Trading the Trend | Trading a Smaller Account

okay here we go [Music] well good morning everyone welcome to trading a smaller account it is Friday morning and it is time for us to get together and pack as much interesting stuff as we can into our 45 minute class I'm delighted that you're all here and today we're going to talk about some short-term largely bullish trading strategies because although the market has overall been down trending this year we've seen in the last month and a half this kind of move to the upside and even if a Trader may not have a ton of confidence that this uptrend is going to continue could we take advantage of that in kind of a shorter term way and that's what we're going to explore this morning so I I just want to thank all of you who joined the chat early we've already had quite a conversation going on for the last 20 minutes so hello to ap514 Marcy Krishna Doug Wayne Michael Rebecca uh Jewels Island gal that some of these names are great aren't they Larry and the rest of the gang thank you all for showing up I'm not just showing up but for participating and adding value in the chat if you are watching this in the archives and you're saying I didn't even know that this was broadcast live and I had that option Friday mornings when the Market opens at 9 30 Eastern we meet on the trader talks Channel um on TD Ameritrade and you can join us on that channel at any time in fact if you hit that little button over there you can subscribe to the channel and then turn on your notifications and it you know you'll get a reminder hey trading a smaller account is happening don't forget to join us so we also have Ken rose with us in the chat he brings a wealth of experience with him and so if you've got questions don't hesitate to ask if you're watching this in the archives as thousands of people do know that you two have a voice you can just type your question and down in the comment or if there was something you loved you can you know put that in the in the comment section as well and I respond to those on a daily basis okay so um so yeah take advantage of that the third way that I can communicate with you and that you can communicate with me is through the land of Twitter so my Twitter handle up here at B Armstrong underscore TDA Kansas at K Rose underscore TDA and today there was a conversation about candlesticks happening in the chat and so I asked if they wanted me to repost some information I'd posted in the past so you know I posted just kind of a quick Visual and three of the cheat sheets that I used to have on my office wall when I first started learning how to do this and I still refer to these on occasions so you know there's one for bullish candle stick formations there's one for bearish candle formations and then there's one for others that kind of apply you know wherever they appear and so you know anyway it this is just a way for me to be able to deliver valuable content to you and you to take advantage of it okay so having said all that let's get through our important information so that we can get out to the platform and uh you know get busy because we've got a lot as always we have a lot that we want to cover okay so know that this is an intermediate level class what do I mean by that well if you're new um and you don't understand a particular trading strategy please let me know and I can put a link to that trading strategy um in at the end of the class and I can always you know put it in in the top right corner but I'm assuming you understand these strategies you know what a short put vertical is what a long call vertical is uh what a buy right is those kinds of things an iron Condor um so I'm not teaching new strategies we're taking strategies and applying them but know that what we're doing in this class is all you know know for educational purposes only it isn't a recommendation to go out and trade these strategies in your Live account know that options aren't suitable for all investors there are special risks inherent to options trading they can expose investors to potentially rapid and substantial losses we want to be aware of what those are know that when we're doing spreads or multiple leg option strategies which is predominantly what we have in our account right now the substance the transaction costs are higher so we need to be aware of that as well okay where if you're new to TD Ameritrade you have to apply for option trading privileges same goes for futures know that all investing involves risk including the risk of loss all the trades that we do in this class we place in our trading a smaller account um account on the think or swim platform the paper money version of it it looks like smells like feels like real money but it's not um and there are some nuances between the live platform and the paper money platform the biggest one is that a short vertical will never be assigned early for a short um a short strike will never be assigned early a short contract in your paper money account that can happen in your Live account okay I know that all investing involves risk including the risk of loss okay so what are we going to cover today what's on our menu well it always looks like really familiar doesn't it but we're going to I've got one quick announcement we're going to do a quick Market overview we've got about I don't know six or seven trades on that I want to have a quick peek at and we may want to exit some of those or manage those in some way and we may just want to say hey they're percolating along and doing just fine and then we're going to spend the majority of our time on new trades so the announcement well the one announcement is you know there have been a lot of imposters out there and I probably had half a dozen so have all the other coaches and what they're doing is reaching out they're uh befriending