Trading A Smaller Account | Barbara Armstrong | 11-6-20 | Taking a Look at Energy
All. Righty. Hello, everyone. This is barb armstrong, coming to you live, from. Well, kind of overcast, salt lake city it's been beautiful, indian summer weather here and winter, is coming, in so. Today we're talking, trading a smaller, account it is friday, afternoon, almost the end of our week i applaud. The dozens, of you that are here, and get here early, each and every week because you know if you come early, you're going to get some special tidbits, from ken rose. Who always, has great information, to share so hello. To. Jerome. And bennett, and, jazeera. And sorry if i'm massacring, your name. Sonia. Radio wayne yoko, john and many others. Glad to have you guys all on board if you are here for the very, first time. Please feel free to type a greeting. Into the chat so that we can welcome you, ken rose is with me in the chat he also teaches, many classes each and every week and brings. A wealth of experience. To the table. As you can see above my head. Um i'm on twitter, so is can lots of great content, posted, by both ken and i, as well as the other. Uh coaches. So. If you're not following, us on twitter. Open a twitter account. It's free it'll take you two minutes. Um, and it will be well worth your while. We're sharing, information. About. The world of investing. And every once in a while we throw a little something humorous, in there or, whatever, but at b armstrong, underscore, tda. Kansas, at k, rose underscore, tda. This is an intermediate, level class, i have so much i want to share with you today, it's ridiculous. So. Buckle, up, um, flex your fingers, get ready to go because we're going to cover a lot of ground in the next 45. Minutes. So stick around there's lots of great stuff. Coming. All righty so somebody said you know it's above my pay grade, mine too but i think this class should start 30 minutes earlier, and you know what we moved, it up. Half an hour so that we could get half an hour in before the markets, closed. So i am trying, to. Um figure out what to cover, first in this class. Just so that we can get some trades in before, the market, closes. Okay so let's get to our important information, so we can get right out to the trade.
Um, But to think or swimming, and get some trades, in for today, now. I do want to mention if you have questions between ken and i hopefully, we have answers. The other thing that i want to mention is that if you're one of the hundreds, in the archives, who taps into this, and you're saying hey i can't use the chat. But there's, comments. Underneath, the youtube, channel and if you type a comment, in, you know it might just be hey loved it and found it helpful but if you have a question. Type that in and i will definitely, get back to you the other way to reach out to us is via twitter, so, you know anything, at the top of my feed i'm gonna go through that on a daily basis in any comments. I'm gonna look at, okay. So, here we go. Options, aren't suitable for all investors, as there are special, risks inherent to options trading that can expose investors, to potentially, rapid and substantial. Losses. We do a lot of option trading in this class, not exclusively. But we. Always, have option trades, on the go so be aware of that, in order to demonstrate, the functionality. Of the platform we need to use actual symbols, we use a ton, however, that isn't to be construed, as a recommendation. On the part of td ameritrade, or myself. It's a way. For us to demonstrate. Both the functionality, of the platform and the concepts, of the trading strategies. That we are, trying to share with you but any investment, decision, you make in your live account. That is on you my friends. It's b armstrong. Underscore, tda, on twitter. Um otherwise, c armstrong, you might get my son. Um. Okay. Oops. I guess i was on the wrong thing there. And know that all investing, involves, risk, including the risk of loss. So every week we have a really short list we're going to look at the market forecast. We are going to place some example, trades, right up front before the market closes. And then we're going to review, our current positions. And we're going to review, some positions. That kind of fell off our radar, last week that i didn't cover. And i'll go over why i didn't cover those last week but we had a lot that we were. Managing, last week. Okay so let's get out to, our thinkorswim. Platform. Here. And when we look at the market, forecast. And i bring this up. The idea. Here, is that we are looking, at the s p 500, or the spx. And we're looking at this green, line. And, if you don't have the script for this it's, pinned to the top of my twitter feed. Compliments, of of ken rose he was the one that created, this. So. Uh, we're looking at this green, line, and what we really, are. Looking, for is whether or not the overall, market, is bullish, or bearish. And what we're using as our indicator, is. You know is this line, up trending, in the 20 to 80 zone here's 20 here's 80.. Or is it above the 80.. And if it's up trending in the 20 to 80 we've got permission, to take. Uh bullish, trades. You know granted by who granted by ourselves. And. If it's above the 80. If it's down, trending, we're not going to generally, be looking at bullish positions, that's when we might look, more at bearish, positions. And so this is, in the context, of the overall, market. In this class, what we're assuming. Is that we have a 20 000. Account. And some of you, might say well i wish i had a 20 000, account. Well, you know if you have a 5 000, account or ten thousand dollar account. Um or some people might have a million dollar account but they want to trade a small portion of it, you can kind of adjust, your. Portions. Accordingly. With respect, to risk. We're saying we don't want to take in a risk. Um that is more than 400, dollars. Per trade. And, we don't want a position, size that's more than five thousand dollars. Um we're currently, up about. 25. In this account. Year to date. Um and is that typical, not necessarily. You know these are, unrealized. You know some of these are unrealized. Gains. Um and some of them are are certainly, realized. Gains and realized, losses and we'll talk about some of those losses. Today, but basically. Market. Um, moving to the upside, again. Now, if we look at the energy. Sector. It has been tanking, and how might we see that well we can look at various. Um, etfs. Or, indexes. Um so if we looked at. I guess i y e is energy. You know what, i'm going to show you how. We often come out and look at this we we come, over to td ameritrade, research, and ideas. Sectors, and industries. And then if you click on the market monitor, tab. And i bring this up. As ken mentioned in the chat before the class started.
