Trade Management Techniques | Connie Hill | 11-19-19 | Technically Speaking: Trading Stocks & Option
Hey. Good afternoon everyone, welcome to our webcast on technically, speaking trading. Stocks adoptions we're, gonna be focusing on some intermediate trend. Trading. Today intermediate, term you. Know sometimes, it's hard to know how to manage trades, once you get in them yet really good at the entries you feel pretty good about just pulling the charts up every day but sometimes you're not so sure when you should take action in terms of managing those trades we're going to talk about today some, techniques, you can use so, that you can manage those trades, let's. Go ahead let's look at our disclosures, here. Options. Are not suitable for all investors as, the specialists inherent, option trading may expose investors, to potentially, rapid and. Substantial. Losses. In. Order to demonstrate functionality. The platform, we need to use actual symbols, however, TD Ameritrade doesn't make recommendations. Or determine, suitability and, any. Security, or strategy, any, investment, decision you make in your self-directed account, is solely your responsibility. Past. Performance, of any security, or strategy, does, not guarantee future results or, success. Trades. Involving minimal, potential, benefit can also be impacted by transaction costs. Something. Good to be aware of alright. Looks, like we've got Barry, and Diane and Georgia and Texas and. Terrance. Alright. Good. Morning, - Terrence it's still morning in his time zone and, good. Afternoon to, everybody else I'm, happy, to see you here it's. Just a little blurb on me I've been a coach here at 2000. TV. Ameritrade, since, 2004. In fact I just. Received, my 15-year. Anniversary plaque. Which. It's not all that uncommon, for, those, coaches, that you listen to and talk to to be that, tenured, in the. In, the technical, in the training. Division should, say alright so I'm happy to be here hopefully share some things that I've learned along the way with you now. Today, this, is going to be more of our agenda, what what I want you to learn we're, just going to reiterate and, redefine, what enter me yet term trading, is about, time. Frames and so forth, last, time we focused a lot on entry. Signals, as well as, the setup that you received before you actually get your signal today, we're going to talk about more of those trading techniques, how. To determine. Appropriate, risk in position, sizing we're going to spend just a little bit of time on that at the end of course we're going to be using the thinkorswim, paper, money for. Our. Platform. Here today, now. Just as again, as a review. Thank. You Terrance as. A, terrance said congratulations to, me appreciate, that an, intermediate. Term, trade, generally, lasts, several, weeks two, months all. Right you, don't plan on getting in and out and in and out but. You are planning on staying in as long as that trend continues, and as that trend continues. You're. Gonna just ride, the peaks of the pullbacks as, long, as it continues, and then when it breaks down it. Might go ahead and hit a stop loss that you have in place we're going to talk about that as we talk about managing, some of these trades today. Typically. Intermediate, term traders, typically, to find their entry, signals, and, their. Initial, exit, signals, and trade, management, strategies, before, answering. Any new, positions all, right so, you basically, you plan it all out you. Plan that trade out and then you trade the plan whatever, it is you've developed. Intermediate. Term traders often use as part of their signal. Or. I take, that back you often use indicators as, part, of their trading, strategy, now. Last week and we will continue with, it today, we're. Going to be looking at the DMI, the directional, movement, indicator, give. You a little bit more exposure, to that indicator. Intermediate. Term traders and usually attempt to trade with the prevailing, intermediate, and longer-term trends. But, often look for short-term reversal, price patterns, they, might look for those reversal. Price patterns, to get in on the beginning of a, potential, bullish. Trend, that, might be just barely starting, to the all up alright. Again, we're not going to focus so much I want to setup is as we covered that a lot last week but a setup is what the stock price, action, looks like and. The indicator, if you're using it before, getting. A potential. Entry signal, alright. Hopefully. You're good with that hopefully that was just a little bit of review we're, gonna jump now to trade. Management. Techniques. So. Initially. You're. Going to have let me get my mouse in the right spot here. You're. Going to identify that, initial, at exit, signal, sometimes. That will be a percentage. Below a moving average or a percentage. Below a support. Some. People might even use, a dollar, figure below, the low of a recent low that. You're seen on the chart.
