Technically Speaking: Trading the Trend | James Boyd | 6-17-21 | The Nasdaq Fights Back
[Music] hello and welcome to technically speaking trading the trend weeks to months my name is james boyd we welcome you here today terence annette jen quay david uh grace pierre mike giles sergio david uh welcome everyone here today my name is james boyd great to be with you uh here also in the chat got my good friend michael keely here he's been on the mend and that's good to see he he needs that so um maybe kind of tell him not to ride that scooter as quickly as possible maybe put some handrails on there yeah we've all been hurt before michael hopefully you're feeling better all right so let's go ahead and get started now remember you can follow michael or myself on twitter we do post edge accounts educational content there daily we talk about how really thursday is trend trading thursday and it's very important that we actually pick this up because really we need to grow the accounts because we're going to one day kind of need the income from those assets and also have an asset based to really work off and live off now remember as we talk about investing remember carefully consider the investment objective risks charges and expenses before investing remember when we talk about options their uh options are not suitable for all investors especially risk inherited trading options also remember we're going to demonstrate the function of the platform here today td ameritrade does not make any recommendations determine suitability of any security or strategy for individual traders and also remember that when we talk about investing and looking at options remember the option greeks delta gamma vega and theta now as we talk about our agenda here today wow the we've had some fluctuation really in the market i wouldn't say it's been severe but it's at least moved okay and when i say it's not severe i'm not talking about uh some commodity prices here okay we're going to talk about indexes sector update which ones are going down which ones are potentially benefiting from the other ones going down really want to kind of nail that down then we want to talk about income and protection differences i know in the last two days i've seen some stocks that have actually gone down quite aggressively and i think it's actually important that you actually understand the differences in income strategies and protection strategies and when an investor might use both as they're trading the long-term trend we know that the long-term trend is not always just beautiful sometimes there can be kind of some beat down price action moments where the investor is saying i'd like to invest in trend but man short term it can be painful i want to kind of talk about how to maybe consider alleviating some of that pain or kind of putting the defining the risk and the probabilities on more your side and also decreasing that uh that volatility in the portfolio and on the position we'll talk about stocks exits and entry of protection we'll also talk about bullish outliers so let's go ahead and kick it off now if we take a look at really the s p you know here we were 42 57 uh just three days ago prior to the fed yesterday the fed actually comes out they said they were going to uh raise rates potentially two times by 2023 now if you're asking me personally what i think i think it's kind of funny okay in two years you could be in a recession so they actually gave a forecast of what they think they're gonna do they don't know if they're gonna do it but they tell market participants there is a risk of actually having uh two rate hikes now when you think about other countries that you're doing rate hikes there's not that many other countries the only other country i could think of they had a rate hike was russia okay so it's a forecast now if you take a look at this we're going to see that the price when we look at the the index level it fell down to the 30 period moving average and it's trying to bounce back up we kind of saw some price action like that right here and right here looks very similar okay so on the s p it's still holding a support level but when you kind of take a look at the fluctuation from high to low the index okay has moved 1.3 percent from high to low okay now that doesn't mean individual stocks only move 1.3 that's the index now when you look at let's say the nasdaq would you expect there to be some volatility there but no uh now by the way has there been a little volatility from high to low yeah from three days ago to yesterday it moved 1.92 percent but today what we see okay sorry i had to do that uh well it's in a brand new hawk so it's kind of interesting that we're not seeing the same thing across the board and this has kind of been that continuation of what we said that the technology has been fierce back to the upside quite remarkably so but also maybe we want to keep an eye on discretionaries okay so the nasdaq despite still made actually a brand new high now some of you like smaller caps we don't talk about small caps a lot but small caps did get hurt a little bit if you raise the rates they might actually be more affected potentially than larger caps perhaps and when we actually look at volatility some of you guys saw were talking about hey even though the market went down a little bit yesterday i think it was less than a percent the volatility did not even go up that strongly and it's still below the 30 period moving average so far so if there's a lot of fear in the market well at least on the volatility for the s p 500 we're not really seeing fear that the vix is for the s p 500 the vixen is for the volatility index for the nasdaq and if you take a look at the volatility index for the nasdaq you could think of it as a fear gauge you don't see a lot of fear when there's not a whole lot of fear people tend to be more buying than selling now sectors wise now we know that everything has not been the same we saw energy stocks or energy the sector actually dropped about three percent here today so it wasn't a small drop some of these stocks for example like exxon uh it's down 168 conoco phillips etc that was actually down about almost