I Mean the energy, sector getting kind of clobbered, today down, 2.46. Percent. As, and, you know these are the stocks listed on the s p here. On the s p 500. That are part of the energy, sector. So this gives us a a sense of how this sector, is doing. If we look at the last, 30 days, so how has energy done in the last 30 days. Pulling up the rear. You know at the back of the bus, it is the sector, that is down the most. And if we look at the last, three months. Which sector, is again. At the back of the bus, energy, down 21. So we had placed, three, bearish, trades. On. Three stocks, in the energy, sector. Two of those we got out of this week for a profit, and we'll look at those in a few minutes. And one of those, we are still in because we didn't put an exit in during the class. So. We are going to come back to our energy sector, and we're going to start. By looking at cop. And i'm also, going to come out and we're going to change. Our study set. Now that we've, got. We've looked at our market forecast. So with cop. Or conoco, phillips, we can see. You know that this tanked along with everything else back in march. And then it made a bit of a recovery, but really. Since, june. This stock has been. Um. Down trending. And we did have a previous, position, on this and we exited, for a profit and we'll look at that in a minute but. If we look at this and said well. You know this has been downtrending. Came down. Rallied, for two days came down. It has rallied, for a couple of days. And you know if we look at, this, high day here. It's now. You know trading. Below. Um, the low of the high day. So our, our high day here 29. 21. And we're at 29. 20. so if we looked at this as an entry and we said, hey what if we just traded, this, back to this. You know. 2750. You know if we put that in as our target. Um. Our previous, low here. And so when we looked at that our previous, low was 2750.. So if we look at doing that as a this would be considered, a bearish. Swing trade, and even though. The rest of the market, is bullish, this one particular, sector has not been.
So, What we're going to do is come out to the trade, tab. And we're going to come over. And so why would i look out 42, days if i'm doing a swing trade, and i think i'm likely, only going to be in this for maybe, four or five days. Because, if i'm wrong and i need a little more time, it's nice not to have time decay. Chipping away. So, when we look at this and we say where is it trading now 29, 18., so if we look at the at the money strike. Do we have, contracts, on that, well yeah we have. 1461. 51, contracts, traded today if we look at the 28th, strike wow somebody. It looks like did, you know some type of vertical, so they may be expecting, this to pull back. 4, 300. You know contracts. At two different strikes, here. But this is a pretty heavily, traded stock so, we look at this we've got a 10 cent spread. If we looked at buying. This, and we put a target, in. Where would we put our target. Well again we looked at it and we said. Well if conoco, phillips, the previous, low was down here, around. 27.53. So let's put our target at say. 27.55. And. If this goes. One percent, above, today's, high. So when today's high is 30. 65. Oh. So i've just got my little calculator, here 30 65. Times one decimal zero one. Is 30, 95.. So if it goes up to 30 95. It's going in the wrong direction. And we are going to. Cut our. Losses, i read something on twitter today so not only do i post, but. Um, i look at some of the things posted by, by other people and this one guy had some trading, tips. And one was, cut your losses, quickly if you're wrong. And hang on to those things that are doing well perhaps, a little longer. Um you know and i think he was talking about a trend trade there but i thought it was. Interesting, advice. So if we come here to our 29. We're going to right click, and we are going to buy, with an oco, bracket. And so. We don't know exactly, what this option will be worth. But we're going to make, both of our exits, good till cancelled, and we're going to make this a market, order. To get out. When it hits, our target. Which is at or below. 27.55. Okay. Okay. So we've got that one in and our stop. We're just going to make that a market, order, also. And we're going to come in and say hey, if this goes up. It's not the direction, we were anticipating. So we would rather get out and wait to reenter, and that's at 30 95. So, 30. 95.. Save. Confirm, and send now, how much can we possibly, lose on this, well the most we can lose. Is. What we're. Spending to get into the trade. So if we're willing to risk 400. We could do two contracts. So. Or we could hit that and it will, line everything up so if we do two contracts, on that, confirm, and send. We are selling, two puts expiring, december, 18th, the 29, put it at. A dollar 86, is what it'll cost us to get in, how much are we risking. 372. Dollars. Do you see that. So that's our dollar eighty-six. Times two. How much can we make, five thousand four hundred and twenty-eight. Well we can't really make that because we've decided, we're going to get out when it hits, 27.55. So we could go to theo price and have a look at what that might be. If it hit that target within that time frame. And so we're going to put this in, our.