you asking you to follow them and then they're trying to scam you with some cryptocurrency thing or some other scam I will never nor will any other coach ever reach out to you and say that we are you know that we would like to enroll you in something for which there's a payment that we will never ever do that if somebody reaches out to you and they they're they say they're me they're pretending to be me they aren't me so I just want you to be aware and hear they just added an extra um underscore at the end sometimes they just change the name slightly and then they're stealing all the images and stuff too so it looks like smells like feels like me but it's not okay so that's that um coming back to number two on our list which is what's going on with the market so when we come and we look at the s p so it's falling today so you know there may go our opportunity to focus on bullish trades we may have to Pivot and look at something else but what we can see here you know if I change my drawing tool in spite of the fact that the market has overall been downtrending you know we're seeing even with today's pullback it's up 15 in the last you know month and a half or the last 36 trading days since this you know middle of October this was October 13th it was a Thursday it was kind of a crazy day in the market um as you'll recall because it gapped down on the open and then rallied you know it was like ridiculous the rally okay so that's what's happening with the s p how about the NASDAQ oh sorry guys sorry okay thank you okay it'll just take a minute there's a little bit of a leg so there's our our s p and now let's move over to the NASDAQ so October 13th I don't know if you remember it I sure do um but you know it gapped down on the open and then rallied like crazy but really that was kind of a turning point because since then you know if I draw My Line This Way we've basically been up trending even within this downtrend okay thank you for pointing that out guys okay so how about the NASDAQ it hasn't been quite as clean a trajectory and we can kind of get rid of this line I took all my lines off it was getting so cluttered um but you know we've seen we had this low here on this Thursday higher low higher low so it too is up trending it just isn't quite as steep uh a trajectory as the s p and you know where where the other one was up what 15 this one's up slightly less about 13 but it's still up 13 since the middle of October and it gapped down on the open today and this is where we were talking about candlesticks before um before the market opened when we have a red candle like this candle that we're seeing this morning it means it gapped down so it opened lower um but then it's rallying so far within the day and of course this is a live this is a live candle um but it's still it has a red ring around it because it still um below yesterday's close and who knows where it will be by the end of the day um but I would say that that's a a more bullish sign that you know even though we had this knee-jerk reaction you know to maybe the jobs report or other news that it was coming out this morning that it seems to be kind of coming back and you know we could end up seeing the same thing with the s p throughout the day because we have this candle that if we go back to those charts I just posted this is a candle of indecision this candle here and this was a pretty extraordinary move to the upside you know on Wednesday um so are we surprised to see a bit of a pullback no not really we are not it's you know kind of a pullback within the context of this you know shorter term uptrend now how about the Dow the Dow is still down about eight percent year to date but I mean tremendous rally and again you know I did this in another class and you know if we back up I didn't take all of the lines off this one because it had been down trending in this downtrending channel pretty much all year and then on that October 13th again gap down huge rally and has been Off to the Races you know ever since and so you know if we take a look at that and come down to this low and come up to today you know this one's up almost 20 like 19.3 you know it was up over 20. so you know and again we had a big up day on Wednesday a couple of days pulling back it's still sitting on the 10-day moving average and this one this black line by the way is the 200-day moving average which is a significant marker for a lot of people and you know this is above the the 200 above the 30 and even it's still it's sitting on the 10. which is pretty

awesome and if we come back to the s p you know it's it's flirting you know with this 200-day moving average it broke above it on Wednesday it's kind of sitting right on it but this is a significant marker and of course for you who like technical analysis and there was a lot of chat about charting um you know before we started the class in the chat you know when we look at this kind of a big double double bottom pattern isn't it you know using this as a resistance level and so you know if you were to draw your lines you could say well if this breaks out how far might It Go and the measurement would be you know from here and then you double it you know but right now we're flirting we're not there yeah yep and then the Russell kind of more the same right like although this one on October 13th didn't establish a new year-to-date low you know we have a pretty strong support level here and it too has been moving to the upside yeah let me just get rid of that one you know so since October 13th and I'm not super exact here but it too is kind of in that you know I'm flirting with that 200-day moving average and and it will be considered by many to be significant you know if it goes if it goes above that I don't know what happened on October 13th I don't know that there was any