two dollars here so you're seeing a little volatility we're going to talk about that okay but when you look at basic materials this has not just been today it's not just been yesterday you've just seen that really the 30 period moving average had acted like support until it wasn't and the price fell down below the support and you're gonna see that they're just red candles now it's pretty simple when you see red candles those are not typically viewed as entry points okay red candles typically mean well there's less buyers or buyers willing to buy the higher prices and more sellers putting pressure on the price basic materials getting blasted okay and if we look at let's say industrials we would also include industrials in that area if you look at a stock like caterpillar it looks like it's a machine that's off the edge of a cliff right now and if you look at industrial it's definitely getting pushed down but here's the thing i don't think anyone can complain about the runs at the last three months of these sectors these have been huge you always get there is a you know a run in the price and you're seeing on all of these just kind of getting to the end of that trend at least right now so when we actually look at these trends these have been trends that have gone for about three months and the blue line or the yellow line now that i've drawn it you're now seeing that price break below the line and this would cause some investors to get stopped out or they might manually sell so sometimes people are confused and say well why is the price going down the price might just be going down because it's below support and investors are waiting for the price to go up a little bit and if they want to sell more they're trying to sell into higher prices and if it's below the support they might use the opportunity to sell and move or shift the money over to other areas that might be better suited or maybe that are going up in the opposite direction now that opposite direction not a surprise would be technology now here's the here's the thing don't forget okay you do not have to buy individual stocks people buy individual stocks because they're thinking a little enhanced return but volatility up and there's volatility down okay some people just buy indexes or sectors they're trying to get exposure but not individual company and they're trying to get really good exposure to trends someone might just buy the tech space in itself if we look at let's say utilities utilities broke out pulled back yesterday on the volatility of the the tnx trying to go back up here today but still holding and if you look at healthcare like we talked about on on tuesday look it's bullish engulfed it's bullsh engulfed itself here today trying to actually make a little shorter term flag still pretty strong but probably the one outside of technology maybe an investor might consider for a sector play might be discretionaries okay so think of it like a teeter-totter right if energies or materials or industrials are going down and investors sell and now there's cash in those accounts well they might take the cash that's in the hand and they might come over and push up other areas okay so if one area goes down it might cause the other one to go up or cause that area to become more attractive okay now are there any questions with that so far so if i listen to the first couple sections i would say uh nastic is the standout okay followed then by holding up pretty well s p limited volatility so far in the s p uh second thing that would kind of be uh that i'd be thinking about is energy materials industrials financials we probably need a little discussion on protection there because those are four sectors where some investors might be exposed to those areas areas such as tech health care discretionaries those are some spots that really don't look that bad so in this market it's not all sectors moving up you're seeing some little rotation here some sectors are breaking below support while other sectors are breaking above resistance so we need to kind of stay on point there now let me know if you have any questions okay now i i think this as far as the agenda item number two here i want to talk about income and protection differences okay this is something i think you should be aware that when stocks go down in the shorter term or maybe longer term okay what are some of the tools that the investor has if they wanted to use options as a way to protect okay now i'm going to kind of use these headings here cover call long put collar as kind of like a discussion point for strategy and then on the left hand side these are going to kind of be some verbal talking points that i want to kind of address okay now this is not going to be like james is going to tell you let's have a discussion on this because i think when stocks go down sometimes investors can be like dear in the headlight they don't know what to do or what to even consider or what strategy to maybe use one versus the other okay so let's take about five minutes and just verbally talk about this and then we're going to talk about conoco phillips we'll talk about exomobile some of these stocks that might have been affected okay the paid money account is long those positions but what should the people in the account consider in terms of maybe applying or using options with those stock positions so when would an investor use a covered call okay when would an investor use a covered call well the first thing is there as we verbally talk about this is we would be using a cover call when we think there's quite a bit of support level we think that stock is probably going to pull back less than five percent in other words that's the forecast so if we're going to use a cover call we think there is a good or a strong level of support so if you look at a stock and you say i don't see a level of support really that is that strong you're probably not going to use a cover call okay now if we for example said when would an investor use a long put well the investor is probably going to use a long put when the implied volatility is probably in the bracket of 15 to 24 or in other words lower when the implied volatility