Long. Puts. Bucket. And and i'm only going to do this, um, on one example, because, our. Our time is limited but if you wanted to see, this was one of i thought this was one of the coolest, features. On this platform. If we come to theo, price. The first thing you're always going to do is hit reset. And if we said okay today's the sixth. Let's say we're expecting, this to hit by next, friday. Our target, and our target was. 27.50. So. You know if i take 29.30. That's gonna, it's about a drop of about a dollar eighty. So if i said minus, a dollar, eighty. That's twenty seven fifty. What might this, option be worth. Well if we come over here to our theo, price, column. Let me just drag this stuff over here. Then it's faster. If i come over to theo, price. You know we got in about a dollar, 80. And it would be worth 250. Let's call it 260. To make the math easy. So we'd be up about 80, cents, on something we paid a dollar. 84.. So. If i take a look at 60, cents, divided, by, a dollar, 80. That's about a 33. Percent return. On you know for a trade that we might be in for a week. So if that's acceptable. Then, you know you take that trade now we're. You know we we haven't. Taken volatility. Into account. But typically, if something continues, to fall volatility. Might be higher, but, there might be some volatility. In the market because of covid, because of the uncertainty, of the results, of the election. You know, these numbers are high. You know volatility. At 50.. Okay so the next one we wanted to look at was cxo. And when we come to the chart, you know again. This is another, stock that is in. Um. This, sector, right. And if we look at this and we say. Okay, this is at. 4253. And this is another stock that's been down trending. It's below, the 30-day, moving average. And if we looked at this and said what if we just did a swing trade and traded this back to like that 40, dollar mark. And again, you know it's, tried, to recover. Hit its head on this 30-day, moving average which appears to be acting as support. Bonked its head once. Twice. Three times. Today, it's falling, down 2.4. Percent. You know and, it's. Currently, below, where it opened yesterday. So if we look at this and say. Well. You know again, if i look at the high on this day and this day they're almost the same 44. 42. 44. 36. 44. 74.. So if i say hey if this goes one percent. Above, that. Um, let's get out. And so, cxo. So, our stop would be at, 44.80. And, our target, would be down here at 40.. So if we come out to our trade tab. And again look at december. Now. Here's. The rub. We've got, five dollar wide strikes. It's like oh that's kind of a bummer isn't it. And. Actually, now our bid-ask, spread is getting wider, this is 60 cents apart. You know so we might say 60 cents apart that's more than 10 cents and i know that volatility. On this one is very high. If we can get filled at the mid around 4 30. Maybe we're willing to take this trade. But otherwise, we might say hey this is just a little too wide and we're going to pass. But it's also. It's trading at, 42.60. Oh, wouldn't you know it like this one has been moving around a bit, um, it so it's like smack, dab in the middle. You know so, 40, is actually, our target. On this and we'd want to get out when it hits 40.. So, if we. Buy the 45, we could only do one contract. Well our open, interest, it says it looks, you might think it looks rather, low but you know we've got, 600, contracts. At the 45. And we've got. Um. Almost 1500. At the 40., and a general rule of thumb is. Um you know that, you're, you want to look at something, that is. Trading at least 20 times. What you, are trading volume, wise or some might say 10 times some might not have a rule around open interest. But many do but i mean whatever your rule is we'd only be doing one or two contracts, here. But since i last look at this this spread, is getting wider. So you know what we're going to pass on that one. So let's look at our third one. Psx. And this is one that we had traded, and then we got out of, and again, you know. Down trending, trying to recover, downtrend. Trying to recover. Downtrend. So it was down trending. Three-day, recovery. It's been hanging, out, starting to fall again, so again, if we looked at this and said hey.