Many. Times in terms of trade management when you get a fresh, entry, signal that's when people will consider, adding to their position, all. Right with the trend trade, more, often than not you're, going to stay with the trend you're, not going to be picking out targets, that. Is something that a shorter term trader might like, to do is identify those, targets, stock. Might not always make it there but, have something in mind where you'd like it to go to, and. We're going to focus a little bit today on managing profit, and loss and some protection. Strategies. All. Right we've got some positions, out there to do this with, I'm. Going to come back to, this. Little piece here the. Position. Sizing element, we'll come back to that in a minute, alright, let's jump over here to think, or swim and. Actually. Let's go to the monitor tab first I do, want to draw your attention over. To the left in my TAS scratchpad. Area, where. I have, my twitter handle, or. Not to it yeah my twitter handle and then. We're going to encourage you to us to, subscribe. To. Our active. Investor, channel on our Investor, insight channel, on TD. Ameritrade so that you're always aware of the updates, thing. That might be changing in fact I should probably put a return, there how's that all right my, Twitter handle is, at chill, underscore. TDA and. As. Coaches. We're trying to put out information that, we think will be helpful to you or. In some instances. Inspirational. For you as. Far as little tidbits that you could maybe take advantage of, or see or maybe. It's something that's really timely, going on out in the marketplace, with the stock letting. You know, about some of those things as especially, as they apply to education. And as, they apply to technical. Analysis. Now. In our trading, account, we have. Mmm. Trading. Stocks and options we have four different positions, that, were actively, managing, that. Are more intermediate, from, related. We've. Got info, Microsoft. Nvidia, which you'll see doesn't, have a quantity. There so why is that well. That's because we have a long term call option, has, four hundred twenty three days before it expires. All. Right so we're treating it like a stock we're not treating, it like a short-term option trade and then. We have on Visa we. Do have a shorter, term option trade we've actually been in this one for quite a while, might. Have missed some opportunity. In the past to take some profits up off the table, okay. Looks, like it is recovering, a bit today up to 15, but, we'll take a look at every, single one of these charts here and determine. If we have the. Need to maybe put some stops in place a little bit better, info. Doesn't, have a stop. Nor. Does visa. Anymore all. Right let's start out with Infosys. And. We're. Going to do an analysis, of this, chart. As. We look, in a little bit more detail at it now I am going to. I. Didn't. Click the right way I guess, I want, to maximize this, sell I've, got six, setup. Here that we're going to talk about but. I don't want to. Look. At all of them what ones that gets a little too busy let's take a look you're a big screen here now. What I've got up here is just a one month time. Frame so. That we can see it kind of big and up close remember. We were talking about the, DMI. Indicator. Here. Just. Kind of as a review and especially for those of you that weren't here with us last week. The. Green, Line here, is what we call di+, it, tells, us that the bullish, trend, because, it's on top of the red line is in. Control, it's, the more more powerful trend at that time the. Red line which is kind of down here and, crossed. Below, the green line a while few. Days back probably last week sometime, let. Us know that, the, bullish, trend, was really, taking, over and the bearish trend that red, line was below, and so. It's not the dominant trend right now so, it's whatever line is on top it could be red it could be green I tried. To color code mine because, typically, we think of something, bullish as being green and something, bearish, being red or, a loss or gain or saying things along those nature, about nature then, we've got this black line here in fact let's get rid of this for a minute this, black line is. Down. Here, towards, the bottom that. Is what we call our ATX line it, in and of itself is, a separate, indicator if you wanted, it to be on your screen write that like. That or if you wanted to build rules around the ad ox you could you, don't have to use it with the DMI but for our purposes today we're using it all together and.