particular news event or anything that happened on October 13th all I can tell you is that it gapped down on the open I remember it well because I was teaching a class early that day and then we had this extraordinary rally one of the biggest range days in the market in the last couple of years like the range that day on the Russell was 92 points you know that it was really quite an extraordinary day and then the next day you know it pulled back pretty dramatically but overall since the 13th you know things have been kind of moving to the upside and it's up 13 so if we kind of drew a line a support line you know it's it stayed since it broke Above This 30-day moving average it's come down and kissed it once kissed it twice but the 30-day moving average now appears to be acting as a support level you know which is another good sign so you know is this the end of this you know year of angst for those that are bullish in the market well you know we don't know yet all we can do is trade what we see right um but you know what we're seeing you know here we have this big day on Wednesday and it's kind of come about half dang it it's kind of come about halfway back and and when you have a big candle like this the first support level is kind of halfway back through that candle where is it sitting right now about halfway back through that candle which also happens to be right where the 200-day moving average is oh the CPI October 13th was CPI day so maybe it was less negative than they were expecting it's it's been an interesting year in the market what else can I tell you and you know we're getting a little I don't even want to say a little bit of a bounce really because it's sitting really close to our year-to-date lows it's sitting close to our year-to-date lows you know when we come and we look at the last year it seemed to find support when it gets down here around 20. you know I remember a few years ago 20 would have been considered really high in this crazy year we've been having you know it's kind of been in a range between 20 and about 35. and so now we're closer to the low and and I don't mean think that necessarily means there's tremendous confidence but there's less fear I mean you can interpret this how you like okay so let's go and look at what we have going on and do we have any brand new people with us today I know we have a lot of people with us live are there people that have never been with us before because if if you haven't been with us before we started the year at twenty thousand and we're currently sitting at 34 000 so we're up basically fourteen thousand dollars so if I take 14 000 and I divide that by twenty thousand we're up about 70 percent you know at one point we were up 75 so we've given a little bit back but our strategy this year has been never to risk more than in the beginning 400 on any one trade if we bought a stock position we would never exceed a position size of 5 000 which is very high that's 25 percent of our starting balance but then it just it gives us the ability to do something like a buy right or own a stock where we could use you know a protective put or sell a covered call or those kinds of things um and it has served us quite well we've been doing that for the last three years um this year our trading strategies have been different because the Market's been different um but it's been pretty effective um thus far and who knows where we'll be at the end of the year um but we're going to continue with that now we've upped our risk to 500 per trade from 400 we didn't go to 600. so what some people might do is as your account grows rather than saying well I was willing to risk two percent so now that my account is 30 000 shouldn't that be 600. well two percent if you have a million dollar account might seem like an insanely High number to risk on an option trade and so your number might be um one percent or half of one percent or a third of one percent but when you have a smaller account as a percentage often you might risk a little bit more percentage-wise so as our account grew and we'll reset this uh which always brings the chair to my eye um at the beginning of January but if we were to continue on and we got grew this account to forty thousand or fifty thousand you know what fifty thousand you know we might um say well we're going to still only risk six hundred dollars which is just over one percent so we're taking our amount of risk as we grow the account and we're as a percentage we're making it lower um but we never really get to that because we always reset the account at the end at the end of the year back to twenty thousand so right now we have two short put verticals I put these trades on on Tuesday in the getting started with options class so we had one on Crocs and one on Exxon Mobil and if you weren't with us and getting started with options first you're welcome to join us it's at High Noon on Tuesdays um but with the short put vertical if we come and look at Crocs it was pulling back yesterday so I thought we might just take our money and run here are our strikes this is a fairly volatile stock so here are our strikes and as long as it stays at at or above 90 and currently it's at 99.38 we can let time work its magic so today it gapped down and looks like it's trying to Rally it's still slightly below yesterday's close by you know 30 cents but it looks like it's kind of trucking along so we're just going to leave that one okay but if you wanted to kind of follow along it expires December 16th the second one that we did and we haven't done as many short put verticals this year the last two years they've been kind of our bread and butter um but the reason we haven't done as many is because we weren't confident that you know we could be in a trade for three or four weeks um and not get beaten up and and a lot