If We just traded this, back, to. The previous. Low. Which was. 43.27. So maybe let's put our target, at. 43. 50. And where is it trading right now. 46.86. So that's just a three dollar, drop. So. If we look at that and then say well where would we put our stop, well if we look at the high today. At. 48.89. So if we took, 48.89. And multiplied, that times, 1.01. That would be. 49.37. And i'm just doing this on a little calculator. Here because it's, it's faster, but please feel free to, check my math. So if we come out here to our trade tab. And we say okay, this one's trading at. 46.87. So. Almost, 47. And we have a 250. Wide, strike, here. And so, what some investors, will do is they'll say well it's it's closer, to the first strike, in the money. Than it is the first strike. You know the strike, at the money. And when we look at this you know we've got a thousand, contracts. You know we've got a 45. Cent spread. We've got a 20, cent spread here at the 47.50. And we've got a 50. Chance of this being, in the money. Um. You know. On december, 18th. So we're going to look at, we're going to do the 4750. And again. We're going to buy, custom. And, we're going to do that oco, bracket again. And so we're going to make these good till cancelled. And again, we're going to make both of these market. Always. I you know. A lot of people if you trade, regularly. They'll always, put. Their things in in the same order. So we're putting our target, in first. Being an optimist. 4350. Save. We're going to do. Our stop. If we're wrong we'd rather admit it early. And then look to reenter. 49. 37. Is our stop. Save. How many of these can we do. This is a four dollar option, we can do. One. So. You want to, get in see if we can get in at the. Mid there. Actually does it go just in 10 cent, yeah. Okay. So how much can we possibly, lose. 390. Dollars, how much can we possibly, make, 4. 360.. In order for that to happen. This stock would have to go to zero by december, 18th. But we have put in both a target. It when it hits 4350. We're going to exit this. Or, if it goes above. 49.37. We're going to put that in. Our. Long. Foot bucket. Okay there's one other one, that i wanted to put in. Um. So we did this one we did. This. One. I think we passed on that one. Okay, neil. So, if we come and we'll look at our other neo, positions. In a minute. But we have a buy right here on neo that expires. Today. And we have only five minutes left but that one has, been a profitable, trade for us. We're up, 255.
Dollars. Mind you we're up a whole lot more on the one where we bought the long position. But that expires, today so if we like the. This trade. And think that neo, is likely to continue, to do well. We. And it's looking like it could, be setting up to pull back. Um, because we have, this, harami. Happening, today, although it did hit a new, all-time, high. Um, but if we looked at this and said if we're still bullish on neo. Um, and, our numbers, are high because, we've got, our volatility. Is super high on this because we've got earnings, coming up, pandemic. Election. All these, layered, uncertainties. You know could we sell something, out a short time frame. So, when, is, earnings. November, 17th. So, one of the things, that we looked at was could we do something, if we don't want to hold this call over earnings. Just one week out so very short term. And would we get enough premium, well it it's, sitting at, 41.74. Could we sell the 45. Well if we sell the 45, did anyone else have this idea today yeah 40. 687. Contracts. So you know you're looking at almost, three percent. Plus, if it went up and hit it, you know we get another three dollars, and if it pulls back are we okay, with owning, another 100 shares. So. We're going to go ahead. And usually, we do this at a support, level, rather than a resistance, level when it's pulling back but we're just going to see how this one works out. We are. Coming down here and we are buying. Because we are buying, covered, stock, so we're buying a hundred shares of the stock. And we are going to sell, one covered call now how much can we make on this. Well if we look at this. I'm, we've got three, minutes so i'm gonna go ahead and put this in, and then we'll come back, and. Um. Go through this. So confirm, and send. We're gonna put that in our buy right bucket. Fire in the hole. Okay so let's come back to our trade, track. Trade, tab. And, um, tee this up again because in buying covered, stock. If you're not familiar, with this, so this is a trade we might only be in for a week. Right. But. If it goes up to 45. And this stock has been on a tear. Um, how, what's the most we could make. Well, you know when we look at this. We could make. The most we can make. Is the difference between what we paid to get in 40 46. And what would we be called what we would be called out at so 45. Minus. Let's call it 40 50.. Well okay it's 40 40 right now. So the most we could make on this. Is four dollars and sixty. Cents. On what, on a 40. Investment. In a week. So that would be north of 10. Probably, around 12 percent if i get my little calculator, 460. Divided, by. 40 dollars and 40 cents. 