The. Black, line tells, us how. Strong is, the, current, trend. That's on the top in this, case the. Bullish trend how strong, is it well. Right now we have a value today of. 17.5. So. Not the strongest anything. That's below 20, gives. Us the idea of that the stock is maybe sideways, trending, or that, maybe this the trend isn't that strong yet especially if, it's just changed over right. Because it changed over right there. The, black line is starting, to grow up. Very, very gradually it's not like it's shooting off like a rocket so that tells us info. Has. Basically. No exit, signals based, on the DMI right, because. This green line hasn't come down and crossed. Below, the red line that hasn't, occurred so that for, that oscillator. That's not a signal, that we see yet to get out of the trade so. The other thing we might do is just look a little bit more at. The. Trend, of the stock now we, were looking at this in a little bit of detail let's go to. Let's. Go to three months here so, you can see a little, bit more about what's been going on with the stock and for. The most part it seems to be holding, the trend the bullish trend pretty nicely here, we. See it come and bounce off that 30 period moving average recently. Here, went below it a little bit but nothing to make you think hey this thing is breaking down. Now. The one thing I do want to point out is what. We. Have our stop-loss clear down here don't we that's, about sixty, five dollars right now the stocks at seventy two dollars maybe. It's, time to adjust, that stop let's, take a look here. The. Stop itself, let's, see if that will balloon out for us if. You've got your mouse there it'll balloon out maybe. This one won't balloon out, we're. Gonna have to come back to our other screen here for that. And. Let's. Do it with this mouse rather than with my finger. And. Let's. See the stop is. Not. Showing, it's. Being a little tricky on us okay. Let. Me see if I can, maybe, spread. This. Pull, this up a little bit looks like it's pretty close to sixty four right there can't, tell for sure when, it was spread. Out a little bit more. But. It looks like we here we go 63. 84. Is. Where did that stop loss is situating. It's a good tell cancelled which from the time was put in is about six, months all. Right do, you like the stop where it is. You. Might you might not, let's. Let's. Look at what the thirty period, moving average is, right here today. It's. Hiding over, here on the side it looks like it's sixty nine fifty six I'm, gonna use our calculator, quite a bit here today. So. 69.50. Six, times. We're. Going to multiply it by something we could go three. Percent, below support, we could go five percent, below support sometimes.
People, Will make it really tight if it's something that doesn't move a whole lot they might even go two percent, below support, so. Again, in this intermediate, time frame were not trying to choke it alright let's try. Let's. Try this let's, put in our. 69.50. Six, times point, ninety. Seven that gets us to three percent below support, that. Value is gonna be sixty, seven forty-seven I'm, gonna put my mouse in. That area, sixty. Seven, oh that. Is about as close as I can get with out actually being on the number. Alright, that, if we were to move our stop loss up that's where, we, would move it to, take. Some risk off the table hopefully, locks in a little bit of profits, let's, look real quickly here, on this how long have we been in the trade we've got a nice position on it I should, say a nice gain on the P&L open on it we, got into this trade July, night we've. Been writing, this for a long time. Being. Patient with it as it Peaks and pulls back I, maybe. Should go out a little bit further here let's go out even say six months so we can see what things look like at, the time that we entered into the trade we're. Clear back here we. Are clear back here where. My green dot is on. July, 9th I'm just going to zoom on it briefly and. It. Looked like it had a nice little flagpole, going up little. Pullback there of about four days and boom it broke out, at. That point that's where our entry, was on that day, alright. So. It. Has for. The most part it's consider, it's been, consistently. Bullish, did. Get a little flat down here in July but that, is just recovered. Now. Because, we don't have an exit on the DMI, we don't really have an exit, it's not breaking below a support, area. It, might be helpful though to say let's move that stop-loss, up to. 67. 47. Now. We. Can do it by dragging, this. Up and, just, kind of watching over here on the far right side till it gets to the right place, let's. Try that. Let's. Go, 67. 47. Oops. I passed it. 6, oh hey, I got it, 67. Went to 46, good. Enough I'm gonna keep it alright that's, where our stop loss is and, notice. Just, kind of the details on there make sure it's going.