of our story about verticals haven't worked out so well for us this year just saying um but we did another one on Exxon Mobil this one is only a dollar strike so we have five contracts a dollar wide and again as long as we stay above 106 so it came down yesterday but today rallying we're going into the weekend where time just will continue to do its thing and if it were down again today we might say you know what this is maybe going in the wrong wrong direction but you know this support level kind of right along here seems to be holding and so we're going to just let that one ride also okay so that's the two short put verticals okay ap514 is saying yeah let it ride and and you know he knows that I like to run a democratic class here and that I'll often say what do you think guys should we stay or should we go not a song okay so here's our long call verticals now am Jen look at that we were when I looked at these before the market opened every single one of these we were up on so let's go and have a quick look our our deal with these is we put in an exit to get out when we have a 50 gain and then we just watch them and if we get to the point where there's a 50 loss we're out and so you might say oh wow like there's a whole pile of these are we gonna spend the whole class I'll just show you how quickly we can go through these so amgn Amgen so here's our long call vertical we have a couple of weeks it seems to be holding this line to get our Max gain it has to go through this 290 um and we're 285 and 290. so today it

kind of um it gapped down a bit but we've got this candle of indecision so we're going to let that one um ride and see if it rallies on through um and it's not at our 50 percent loss yet um which tells us we can stay this one I'm going to skip over because I've got to call the trade desk we want out of this and it's not playing nicely um it's not letting us we tried to exit this a week ago and it wouldn't let us exit the trade um with Hass we're at 140 145 so we're halfway through with Hess and we've got two weeks for it to go up below up another dollar forty so you know we're now bullish on the day we're gonna let that one continue to work okay now the way I do my candles I'm a big fan of candle trend and the difference between candle and candle trend is that it will show the relationship of the candle in relation to the previous day um as well which I like um and so if you want to change that if that's not how your charts are showing up you come to appearance and you can change it with candle they they change this is showing as a down candle which drives me bananas because it's way higher than this candle was and but if I go to Candle Trend it makes it green as it should be in my opinion just my opinion obviously there are others who feel differently or they would only offer candle trend okay so um it has we're gonna let that one percolate Honeywell well that's a little worrisome we'll look at this one again on Monday but and and you know we have a couple of trades on this we also have a a one ATR Target on this so all snug up at the stop on that um later today and you know so we should be out of that that one I'm guessing that one ATR with today's drop um if we had moved our stop up here um so so um this one will wait and see what it does at the end of the day because by the end of the day this one could be up but these we do want to Monitor and if we get to the point where we're down 50 percent um then we're out oh well this one kind of dropped today but you know we've seen it's been kind of I don't know if this is called holding but we want it to be up here but this is a candle of indecision or a candle that might be indicating that it's finished falling if it comes down to a support level it holds so it but you know it's it's a live candle it could change throughout the day and then um Mickey D's here's our last one and you know we want this to be above 275 by next Friday so that doesn't give us a lot of time so if this isn't moving to the upside on Monday we may just take our our losses on that one Okay so we've now just reviewed you know one two three four five eight trades and I'm talking through rather than just reviewing them so you can review your positions on a daily basis pretty darn quickly okay so let's go and look at yeah let's go and look at some new some new opportunities so and you know the the challenge with this class is that you know it the Market opens um when we start the class so Walmart has had quite a great run and um you know I don't tend to be a big Walmart Shopper but someone told me you know when I was on tour for the last month that you know Walmart their grocery prices are really hard to beat and um you know they were fans now it could be you know the area that they live in or or whatnot but it was interesting um to see that kind of positive feedback and I mean this is just you know it's not a recommendation for you to shop at Walmart or to trade Walmart but we've seen it's had a really nice um breakout here and moved to the upside and it's it's kind of pulled back for a couple of days and again what these candles are telling us is that you know it pulled back for two days rallied yesterday opened a little lower but is is trying to Rally now in the day and so if we think that this might continue to the upside could we do a long call vertical on this you know could we do a long call vertical and say hey it's at 150 250. it just hit 155 154.64. could we maybe do a 150 155. and you know even come out to January on the thing so if we come out to January we say okay the 150 if we were to just do a long call that's kind of out of our snap bracket um so but could we come here and say I would like to buy a vertical and do the 150 155 so how much could we possibly make and it's already halfway through it's at 150 260.

