to go confirm and send and send that order now just real quick as we've been working this platform you might be thinking to yourself well james i don't really move around on it as smooth as maybe you do okay or somebody else okay or ben watson or cameraman whatever right so what we actually have right now quick thing i want to make mention of is we have a way right now if you said james i'm interested in learning more about the platform we actually have 30 to 45 minute sessions regarding actually on using the platform or how to customize the platform these are one-on-one sessions not one-to-many one to you and so we have a licensed representative where you can actually set up a time a date and a time of the day that would actually work best for you and you're gonna notice that what is this not if you said i would like to talk to someone about strategy specific details or stocks what about my stocks that's not what this is this is not about technical support so this is about how do i get the platform to maybe how i use scripts or how do i actually maybe use the scan feature how do i make the watch list how do i actually kind of review like what my positions are or can this platform do this that's what this offer is now how much is it zero okay so the one thing i want to make sure and i just want to make sure i get to you is if you actually uh click on this link that i just sent to you right now right in the chat it will be as simple as follows okay well if i actually click on this link what it's going to do is it's going to take me just real quick to a page and it's going to ask me to say okay do you understand the basics okay if you read through that and agree you can say i agree and then what you're going to notice is if you say i would like to actually do a demo okay i'm going to click on that and then it's just going to ask us here in this case what date and what time works best for you as simple as that so if i said i need help august 22nd and i i would like to do it at 7 00 am okay i can click on that pick what time and now if i actually do that and go down and say continue i just type in my name etc and now i can get that one one-to-one help we think that would be very helpful that's why we just wanted to make sure you knew about it okay so simply go to that link that i actually sent in the chat and there you go now i want to actually kind of go back to we've got about seven or eight minutes here are there any questions that i could address so number one is we talk about xom we actually talked about buying that back the position we also talked about was the cash secured put on disney then what we also did as far as the second new trade is we also did the position on conoco phillips and rolled that position okay now are there any questions now as i'm kind of seeing if there's any questions out here i just want to kind of look through a couple stocks just briefly so number one is honeywell which is also in industrials that's a stock that could be on the cost of trying to break through that area of resistance we know that boeing another industrial stock that's actually one that's kind of at this major area of resistance 168 that one also got past earnings could this stop maybe the next couple days could that start to make some higher highs and higher lows now if we actually look at stocks in the reed space we talked about this about two weeks ago with rates not really going higher even despite the fed funds rates going higher some reits okay coming back up a little bit now we're talking about financials slash real estate the one we actually talked about and did the example on was a company right here in utah right called extra space storage and it shot through 190 and then it sliced slides through the 206. so some of these stocks in the reit space well they're kind of coming back as maybe some of those as the interest rates the t and x i'm talking about the 10-year yield as it kind of pauses and that's what we kind of call you know kind of watching those relationships these companies borrow money and if the borrowing cost is lower their profits could be higher but if the borrowing cost is higher and maybe the real estate is a little sketchy the economy is a little sketchy then the profitability might be a little lower so we're going to keep an eye on those now i'm going to go back to also one of them uh that we actually brought up before but i'm going to talk about a new trade on it now one of those we're actually going to bring up is q com now the reason why i'm talking about this is what you're going to notice is this was a stock in a downward channel okay now jesse says john deere my gosh i swear right there jesse uh john deere's right here so let's talk about cucumber real quick to also talk about deer gonna do two trades in six minutes so here we go so if we actually look at qcon we're gonna do this from kind of a side so investor might say james i see this up moving the price but i also kind of see that the stock might be in a flag and i would say i'm okay with that okay so the stock went up and then lately you're gonna kind of see that we have like a lower low and then a lower high now the investor might say james so this right here we just call that the pull part the pull plot part is where the price ascended to the upside the flat is where we actually have lower lows and or we can also have lower hives like we actually see here or it can actually be more sideways where you have equal lows equal highs okay so let's see what the investor said james i want to get into this position if the stock actually got above today's high and i'm going to actually do this in terms of a stock trade so what the investor could actually do is use what's called a buy stop okay we're going to right click on this chart right click we're going to go down to where it says buy custom we're gonna do with oco bracket so a buy stop is really saying if the stock gets at or above a certain price okay now the price that i'm gonna put in our example is a hundred and fifty dollars okay now what we're going to do is if you said james i don't like buy stops because i don't know what the what's the most of the investor could pay for it i'm fine with that so i'll go ahead and help you out here and if we said how could the investor learn maybe how to put a ceiling here okay well 150 says look if the stock is entered above 150 buy the stock but it's not going to buy any higher than 151 so the limit is where the investor says i'm no longer comfortable in buying those shares of stock data gtc why are you doing gtc because i don't know if that stock's going to get above 150 today or tomorrow right typically we'll let these orders sit here for about a week now if we actually went back on this chart and said where's potential support well if we actually use that 140 66 as far as setting a stop less two percent we're going to actually set that stop at about 137.84 okay data gtc okay now what what about the target here well look what about the target let's go actually back and look at it where might be a potential area of resistance well if we finish this last part where might be a potential area of resistance if we're talking about let's say multiple touches i think if we're talking about multiple touches i think we're probably talking about let's say 161 171 if we said what might be potentially more probable we don't know if it's going to go there let's say we actually said 161 okay so now what you're going to notice is by the way the investor might say james i don't share the same level i'm going to do it higher that's fine they could actually just type theirs in there on their page money account now if we actually did this and said confirm and send the only thing i'm actually going to do is i'm going to go back and actually say what's the capital size 40 000 264. now this is not near 300 per se we're actually going to lower it and say 200 shares we're trying to find increments of a hundred two hundred where possible confirm and send notice the stop again and saying that price are less with stop orders there's no guarantee that the execution price will be going near the activation price we know the risk is the stock could gap down below that we also know on a sell limit you could gap above and be filled potentially at a higher price which that would be a great scenario if that were to happen okay what's the commission zero now that's okay the investor's gonna send the order and now that order's there so this is the buy stop limit buy the stock if it goes to 150 or higher and i am no longer comfortable to buy it if the stock is a dollar above that price simple buy stop limit okay now let's go back to john deere okay now if you actually saw my twitter page when i went to oklahoma uh my family bought that new zero turn mower oh my gosh that cup over on it oh man i admit it it was john deere make some nice machines i'm not gonna lie those people in illinois the caterpillars the john deere's they know how to make some machines back there in illinois now john deere actually has earnings actually coming up so the last trade i'm going to do here is we're actually going to go back to the selling the put we're going to try to actually do an example of selling the put maybe right near the moving average since this stock has earnings coming up okay going to maybe try to sell a put a little lower in terms of the strike and have a little less or a little lower delta so there's lesser chance of the stock being below the strike now where i drew that line was really 339. we're going to go back to the trading page last last trade here we're going to sell the put of the 340. now that 340

last thing i'm going to say here is that 340 has a delta 28 that's lower on purpose you might be saying why are you doing that well it's because we're trying to actually sell that with a lesser probability to be uh below that strike so i'm going to stop there but that'll be our last trade that's the obligation to buy the stock at that strike from now to expiration want to just do a quick reminder that with what we discussed here today he was done for example illustrative purposes only subscribe to our trader talks channel stay tuned for our next webcast coming up right at the top of the hour feel free to practice and also a reminder i'll sign up that you get that one-on-one help as well i want to thank you so much for your comments and your participation stay tuned for our next webcast coming up right at the top of the hour take care

2022-08-17 08:04

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