To Do what you want it to do let's, go ahead and send this in it should cancel our old stop-loss, order which it did and now. Our new stop-loss, order should be out in the working orders, okay. Now, that approach. Is, fairly, simple, okay. Just, moving at 3% below support or, the moving average as we this, particular one we saw the stock using. The moving average and sometimes you don't see that if you, don't see it and the stock doesn't use it maybe, it's not a good idea to, use the 30 period, moving, average. Alright. As you have questions go ahead and shout those in I'm gonna keep my eye on our chat here make, sure I pick up everything. That you sound across. Alright. We're gonna go to our next one. Let's. Put this back to three months our time frame here I want. You to see all that we're. Going to go to our next stock, that we have and take. It to the big chart we're going to talk about Microsoft here, now. Microsoft. Has been trending. It's a bit of strong trending. Tech. Stock for. A, fairly, good. Part of the year, let's. Just kind of bounce out here a little bit we. Can see it got kind, of stuck in a sideways, pattern. Let's, get this back right. Through this period of time until it. Broke, out above that resistance, area and then, since then what is it done, higher, peaks and troughs the whole way is, really. I'm, gonna say been. Used. It's, been I should say maybe using the. 30 period moving average hasn't, even gone close, to it to even really bounce is keeping, a distant, nice, difference, which, one under the price of the stock is in the thirty period moving average okay, so maybe, it's acting a support a bit we. Could see it kind of was bouncing, along in here more, recently, is probably, trending, on something a little bit steeper, like possibly, a ten period moving average which. Is more of a short term moving. Average to use would, still want to use our thirty because. We're trying to trade it enter based. On the intermediate trend, alright, we've. Got our stop down here, looks. Like it's about in the neighborhood of 141. I, don't, know if you can see that my head might be in the way but 141. Is. Where. Our redline. Comes into, play. We. May want to as. New. Support, levels are created, we, may want to move up our stop loss along. The way and if you're not seeing definite, support levels say horizontal, or diagonal that's. When sometimes people will use the moving average as well or they. May say where has, the stock gone the lowest, recently. What. Zoom in here a little bit for that one. Actually. I'm going to kind of zoom out across here, and as. We're looking at the chart here what I want you to pick out is, which day does it look to you like it's traded, the lowest in. Terms of where's a low and a bounce okay. Not, just some low low low spot, down here but where's, the previous. Low recently. Looks. Like that little candle there back, if I drew all right. It would be that little candle, there we. Could go a percentage, below that all. Right. Some. Or we could go a percentage, below the moving average I think depends on how much room you want to give the stock you, want to get a lot of wiggle room you're planning on being in it a long time you like the Microsoft story, then, you might decide to give it a little bit more room all. Right, all. Right let's take, a look at this because we're gonna make some changes to it. So. This. Is our load a. The. Where. The price went the lowest I should say 1. 49 53 let's just experiment. Here, what. We might, use for that so that was one 49. 53. Now.