we could we're risking our theoretical Max losses 282 the most we can make is 218 but what we've decided this year after some trial and error is if we can make a 50 gain we're happy so we're going to take our calculator and say okay if I'm I'm coming in oh I guess I have to I'm coming in here at 282 and if that goes up by 50 percent to 423 I'm I'm not going to wait for it to get all the way to five dollars at 423 I'm a happy camper I'm out and then on the other hand if it goes down to a dollar forty I'm out do you know even though we can afford to risk 280 dollars we'd rather not lose that if we can avoid it yeah and you know if somebody's asking how can you judge if it will keep going up you're just looking at the trend and then you're looking at how people are shopping and if you're saying well if we're coming into a recessionary p um period if that in fact is happening or you believe it might happen might people be more sensitive to grocery prices and go where they think they can get the better deal and and might Walmart be a place that someone would consider that so you're just kind of thinking through what like this isn't just a ticker symbol it's a company and what does this company do what is their business and do you see demand for their product or their service continuing to grow what story is the chart telling us and the chart is telling us is that after the last earnings um you know they beat on earnings and it's been moving nicely to the upside and so you know that's how we're making our judgment are we sometimes wrong you bet your sweet baby we are okay we've had a lot of losing trades in fact you know when we come back here right now they were all up but you know we now have three that are are in a losing position right now and then we have one two three five that are you know doing well and if you can win more than you lose and manage the damage when you're losing by following a set of rules that you have decided you're going to follow before you place the trade this is stuff that that matters this guys this matters should I say that again following rules matters because like I have done a lot of personal research and I have broken my rules many times and usually it is a painful learning experience you know so okay so we're gonna come here we're going to do this single order first trigger sequence we are going to right click create an opposite order and say hey when this gets to 423 we want to close it down we are not going to put in the exit although we could just because sometimes when the Market opens we can get these this crazy volatility and if I get nipped out for a nice profit I'm okay with that I don't want to get nicked out for a big loss and I've seen that happen in Live accounts and so I'm I'm teaching this as if it were a live account even though it is not now remember when I said one of the differences the nuances between um this is a long call vertical the nuances between um the paper money and live money is that a short call will never be exercised early well you know if we they exercise the short call then we would just go in and exercise the long call and we'd have our Max gain and it you know so it with long-haul verticals were we to be called out and I'm not well it never is going to happen in our paper money account um it's not always a bad thing you just have to understand how the strategy works and what you would do if that happened and it's only likely to happen if it goes through both strikes in which case we'd have a profitable trade anyway and it's less likely to happen because we've said we want it out at a 50 gain downside protection we're going to watch these just like we did today and say hey if this gets to the point where we're up 50 or down 50 on Mickey D's we're down 38 if it gets to 50 we're going to take our losses we are setting stops on the atrs that's a different trading strategy than this so somebody asked the question when we when we do a long call with a one ATR Target and exit we are setting stops on those okay so that's Walmart um let's look at Home Depot so again like you'll notice I'm going to you know these are kind of standard companies that a lot of people you know it's not you can buy Big Ticket items certainly at the Depot but a lot of it is like regular everyday get your propane tank filled that kind of thing um and this has been up trending also so today it pulled back to the 10-day moving average and it's looking like it's trying to Rally isn't it and so if we look at this previous high around this 326 I mean yesterday it hit 3 30. could we come down here and do maybe 320 325 it doesn't even have to go up to yesterday's high it just has to go up to this previous High and we'd be through both strikes and so even though it's pulled back it's pulled back to the 10-day moving average it's trying to Rally you know that's why this candle is white and not a red body and it's a live candle so you know it could look totally different by the end of the day let's go have a peek and so if we come out to January we're saying okay 320 and this is one where this is a 320 dollar stock so if we wanted to buy a call out of our snack bracket we couldn't afford it you know fourteen hundred and fifty dollars or even you know 1175 but if we come here we say okay well if I think this is up trending it would be kind of nice if I still had a way to trade it and this is our way this is one way you know we could say Okay 320 325 so again some investors or Traders will say I don't want that to be higher than 250 because if it's 250 I'm risking one to make one I'm risking 250 I could make 250. and and you know the if we did strikes like 325 and 330 it's more bullish it has to go up through 330 instead of 325 but we're saying we're going to be happy with a 50 gain um I'm not looking to make a hundred percent gain so if I take my 278 and I multiply it by 1.5 and say hey when this gets to the point where it's worth 417 I'm out I'm going to take my 50 gain and I'm going to be a happy camper it's like we're trying not to be greedy but to do trades that are shorter term in nature and you know to kind of catch a short-term Trend and benefit from it so it might go up for a week or a week and a half what if it gets to the point where it's worth 410 and then it looks like it's going to turn around like do we have to hang in there until it gets to 417 yeah absolutely not we could say hey it's at four bucks uh like I'm up 110 here that's a base hit in my books and I'm good with that yeah yeah so one of the things that some like about this this trading strategy is that you know here's our theoretical Max loss so we know what we're risking and what we've set an exit so we know what you know we're saying we'd be happy with gain wise let me just do that math again 285 times 1.5 because we're live so now we're saying let's make it 425.