is lower okay when it is those puts are less expensive when they're less expensive okay it's kind of more interesting to buy the put because that put gives the investor the right to sell and when the investor might go along the put they're really thinking about in this case of okay they want to have a defined risk trade now if you said well a caller what is that well a caller would really be the combination of the investor owns the stock they sell the call and they buy the put of these three it's the caller that is the most protective the caller has capped upside and it also has maximum or defined risk to the downside all three so the cover call will be viewed as an income strategy the long put in the caller that is a defensive or a protection strategy now we would consider if we started to see stocks that were breaking support like we saw with energy like we saw with materials like we saw with industrials like we saw with financials okay this is when the investors say hey i'm starting to see a break of support they could start to use a cover call long put or call okay if they started to see james i kind of see more of a sideways price range i see upcoming earnings or the market is just kind of more flat that would be times to use with all of them okay now does the investor need a hundred shares minimum does the investor need a hundred shares minimum for the cover call yes or no 100 shares minimal now make sure you're paying attention because we've got three trades we need to kind of talk about which strategy we're going to talk about in use on a cover call we would need 100 shares okay so in this case what you're going to notice is the cover call we need a hundred shares and for the caller the same thing we need a hundred on the cover calling the caller but with a long put we don't need a hundred shares but i would say in this case probably 50 shares minimum 50 shares minimum now on the expiration or the strike selection okay when we typically talk about a covered call we would like to first probably look at out of the money or above because we like to at least have some upside on the stock okay so first option would be like geez go out of the money maybe a delta of 30 to 40. okay in other words out of the money or above the current stock price now on a long put where would that put typically be where would it typically be would it be or tend to be at the money or would that long put strike be below the current price well the biggest etching thing is the long put would typically be be low or that strike would be below the current price okay think of that long put strike as a safety net to the trade now a caller it's going to be both right you're selling a strike above and buying a strike below the current stock price and you that's why you have defined gain or maximum gain and a defined risk to the downside okay all three of these could actually really be done within that ballpark of an expiration of 20 to 50 days now of these three which one is the most dangerous as far as downside risk of these three which one is the most dangerous okay i'm not using dangerous lightly the long put is not that dangerous because you actually have a defined risk you can sell the stock at the strike price same goes for the caller okay the one trade that actually has the most risk is the cover call the trade that actually has the highest likelihood of being stomped out or losing the most is the covered call okay now let's kind of take this and now let's go and kind of talk about uh the difference here and i'm going to use conoco phillips okay now i want you to think back okay let me kind of delete this real quick i want you to kind of think back just real quick to would you consider using a cover call long put or a caller on conoco phillips now you've got to remember here's conoco phillips conoco phillips is a part of ixe now here's ixe and if ixc is not able to hold that 30 period moving average as a support level is sold off and guess what's in ixe or that sector conoco phillips so you need to understand something that if the neighborhood value declines the individual stocks or the holdings in that fund they're also going to probably decline or have a high correlation to decline okay so don't think well my stock is a good stock other people don't think like that they think the stock is correlated to the sector now if we were to ask what type of strategy would you use a lot of you actually said james i would have considered a cover call well why would you consider a cover call now one of the things we actually said about considering a cover call is we think we can see defined levels of support so when we actually go to this chart and by the way i want you to listen to this from an exit point of view if we look at this and say okay where's the first level of support well there's one and here's a secondary area of support here's two okay so the price has already fallen down to the first level and if we said hey if it broke if it fell down to even this next level from where we are right now is that greater than a five percent drop so this first level of support does not hold and that price smashes its way down to the next level well someone might actually use a protective put if they think that decline potentially could be greater than five percent in other words more directional movement the other way they could look at is maybe they could say well let's go look and see what the implied volatility is and i said okay someone might use buying puts or long puts if the implied volatility was between what to what james you make me listen i like i i you're asking me to recall something here well i said if the implied volatility was lower but i gave a specific range i said between what to what that's right 15 to 24. well when you look down this option table you look at the annualized implied volatility i don't see any of these 15 to 24.