Let's Experiment, let's go three percent lower, so. We'll say times 0.9. T7, that. Gives us a value of one forty, five point. Zero four, one, forty. Five point zero four, is. What. Is this set up this is set to one, forty, point sixty nine currently. So, that would that would give it about five dollars. More. In. Its that's. Kind, of I. Wanted. Us to see where it was it's like way down there okay we're not going to we're not going to move, the chart down much because it's. It. It. Disturbs, the pattern and the look and kind of scrunches, it down so you can't see it as well, however. It. It. Could, use a. Refreshening. Right it could be a place, to lock in some numbers take five bucks of risk off the table and. That's. Interesting, I didn't think I wrote it up that bad, there. We go I guess I did ruin it that bad we'll. Pull it back into shape here I. Wanted. To see. Now. This is saying a one-hour, chart how did that happen, let's, go back and reanalyze, those folks okay. That. Was a, different. Chart than what what I was seen initially, here so, I apologized, the timeframe was off and I'm not sure how it got off probably. Person is driving probably, touched, something incorrectly, all. Right but nonetheless. We. See this period of time Microsoft's. Consolidating. Consolidating. Pops through and. Rallies. Up now, it's making a high 150, 133, today, it. Looks like it's pulling. Back a little bit off that high and every time you see little smaller, candles. Smaller. Candles, that gives you the idea that the momentum is starting to fade okay, versus. If they're big long candles, like this day or. This day there's a pretty decent sized bodied, candles, gives you the idea of there's still some strength there so, if we have a couple candles, in a row here. That. Are small they'll almost like doji, like they're not perfect, doji's but they do have a little teeny body here. Gives. You the idea that they might be. Starting to show some weakness. Does. That mean we. Should ratchet, our stop-loss, up you're really really tight. Because. We're reading what these candlesticks, might be saying. Well. The answer is probably not, right. Now it's just going up into a peak, we're. Need to be prepared, to let it pull back, all. Right prepare to pull back I'm. Gonna redo, our stop-loss, here because, I, had the wrong numbers, on the chart in the wrong time frame our. 30 period, moving average is at about 144, the stop, still is at about. 140. Point 69. So. We certainly could still possibly lock in some gains let's start out one forty four point, zero four, times. Zero point, nine seven. Okay. That gives us one thirty, nine seventy. One. That's. Actually, below where the current stop loss is if. You. Calculate, something and it's below, your stop-loss, currently. Typically. You don't, want to drop your stop-loss down, right, if you've, been moving it up to take advantage of. The, movement of the stock. No. Sometimes. People will get. Concerned. And the, fear might get the best of them and they, think I don't want to get stopped down this stock I'd better drop my stop-loss. No. Don't do it okay. Keep, your stop-loss where it was if you. Made a. Logical. Equation. You, multiplied. It out you figured out where a good stop-loss, could be all. Right don't let your emotions get the best of you because you put it in at, a time when you weren't emotional, now. If you made a mistake let's. Suppose you go back and you calculate it you're right Wow, I made. A horrible mistake when, I did that, maybe, he decide to recalculate, it based on what it should have been at that time and, then. In that scenario you might move it up you might move it down if there's a gross miscalculation, but, don't move it for emotional, reasons. Romell. Asks a question here how, do you select a stock for a long-term trade, six. Months plus if you covered this topic in previous session. Could you please tell me what week you posted. That video I can. Just tell you real quick here, because. We we reviewed, it ever so slightly. Just. Kind, of going, through it in our opening slides here we're. Talking about intermediate, timeframes, which is weeks, to.