11.3. So, it's a short term trade. You know what are the odds of us being called out. Well to see that. You know we'd have to come back up here. And say november, 13th, it's saying we've got a, 33. Chance of being called out which means we got a 67. Chance. That. Neil will not be at 45. Or above by next friday. And so we will look at that. And, and decide, what we want to do with this, then. But what if it's at 43, or 44.. So there's a question, and now we're going to go and look at what's going on. So. This expiring. Position, today. We sold the 29. Call. We got in for. 26.45. Um, and. It's currently, trading at. 41.67. So. We sold this call it's in the money. We will be called out. So, come monday we will no longer, own, this hundred, shares. And so some people might look at this and say like, wow, that really, sucked. So one i thought we got filled on. That. Okay, so if that, expired, i'll go and look at those and make sure that those get put in again on monday. Um. But. So if we look at this, when did we get into this trade. Well we got into this trade on october, 27th. And. We paid, a net, of how much. Well we paid. 26.45. To get into this how do i know that because it's right here. And we got called out at 29.. So i already did the math on this. So. We got called out at 29. We got. You know in at, 26.45. So the net was we made two dollars and 55, cents. Now, on what, on an investment, of, 26.45. So that was, a, return, on investment. Of, 9.23. For a trade that we were in. For 11. Days. And so we agreed, when we put that in. That even, if neo, went up and went up. Dramatically. That, we would be okay, being, called out. And ending up with a return. Of almost, 10 percent. For, a trade that we were in for 11 days. And i said you know if you want to throw a pity party you can go ahead. But the caterers. You know you may not have a lot of attendees. Because. You know many investors, would consider that to be a pretty nice return. Now when we come back to neo, here. And we look at when we bought this stock.
We Bought this october, 9th, not even a month ago. And we are up, you know almost, 95. And when we take a look at where our stop, is on this, it's at 25. Basically. And it's now trading at 41.. So what we may want to do, is. Protect, a little bit more of that gain. Does that make sense. So if we come out to our chart on neo. We want to give it room to breathe. But you know or we could say you know what i'm going to. Put in an. Alert, here. You know you might want to put an alert in because, it hit 43. Today. Um and the low of today was 40., you might say hey if this goes below 40, let me know, so we could put in an alert. To just say hey if this goes out or below, 40. Let me know. And this is where. You know support. Um. Can be in the eye of the beholder, because some might say well. Hey we looked at this breaking, out above the support, level here at 30. And it's just been like stomping. Up the hill. Since then. So you might look at this 30, as your support, level. And say you know i'm going to put this, you know my stop. Three percent below that and some of you might say like back the truck up. I have a twenty thousand dollar account, i don't wanna give up, you know uh, ten, eleven, dollars, eleven hundred dollars worth of that gain. I'm going to look at this next this 35. Dollar, level. And put a stop three percent below that. You know because it gapped, up after it hit that 35. 40.. But you know then you're putting a stop, still above the 10-day moving average. So this is where some people might choose to use, alerts, instead. Or they might just say you know what i'm going to take that 35. Level. And if it goes below, that, you know that's a pretty significant, pullback, for neo. It would be you know 10, over 10 percent. So, i'm going to take that, 3550. And multiply, that times 0.97. And say hey if this hits, 3443. I'm happy to exit with a nice chunk of my profit. And then. Look to re-enter. The problem with stops, often my friends is that people will get stopped, out. And then they never get back in. Sometimes, you end up getting back in two days later. And sometimes, you don't get back in at all because that stock starts to fall, and fall and fall. But sometimes, it's just a blip, and you can get nicked out. Um. When we have, earnings, coming up this is when sometimes, people prefer to use alerts. So this is why we put an alert, in on this one. Instead of using a stop but where might one. Choose to put a stop. At that 34, 43, so if we wanted to put a stop in on this we have a hundred, shares. We would take a look at this stop. And we would move that up by, almost, 10 dollars. Cancel, and replace. 3443. And then when we get closer.