so do you think the paper money account is going to buy a long put no it's not because the volatility is too high when the vault and by the way you could buy a long put you're just going to pay a lot for it but when that volatility is that high the investor who is selling the option is going to try to sell when the implied volatility is higher big premiums now those bigger premiums from selling the option are also going to help pay for that more expensive put now we said that whether we look to the cover call the protected put or the collar it doesn't matter we could actually look at all three in the same expiration month within 20 to 50 days to expiration okay now i don't want you to think about well all james is talking about is bullish that's not true i'm actually spending time talking about positions in the portfolio that are at risk of declining now some investors set a stop other investors they actually use options as a way to protect which they have the right to sell the shares at the strike now in this case if the investor said you know what james i want to actually go out and in this case i'm going to sell the option that is out of the money well this option this first option that is out of the money in this case has a 45 delta that has a greater chance to close above the strike price okay noted that now if the investor said james is it possible maybe if we could look and see maybe the weekly options to see if there's a little bit more strike selection uh i don't see on the ones right after that there's a lot it sure looks like the monthlies is kind of where that liquidity is and i'm just looking at the open interest column i don't see a whole lot so we're gonna have to stick with these monthly options not the weeklies so if the investor want to sell that option they're gonna use some of that credit to help pay for the put and we said the put strike was going to be below now again that should not be that hard because if we wanted protection we're just going to buy a safety net underneath the current price okay now how do we do that if we have 400 shares already that's at risk we're just going to go right click on the bid of the option and we're going to go sell and in this case we're going to sell the sixty dollar call okay so why are we doing this well energy is kind of at risk here we saw commodities get sold off got 400 shares of this stock i mean if we start going down three four five dollars this becomes very painful quickly okay what this pay money account is trying to do is trying to reduce the directional risk so it's selling the 60 call that's bearish buying the put that's bearish now and it's also doing it for about a 93 credit now what is that really saying it can make up to 60 but add 93 cents or 92 cents okay now if this was okay okay if the investor said okay i'm not going to do one contract we're going to do four contracts okay now in this case if the investor did this and said confirm and send a little bit unusual and we need to actually uh we need to actually cancel that stop there that's why it's not all going to allow us to do that but we fixed that here now what we see is when we go to confirm and send it's not going to give us a legal okay now if we take a look at this selling for selling the 60. now when stocks go down typically people do not say to me i'm concerned about the upside when stocks are going down people are typically concerned about the downside so when we look at the downside it's the right to sell the shares at 55. a lot of times people don't buy puts to the downside because they say things like i gotta pay for them well let me think let me ask you something don't you think people already paid for the loss almost already with this with the amount of money they gave back already don't you think they could have just bought the put you want to see a couple stocks that actually just look like niagara falls right so the biggest actually thing is they did kind of financially have the withdrawal or the the draw down in their account already now they're probably thinking about geez i wish i would have just bought that put so sometimes you need to think about what's the sector doing what's the stock doing and sometimes it can make sense to just apply some shorter term protection and try to get through some volatility now what i'm going to do is this was our first example here of a caller strategy now in this case is the paper money account would like to give it about eight or ten days the whole purpose of giving it eight or ten days is to find out where the resistance levels are and if that stock were to break resistance at that point in time the investor could say look the volatility of the rain or the thunderstorm has passed and now all of a sudden they might say i'm gonna take the call off and i'm gonna uh unlock that upside potential but it typically likes to give it some time to have a kind of some time to see where the price is gonna go okay now i'm gonna shift a little bit but we're gonna come back to one more example and we're gonna look at that example of uh slg which is a reit okay but we're gonna talk about doing a covered call protected put or a collar now let's kind of talk about what are some stocks because we said before some sectors are going down but other sectors are going up what in the world well what are some of those bullish outliers okay so if we take a look at let's say some of the stocks and i'm just going to kind of bring this up on the left-hand side okay we have stocks like amazon uh they have not been kind of slowing down they've it i'm not even going to call this an upward trend i'm going to call this a vertical trend okay it's pretty rare to see something that goes nut almost 90 degrees straight to the upside now you know that we've talked about nvidia okay that's been going up just a little bit okay now here's the thing when you even look at stocks for example like tesla not necessarily reversing quite yet not yet but then if you look at say some stocks such as paypal and paypal is kind of one of those that's trying to break resistance by the way in the paypal account with 100 shares of stock is also a small company called square and that's kind of interesting because the paperwork account was assigned to buy the shares of the stock and it had a loss and now that position is down just 300 so it's kind of interesting how that works sometimes so squares actually had a big move then you look at the small company called