Months. Okay. Several. Weeks we're not talking about one or two weeks we're talking about many weeks and some. People they might start it out as an intermediate. Term trade and, then. If. Vidkun is performing, it keeps going for you sometimes, it might turn into a longer term trade, so. In, terms of how you select, for a longer, term I'm, going to call that more of an investment versus. A trade, a lot, of fundamental. Information could, go into it you could look for a girl-- stock you, could look for a value stock in fact. Both. Of those classes, are taught. Fairly. Frequently. Although. It it's. Been a long time since we've covered it in this particular class, in terms of long term trading, long, term. Investing. Okay, but, there are a couple classes, I'm going to reference you to here all right so. There. Are several, courses. The webcast, that we cover the intermediate, trend okay. So, we have. Let. Me get to the right one growth. And value strategies. Is. A class, that James Boyd teaches, on Thursdays, at, 4, p.m. Eastern Time, translate, that to your, own time, frame okay and that's. More. Intermediate. Term it's, also one here we have about. Building. Blocks for a self-directed portfolio. That can include this time frame that, is at 8:00 p.m. Eastern, Time on. Tuesday. Night then. There's another one I was thinking about here. Let. Me find it. The, value stocks investing in value stocks this is what I was thinking of, many. Times if you invest, in a value stock a stock that you think maybe deserves. To be at a higher price and you're you're willing to go and buy it at a bargain. Price so, to speak okay, those. Typically, turn out to be longer, term type. Things and you're just patient with it till, hopefully the stock goes up and gets close to that valuation that you had and maybe even beyond, okay. Real, Mayall i hope that helps. Terms. Of that alright. Let's get back to our stop on. Microsoft. Because we don't want it to go under where the current stop is okay. What, does that mean that means we probably leave it alone means. We probably don't touch it we're, probably feeling, good that it's a little bit below the 30 period moving average and, if, it were to actually break down below, that it would also be breaking, down below, the meet the most recent. Low okay. Which, is an indicator that the trend is changing right. That that trend is changing. Let, me just take a look at something here because. I do want, to talk. About some, new trades, that aren't in our portfolio, right now and. Let's. Let's, get to it. We're. Gonna talk about Kohl's, for a minute all, right you. Guys seen calls today, the. Retailer. Places. Maybe you go and buy. Things clothing. Appliances. House. Goods whatever okay. Last. Week the. What. Do we call it the consumer, census. Bureau came, out and said guess what, retailers. Across the board or down I believe was like 6.7%. Across. The board that kind of heightens some awareness around, the, retailers, and people have been watching really, close what, are these retailers, saying, today okay. Clothes, came out, they. Had. Their earnings, you, can see we've. Got a low price here 47 13. And. So. They are down about. 18. Point six percent they have. Been punched in the nose okay. They, certainly have been punched in the nose did, it break a support, level well. Probably so right if you had a support, level along, maybe, here. All. Right that's about 50, did it break below that it certainly did did, it close below or is it gonna close below the 30-day period moving, average yeah. We. Don't. Necessarily. Like. To see those types of things happen when, we're investing, and trading but. They can and they do all. Right. In reference to the DMI here, I'm gonna zoom in here so we're just looking at all of this a little bit closer on. Our. DMI what do we have this, is a great example of a cross where. Today. The. Bearish, trend, crossed. Over the bullish trend in big fashion, wasn't, like they were kissing they were a swift. Cross, really. Steep okay if, you're using the DMI, or any other oscillator, in this particular case and it gives you a. Signal. To exit bullish Lee and enter bearishly, you. Want to take action on it pretty quickly especially when, it's that vivid, and that evident, okay. When it's not that evident, it just kind of means well. Let me give you my little drying here, maybe. They just come close to each other maybe they don't actually cross. This. One definitely crossed, so. The question is if you, were in this trade number one you may have had a stop loss maybe. Somewhere, below support, all. Right wherever. You deemed that support, to being giving it some wiggle room if. The stock violates. That and drops. Down and you had a stop loss sitting there for it maybe, your stop-loss was kind of where my drew that in and the, stock gaps, over, it, what.