To. 34. 43. When we get, closer. To, earnings we'll decide whether we want to leave that stop, on because sometimes, the stock will kind of whip saw on earnings and it may go really way up, or way down. And then it'll come back up and we don't want to get. What i call nipped out on a wick. But we'll. Update, that for now. Okay, so we only have 10 minutes left there's a couple of other things. That i wanted. To discuss. One. Was. On the monitor. Tab. Under. Our long, puts. We had a position, already. On cvx. And it's currently, showing a loss, because we didn't put in our trade management. As we did with the other two where we got out for a profit. And if we want to see the other two. So let's go in and fix this so we're going to look at. Cvx. So it rallied. As, many, other stocks. Did. And now it's looking to move again to the downside. So we could look at this and say hey, if this goes one percent, above. Today's. Um, high which is 73. 27. We want to exit this position. So i have taken notes on this one too. So. We want to get out and so that, i if we look at that and say 73. 27, was our high today. Times one decimal zero one, that would be seventy four dollars even so if it hits 74. We're out. Where. Might we aim for well close to where we were before. So around this 65. Mark so maybe we make that target. 66.. You know it doesn't have to go quite all the way. Down to 65.. So we are going to look at this position. We have one contract. We are going to right click. And we are going to create, a closing, order. And when we go to create that closing, order, we're going to come down here to advanced. Order. And we're going to make this an oco. An oco. Order. And then i'm going to right click, and create a duplicate, order. Okay, and we're going to make this a market, now there are other ways to do this and you may think that i'm doing this in a more cumbersome, way, i'm doing this because i think that. It's, much easier, to understand. Um, you know kind of the concept. Of, we have a target, we have a stop. So and our target, on this, and again. Lead with our target. We decided, our target on this, would be. Sixty. Sixty. Seven dollars. Sixty, seven. Dollars. And our stop. If it goes. Up again. On monday. We are, out, if it hits. 74.. It's it's unusual. For it to be such a round number. 74. Is one percent, above. Today's, high. And so we're going to put that in. And and how do we put, our. Management, in we would have been out with a. A profit, on that last week. Now if you're saying like hey how can i see. Um. And so these are just the exits, on this. Okay. So we've teed that up. Now if we want to see. The last two trades. So if i come in here and put in cop. And we go back 100, days. So we can see that, we bought, on september, 29th. We bought. A call. Sorry we bought a put. For 250.. Dang it. Sorry we bought a put for 250. And. November, 2nd. We sold it for 350.. So we were up a dollar, on that. Um. You know which, doesn't seem like a lot. But. It's, 41. On 252.. So you know we got a nice return, on that one. Um, and then our other one. Psx. You know we got in at 380. And out at 4 30, so we were up, 50 cents on that one. For a gain of 13. Now there were three, others, and. And um. Someone was upset that i didn't cover these last week we had so many things that we were trying to cover. Where we had a profit. That we and i i. Made an executive, decision but i should have spent 30 seconds to go over these. Mcdonald's. We had three, short put verticals, one was on mcdonald's.
Um. One, was. Costco. Okay, mcdonald's, costco, and zoom. We had decided, that we would try and do a short, term. So we got into these on october, 16th, they expired, two weeks later. So the benefit, is that your time decay, is really rapid. The, the gotcha, can be. If, it goes against, you you don't have time to recover. And so this was an instance, where we didn't have time to recover. It was through both our strikes, and we ended up taking a max, loss, and we did two contracts. So we were out about 380. 82. On that. And so if we come to our chart. Mcd. You know we can see because i went ahead and i prepped this earlier. This is where our bottom, strike was this is at 225. 222.50. And last friday, here we were. And it just dropped, like a rock. We had the same thing happen. On, costco. Where all of a sudden, it dropped. It was just trekking, along and doing great and then in that two days prior to expiration. It dropped, and this is where it was on friday, and this is where, our strike. The, the 267. 