apple and if you look at apple that doesn't look like material stocks and if you look at microsoft ah that doesn't look like material stocks either so what you're going to kind of notice is there's a little swaparooski okay people are selling those materials some industrial some energy names financials and that money is shifting again think of like a teeter-totter one area goes down the other one goes up this area goes down the other area goes up now sometimes you get all sectors to go up sometimes happens like that but maybe not always sometimes you have some leading sectors now i'm going to go back to actually square okay now the reason i'm going to go back to a stock like square is it kind of has us up and down up and down motion here okay now the paper money account has a position it's a hundred shares of stock the strike price that it that that it was assigned to buy the stock at was 240 it's currently at 237 so it's down a little bit okay now what the paper money account is going to do is it's going to go in and try to sell again now sometimes there's this comment regarding risk reversal and if you talk to portfolio managers okay when you talk to portfolio managers and you say risk reversal what that typically means is price was in this case and i'm going to speak to this first the the sentiment of the price was down and then all of a sudden there's a risk reversal okay there's a risk of staying bearish and the bulls start to take over makes a higher high pulls back one two bang and you see it actually makes a higher low with a higher high this is what they call a a bearish to a bullish risk reversal trade now a lot of people like these reversal type trades of price action which could be bearish to bullish or bullish to bears because the reward to risk ratios are kind of interesting now the paper money account is going to go in and try to sell another put okay now sometimes we have a number of these stocks with upcoming earnings when they're about maybe three to six weeks prior to the earnings this is when it gets interesting to watch okay watch which stocks hold on you do it okay you put your hands up okay good now in this case we want to kind of watch and see what stocks are breaking up or down prior to to our earnings because that might be in this case investors that could be speculating what those earnings could be and they might be trying to buy the position with the expectation that the earnings might be what they thought and or potentially better so the paid money count first trade we're going to do here today is we're going to go in and look at that option 20 to 50 days we're going to go look at the ste right that really has a delta in this case of 37 okay so what you have in this case is the strike is 230 the delta here is 37 and if you uh we could but if we look at this we could click on that 725 now this would only be done in the ira because we have to be thinking that if those shares were assigned to this account okay we would need in this case twenty three thousand dollars now i i'm not even gonna look up there might be a question okay not even gonna look up but someone might be asking a good question could we do a vertical so if someone had a lower dollar account where the position size is not or they can't buy 23 000 with the stock then clearly the second option to that would be yes it could be a vertical right that's why someone might do that and have less okay potential risk to downside and it's also where they say i don't have allocate i don't have an allocation big enough to buy 23 000 worth of stock so first right here we're gonna sell the uh 230 put okay and we're going to look at the mid price of 750 which is 750 that 750 dollars is for the potential okay obligation and it's really not even a potential it can be assigned prior to expiration and in this case that is for the commitment to buy the stock potentially from now until expiration max losses if the stock falls to zero and this is in the ira okay now what i'm going to do in this case is we're gonna go ahead and see him now i'm gonna okay so so now mine for some reason in my paper money account well it's i probably know why but mine is saying hey james your buying power is kind of dried up okay if i actually see that my buying power is dried up what i'm going to do in this case is i'm going to go out and just buy a inexpensive put that is going to make it typically where i can do this trade and by the way we have more money invested in this ira than than people probably think but if we were to go look at buying a put with maybe a delta of 10 or less okay there's a couple of them but if we went in and said look i'm going to buy a put example given 195. and we said why that we're looking for something with a delta 10 or less something where there's liquidity okay and what you're going to notice is there's a couple of them that are delta 10 or less that one this one this one this they are pick which one okay now if we do that it does reduce the credit because we're paying for the put but what we're trying to do in this case is make it where we're not tying up as much capital to do the trade now what we're going to do in this case is see if we can send the order and now that goes so i had a problem with the ira account because i have other short put trades on that's tying up the buying power or the capital that's sitting there and by paying 85 cents or so was able to do that trade now i want to go back to something just real quick if we were to look at that stock i want to go back to paypal just real quick okay if we go back to paypal sometimes people like to see stocks that are breaking out of a basing pattern now i'm going to kind of play the role of someone saying not saying someone do this but let's say they did okay someone might say yeah it's it's up but it's near resistance okay oh fine fine fine okay same idea here what you're gonna notice in this case is you got a little earnings okay 728 here it is about five weeks away now if the price is trying to break out of resistance okay ahead of those earnings could there be some people speculating now this class is really trading the trend weeks to months so i just want