Happens To you and your trade. You. Know you had your stop-loss to activate, up here at 53, or lower well, it went lower and so, when it when, it pulls or hits that trigger that, you had in mind that you put in there it's, then, at that point that it triggers a market order market. Orders line up with all, the other market orders to hurry and get filled but. More likely the not it's not gonna be up there 53, more likely than not it's. Gonna be down here where. It opened. That. Looks to me to be about. I'm. Gonna try to draw a straight line here, if I can if my finger will let me. So. That looks like it turned out to be about 48, and some change maybe 49, okay. And it's at that point, that your, orders start to get filled now, is that making you happy, probably, not however. At. This point when the stocks disappointing. You and it doesn't have good news and the, markets getting out of it you want to pay attention to that and. Don't. Get emotional, don't think oh it's gonna come back or I want I don't want to like any any, loss because, it is an out point before it triggers a paper loss all. Right let, your plan play, out as you, have designed, it before, you actually got into the trade alright. Let's. Come back here. Let's, see. Just. Checking the questions see if you guys had anything else that you want me to address, I'm. Going to show you one other stocks your real quick. That. Kind, of looks like Nvidia. Macy's. Now. Actually, on Macy's, let's go three months here. Macy's. Has been struggling as, a retailer, they've really struggled Beit you probably read stories across the country where they're closing stores we've, had a couple of store their stores closed in our area it, was like oh man they are. They. Must be really struggling to close some of those major. Mall, anchor. Positions. All right to close it in any case yes. They've been struggling. Yesterday. In a, class totally, unrelated, to this we. Use Macy as an example of something you could do for protection. In. The event that you were concerned, they had earnings coming up all. Right so the trade that we put on I'm just going to show you real quick these if you're, not into. The. Options trading too much yeah that's okay all. Right no, there are things that you can do. One. Of the things we looked at was buying a collar and what. Is a collar I'm gonna show you real briefly. Our. Order actually didn't get filled so I went out and removed. It and cancelled, it out of the working orders. Because, it was never gonna get filled because the stock dropped so much back, what was that percent today ten, point six three percent. And. Some what we had done and this is just a strategy to consider, is we sold, a call. Out of the money it. Was about the equivalent, of I. Think. It was like a thirtysomething Delta. On it so I'm just going to use for example this, one here these expire, Friday and. The idea was to build. Some sort of protection for yourself, as it went through earnings, if, the stock is gonna drop what's gonna happen to this call that you sold. Well. More. Likely than not if, as long as it doesn't run up and go past your strike price, go. Lower than your strike price. Let, me see if I said that wrong right, as. Long as it doesn't go beyond and above your strike price, okay. You're not likely to get called out you're more likely to keep this 50 cent premium, but. Kind. Of making, it a double. Protective. Type strategy, one thing that we did as we said fine we'll. Go buy a put two what. Does it put do if the price of the stock drops the. Put typically, gains. In value. In. That scenario and, the, call typically, loses in value but as a seller, that's what you want as a, buyer you don't necessarily, a. Buyer. Of a put your, expectation. Is to protect, in the event the stock drops so. We did something similar, here. We bought a Oh. Probably. A 30 something Delta, at. That point I'm going to select on this price my control, key is held down so. That it puts both of them together, all. Right over. Here on the side you're gonna see it's a combo, trade which. Essentially, means. Nothing. Specific that. It we could go and decide off of let. Me rephrase that a, common. Trait is when you, are kind of building something, and it. Isn't something that we can come out here and say on our spread, to. Go by or to go sell all right we're we're just putting it together. The. Net debit on it yesterday was about seven, cents so this is pretty similar here today at six cents, however.
Had. We been able to get filled, in that. That. Position, yesterday, the markets were closed when we submitted net that, had we been. Successful. In getting it in before the big drop this morning then, we could see that definitely, that position, would, have been up now we still have the. Crushing, volatility. Right. Over, here on this far right hand side we. See what implied, volatility. Is priced. Into, these options right here okay. The. One that expires, this week after earnings is super, high right now one hundred thirty nine percent but even, the one that expires next week ninety three percent seventy, eight percent they have a lot of implied, volatility. Priced in there if. The news comes out and. It'll. Crush the implied volatility, that'll, come out of the contracts, and that's going to devalue, both of them but put and the call alright if. The, if, it doesn't move the stock that much we. May not, gain, a whole lot if. Any on that put, we, may actually lose money in the put okay. Because the value, of it it just drops immediately. Especially. If the stock doesn't make a big move on the, call side we, might expect, to be able to keep. That premium, which. Was, let's. See what it is here what. Did I click on about fifty sounds fifty to fifty. Cents in that neighborhood okay. What. Happens, if the stock doesn't drop. Okay. They come out with their news maybe. The stock goes up a little bit maybe. It's better than what the news was today as far as their, cells. All right well. Expectation. Wise the, plight volatility, is still going to come out of both of those options and. Potentially. Both of them could be losing, scenarios, if the, stock moves up I'm. Going to say too high, all. Right if it, bolts up we. Might not keep this premium. Right. We might choose to go buy back that short call and it probably is going to be at a loss because, the price of the stock moved up all, right. The put if it, goes up it's not going to increase in value either, and. So you have to understand, that this is primarily, a, protection. Type strategy, and, is. Not intended. To be held, longer-term. You. Could you know you could do it for the period of time you're concerned about which, doesn't have to be just this week but in our scenario it was due, the fact that we have earnings coming Thursday, morning before, the market opens. Francisco. Says I've had now, a stock, gapped down twice. Much. Less painful when, you just.