50 was, now had we had one more week we would have been fine we would have had a stock, a. Trade with a max gain. So that was the other thing was that we wanted to be out of this before that. So we had three, of those. That went against us the other one was zoom. And so. You know. There we were friday, it just dropped below. You know the day before and this is why. Often if you do something that's a three week trade you want to be out four days before expiration, because you never know what can happen and you want to take your risk off the table. So you know even. You know in a shorter, term when we're only doing this for two weeks, we were hoping to stay in this until the end and it came and bit us right in the took us. To the tune of, you know our max, loss, on all three of these. And the reason that i chose, not to spend time on those was because. They were max losses, but the lesson, in this, is. When we calculate. What we're comfortable, losing, in a certain position. You've got to take into account if you say i'm comfortable, with a max loss of 400, dollars well what if you had to take that one two three. Four. Five. Ouch. Times in a row. You want to be sure that you are fiercely, protecting, your capital. So you know sometimes, like things are going along swimmingly, and it just seems like you can't do anything, wrong. Well trust me the market. You know. And you start position, sizing, inappropriately. It can come up and take a big chunk. And this one, chunk, chunk. Last week. But then on the other hand. You know we've done very very well with crocs, we've done very very well. You know with, um. With neo. And we had sold a put on neo, we've done, you know so we've been trading, neo in lots of different ways. You know just, to. Um, show how, different. Types of trading strategies, can produce, different returns, and of course. You know up almost a hundred percent, in under a month. Um on one return, two thousand dollars on a twenty thousand dollar account is a big deal. You know we're up. You know as of this time. You know if we were to liquidate, this account, twenty four. Five fifty four. So you know and this is half of that. Because last week we just lost. You know the three. Uh six hundred. Or four hundred dollars, times three so we were down twelve hundred. Um on those three, so that that hurt. Okay so let me have a quick look at questions, and then we have to wrap. I'm not sure i covered exactly, everything, but we, we did a lot today holy smokes. Is it a viable, alternative, just to let the call expire, and get. Assigned. Um. So, the the i'm i'm assuming, so this is a question from mark i'm assuming, it's around the, neo. Covered, call. And when we did that as a buy right. We. Sold that call, expecting. To get run over and expecting, to be called out that was the strategy. So we do like the stock we do own the stock. This is a way of just adding a little more to our account it was an, income. A growth, generating, strategy. And so. We, we would be buying at a discount, but not really because that ex, that. If i come back to neo. And we look at this. We. Sold that call for a dollar. 17. It would have cost us 12. To buy it back. So to buy it back. It was out of our price range it wouldn't have made sense to buy it back. The stock had moved too far. So yes we like the stock we have it in our portfolio. We like this strategy. It made us a, nine point something percent return, in, 11, trading days, so now we'd like to you know see if we can, get another. 10, return in a week, perhaps.
Perhaps, Not like, you know this. This strategy. Could end up. Losing money also we we just looked at three losing trades. Okay. So. I didn't look at short interest, what happens to the expiring, neo we talked about that. We talked about the open interest on cxo, it was more the bid ask spread that kind of got us. We talked about account, size. Okay, so i think we've got it my friends thank you for sticking with me i hope that you found this, to be an informative, class. We, it can be a little, bit. Like drinking out of a fire hose. Um if you want something, on how to do oco. Orders, connie hill teaches a class, on mondays, now you can go back and watch the archive, on this. Because we did a lot of oco, orders today so if you go back. And what i did when i was trying to figure this out is whatever the coach did. I tried to mimic in my paper money account. And so i would go to the archive. I would watch, stop. Figure, out how to do it, do it again. Sometimes, stop, back it up, do it again. Until i had it figured out but connie teaches, uh, uh, getting started with think or swim or uh. You know how to use think or swim and you can go back through her archives, that classes, mondays. And i'm sure she has one on oco. Orders. So i'm usually her sidekick, in that class. So guys, um. I think we've covered what we intended to cover today. I thank you so much for joining me again. We move quickly. But. I know that there are some of you who are going, hey that's fine bring it on, and for some of you it may be a little bit like drinking out of a fire, hose but keep coming back. And know that you can watch the archive, you can back it up and replay, things if you need to. Know that options, aren't suitable for all investors. Um, you know there are special, risks inherent to options trading that can, expose investors, to rapid and substantial, losses. We discussed, that in this class. We also, in order to demonstrate. The trading, strategies. And the functionality. Of the platform. We look at actual symbols and lots of them those are all to be construed. As. Examples. Not recommendations. So my friends. Have an awesome weekend please stay safe the coveted numbers. Are really, spiking, across the country, i know there's biking here in utah, a lot of emergency, rooms and. Respiratory, care units are getting maxed out so take care of yourselves, and each other, and i will look forward to seeing you in, a trading. Or a webcast. Coming up soon, take care, bye for. Now.
2020-11-15 06:22