to make sure we got our feet okay solidly on the ground here is this something that isn't an upward trend i'll just take a yes or no do you see something that's above a support level do you see something that's potentially trying to bounce or break out what do you see now if we kind of take a look at this and said what letter of the alphabet do you see on the chart and we would say well the letter of the alphabet we see is the w for washington okay i don't know why my grandma would always say washington i was like graham that's washington okay she she told me it's washington now if you take a look at this you're gonna kind of see that we have what we call the middle of the w and if that price starts to get above the middle of that w this in the middle is what we call the lower high okay the lower high so on the right hand side if we actually get the price where it gets above the middle the w also known as the lower high then this must being ding ding ding come on down this actually means that this could be a higher high now if it makes a higher high what rhymes with higher high higher low okay higher high higher low potential bull flag right potential change in the trend well on the daily chart what we see on this now some of you might say well james i'm not an option investor that's okay you might say i'm gonna maybe do a stock like trade now i'm gonna actually pay i'm gonna do a stock trade on this but you need to understand something if we were talking about a stock trade could it be an option trade provided that there's liquidity oh of course okay but we have to understand not everyone trades options okay even though they already do options in their life already on their car on their house on their life on their dental uh everything they already do options but maybe they don't do options on their portfolio okay now if you take a look at paypal what we're going to do is we're going to just right click on the chart right where the price is now right click and what's going to happen is we're going to go to buy custom with uh ocl bracket now the whole purpose of this ocl bracket is so let's kind of make kind of look at the uh position sizing first we're going to actually kind of change the pool balls to percent percent to dollar amount so if you just click on this it's just changing uh that's the shares that's the percent i believe of the portfolio i've never used that and that's going to be the dollar amount of the portfolio a typical position size for this paper money account would be about 25 000 so in this case it's just we're going to do the position cut it really in half okay so in this what i want you to see in this case is it's only buying half position so what it's trying to do is say look buy half here but then if it were to break out leave some powder capital okay then it can add to the position okay that's all it's doing so it's buying shares of stock now how do you know it's buying shares of stock well see stock right there three times we don't see anything that says expiration we don't see anything that says strike not an option and then if we just said okay there's the stocking so we know it's a stock trade now when we actually take a look at this the investor might use this maybe today's open price as maybe an area to set a stop now james that's a little tight brother well that's true okay but some investors like setting a little tighter stops there's pros and cons of doing that if the investor used today's open price a stronger bullish candle they might say look i'm going to set a stop right below today's open price 260 20. so all i'm doing is taking today's open price last three percent data gtc okay and also on the target we're going to do gtc now is there any how could we measure potentially if the stock were to go if okay where might the stock try to go to if it were to break out where might it try to go to and guys and gals i think this is gonna be just a piece of cake okay when you take a look at this in technical analyses 1010 page one sentence one paragraph one it literally says look if you got a channel if the stock were to break out it might try to travel the width of the channel well that width of the channel in this case is about 38.
so if that stock broke out of resistance really 30 that 38 dollars would really be right in the vicinity of 312 dollars so that 312 dollars is also right in the area okay of really that high right there so if you see that these the target and that high are so stinking close together the investor might say you know what i'm going to go ahead and set my target really at that prior high okay so very important there we're going to actually set the target at 309 we got to stop at 206 260 20 and what you're going to notice is this is a half position now remember and i'm just going to say this was this well let me back that down a notch okay what can be so frustrating is when you had like a plane of what you were going to do like you get in half position and then you said i'm gonna like add to the position if it's confirming the breakout but the problem is you never got in that second half or you took profit on nvidia and you felt so smart like the paper money account but then forgot to keep an eye on it and add another position oh that's i i couldn't think of anything that is more frustrating than that okay no i couldn't think of anything now if we take a look at this we're gonna go confirm and send we're buying those shares not a commission okay yes pierre of course i do buddy go of course i do now we're going to go ahead and send that order so now what you're going to see in this case is let me return that order i'm going to have to actually do this in the in the margin account i'm gonna have to double take a look at that uh ira to see why that's doing that okay i'll fix that but we're gonna do a half position twelve thousand five hundred in the ir range i i will fix that i will note that okay now are there any questions from your side okay of what we've talked about here now let me know now uh the comment from i wish paypal uh let me actually see that comment okay so it looks like it was pulled back now riff says james can i do a long call