Leave The stop-loss alone, I, appreciate. That that. Comment, there Francisco. So. Alan wonders why that color did not fill yesterday, the reason that it didn't fill is because, when the price of the stock opened, up it. Was way lower, than, it, was when. It it closed yesterday, so. All those values that could the put in the call values all changed. In fact, I think, as. I went out there and looked out at before I cancelled it instead. Of being at 6 or 7 cents I think it was 6 ounce, it. Was saying it was going to cost us 93 cents, to get in and so, it wasn't really at that point the appropriate. Strike prices to have but. It didn't feel because we didn't have the right price on it all right, meaning. The prices, had shifted completely with. This with this news and the big gap down so. Good question, Alfred. About that. All. Right. Let's. Just kind of summarize here what we've talked about. I. I. Totally, didn't, get to our part about doing risk. Of, doing, them, position. Sizing to mitigate your risk guess. We better go there next week since, I didn't quite get to it today and it's such a critical, thing to do alright, just, keep in mind trading. The trend takes patience. You're, gonna write the peaks and pullbacks they intend us to be in there for a long time. This, exit. Signals might not occur until the stock has dropped significantly. From. Previous high prices and so you're probably not going to get out of the peak you're, probably gonna get out when it's pulled back a little bit to, the point that maybe it's starting a downward trend you're getting a lower roll in there and it's broken support. And. Like situation. Here with Macy's and Kohl's stocks, may gap down below the initial exit, prices, and trends, change, they. Do not last forever as much as we would like them to they, don't all. Right so today we talked about just the timeframe of an intermediate, trend. Type of trade, we. Talked mostly, about trade management, techniques, how, you can use that DMI. When it crosses over each other how you can identify support, and, give the stock some wiggle room below the support. To. Get, out of things change on you alright, we, did not get into the risk sizing. Like I thought that we would although we did use the think or swim platform, next. Week we're. Gonna take that step we're gonna spend time no-fat and. Possibly a little bit more of trade, management as well but maybe, more of an emphasis on the risk and position sizing because it's so important.
All. Right, what. Would I want you to do how. Can you incorporate this. Into what. You're doing. Well. Go out on each of your stocks and make. Sure you have a stop loss in place now, there are some people that don't like to put in stop losses but, everybody, needs to know when, they should exit. Right. You need to know when you have an unprofitable, employee. Working, for you and you need to get rid of it and you got to think about the same thing you can't be married to these stocks when, they go in the trend changes, and the. And they have some significant. Price depreciation. All, right the, idea is not to go down with the boat the idea, to minimize your losses capture. Whatever profits, you could and then get out so do that on every single one of your positions, and on. Your new ones I want you to make up the plan go through the plan decide what that plan needs to be before. You actually place, the traits okay, those two things what's, going on now and in, the future create, that plan for yourself okay, two things, two that, are important to do I just, need to remind you that in order to demonstrate the functionality of the platform we need to use actual. Ticker symbols, TD. Ameritrade doesn't make recommendations. Or determine, suitability of, any security, or strategy. For individual traders even though we've talked about some examples any. Investment, decision making your self-directed account, it's only your responsibility hey, appreciate you being here known, up next is the, top, of the hour is gonna be Cameron mate with the trader taught question-and-answer. Session you can go over there type in your question, he'll. Give you some guidelines on that people. Love that class so enjoy, it as you over there and then we'll see you next week at the same time thanks. Everybody, bye-bye. You.
2019-11-25 18:09