vertical or short put vertical as an option trading or synthetic so guys and gals if we're talking about a bullish trade whether we talk about stock a long synthetic a short put a short put vertical or a long call vertical each one just has a different sensitivity to the direction of trend okay each also has a difference in breakeven and whether it collects or pays time decay or whether it actually is benefited from volatility going up or down but nevertheless if if the stock goes up and someone did one of those bullish trades could they benefit yes the stock investor could benefit the long synthetic can benefit the long call vertical can benefit it just it's going to be in different amounts okay of how much it benefits if the investor okay buy stock that is the most bullish thing that they can do capital wise and it's the most bullish thing they could actually do because it has the highest delta okay now don't make me go out to my garage and get my ping driver again and then give you an explanation of why there are different clubs in the back or should i go get it okay okay here we go now you you now know why michael keeley is on here he's his job right now just right now is just kind of make sure that james you know sticks to the charts all right so the other comment is thomas says i've heard you say before that many times on a pullback you may get 10 red candles and many people get out before it reverses ah so something a little different there what you'll actually see is the price a lot of times will go up and when the price actually pulls back or flags okay you'll see a lot of times that the flag portion might be like a two week consolidation and that how many how many days trading days is two weeks well ten days and after those ten days the stock sometimes can sometimes do that little trend reversal sometimes that actually flag where it runs up in the price consolidates sideways and maybe after potentially a two week consolidation maybe longer maybe shorter but the price breaks out of resistance so in this case is two weeks is probably your average or if you're like uh someone who likes math you might say well james maybe is it the medium well i think you could say that the median or the mean would probably be pretty close together okay i'd probably be looking for probably about a two week consolidation and then be watching okay with both eyes to see if it's breaking up through resistance because after two weeks you kind of get the zigzagging and then if that price were to break out of resistance the investor is ready the biggest thing that investors i think thomas that they discredit they don't fully understand what's happening is the flag is just a consolidation after a price rally so for example if you had this big run right here this is huge this is number one okay huge the flag is the consolidation of the recent price rally so if you get a flag whether it's sideways or it droops down the investor is still overweighting the implication or the meaning of the prior rally before it ever got into the consolidation so if it actually had a run then consolidates the investors saying hey look the the there could be more fuel in the tank here to break to the upside so do you overweight the flag or do you overweight the poll and many investors have experience they say james the flag is just the consolidation i'm overweighting the poll there could be more potential upside okay now i'm out of my time here today but let's take a quick look at really the spx see where we are spx is really sitting here down about one again sometimes people will say things like the market got killed well i mean i i don't know i mean if if you're saying the market got killed and from high to low it went down 1.25 from high to low you know if you think about a checking account i mean and your checking account went down one percent and someone said my checking account got killed just i'm not really sure if i understand where that's coming from okay if we're talking individual stocks that fell down probably almost nearly six eight ten percent i think you're now talking about something that's had a more of a directional move lastly if we look at let's say the nasdaq itself the ndx that was at a high it's still at a high so again we're just kind of seeing that little teeter-totter rotation here but that does not mean that the investors should not really kind of be also mindful of what's happening on those uh bullish uh trades that have maybe broken down that is why we talked about today really the income and protection differences this would be a really good video that you go back and if i ask you annette umass orlando cg bill marcel if i ask you to say hey i'm going to give you the ball allow you to present and you're going to explain to us what the difference is between a cover call protective foot and a caller and when would you consider could you talk us through that if you say i'm not there yet then i want you to watch that section of this video again okay so the market is not bearish has been a little more volatility wise but still overall we still see a longer term trend now coming up right at the top of the hour got my good friend john mcnichol talking about long verticals and diagonals coming up right at the top of the hour thank you so much for your comments and your participation also in the chat there is a survey you can quickly click on that survey it's a quick five questions about how you like this class and so we always try to bring up things that are relevant to the current market what we thought was relevant is some stocks are going down let's have a discussion on strategy selection there other things like amazon nvidia paypal square microsoft apple we said hey kind of see the teeter-totter effect and maybe some investors are rotating into those areas and so we brought that up as well so with that said i want to thank you so much for your comments your questions and your participation thank you michael keeley for answering those questions in chat i wish you a wonderful day and make it a great one with that said stay tuned for mike uh stay tuned for john mcnichol coming up just next take care bye
2021-06-21 22:59