so you know Max gain would be at five dollars we're saying yeah no we don't have to get to Max King so long call vertical there we go our theoretical Max loss 283 our Max profit 217. we're saying yeah we're not waiting for that we're you know if we're up about a buck 40. we're we're going to call that a successful trade okay so fire in the hall so that's HD okay how about Microsoft a couple of this guy's written down here okay so this is pulling back we've seen some consolidation here on Microsoft and you know it's been a tough year for technicals right and you know you can kind of play a bit of I spy with my little eye with these like so some might say well I see this inverted Head and Shoulders you know with like a double hump because it came and it it's kind of flirting with it but you know if we drew a line kind of here you know could we maybe do a short put vertical here or you know if this was back Above This 250 ish level and it's just you know it's sitting at 251 right now you know could we do a long call vertical on this and we could we could do either one you know here's another one we can look at um Nike so when and we may come back to this one so let's look at Nike and see what's cooking with that so here's another one where it's been kind of consolidating you know we come back to October 3rd it hit this low around the 82 Mark and it's been up trending since then it broke through came back to this 108 level and seems to be bouncing so could we maybe do a short put vertical here I don't know if we'd get enough premium for it but maybe you know at least below the 108 could we get something at 104. and we have earnings coming up December 20th so we'd want to be out before the 20th I look at Microsoft just because I was looking at stocks that are in the NASDAQ and I was looking at stocks also that are in the Dow which has been the strongest um one yeah somebody going back to Microsoft said you know could you see a cup and handle here absolutely we can see a cup and handle so we could do a trade on either one of these go ahead and give me your vote which one would you prefer Microsoft or Nike Microsoft or Nike here's Microsoft Nike I think we're gonna go with Nike but we have to Nike earnings is the 20th you know so we'd have to do something that only 14 days so we're getting some votes for Nike in here and so when we look at this usually with our short verticals we end up out at um at 80 percent of our Max gain we that's what we set our default as and so we're kind of split so let's see if we can do them both we've got about five minutes here so if we look at this if we wanted to do a short vertical we only have you know 16 days and we'd want to be out so we'd have to do this one December 16th because earnings is on the 20th and we don't want to still be in this in 14 days is kind of short but if we look at this and we say okay seems to have found support here around this 110 can we come out to the 105. that's a 23

Delta and if we did a 105 and a 103 that's a little skinny because we're risking a dollar 65 to make 35. so if we say okay so 105 that's not going to fly could we come down here to maybe 106. would we be okay with that or even 107 so if we look at that and we say okay we want to sell a vertical now that 107 105. so if we come and we put this on the chart I'm going to take this line and I I'm just such a visual person I don't know if you are or not so it has to stay above this line so we're assuming that this we would our our expectation would be that you know it's going to stay above this 107 and we're only in this for two weeks and we would definitely our expert our expiration date is prior to earnings but as it approaches earnings you know volatility is likely to stay higher so it has to stay above those strikes okay so we're going to do this and we're going to do we're risking a dollar fifty so we're going to do two of these and for sure your sequence you're going to right click opposite order I'm going to say when this is worth 10 cents so when we've got 80 about 80 percent of our Max gain we want to close it out yeah and and you know what we can put this we can put notes in here and say you know what approaching earnings um only uh 14 days to expiration um yeah and and our strikes are strikes our our short strike is four dollars below their current trading price more or less and we'll just see okay if we commonly look at Microsoft you know how might we do this one well we we've seen once twice three times four times it came up to this 250 mark and you know and now it's kind of flirting with it so if we were bullish on this and saying I think this is going to break out the thing is it hasn't quite broken out yet so you know what we'll look at this one again on Monday okay and our I treat that class as a companion class to this and so long options Monday high noon meet me there I'm going to put a note that we're going to talk about this one and um we're going to review it and so what could we do we could do a long call vertical a short put vertical we could also just if we were bullish we could do a long call but the December price is 590 so and we'd want to go out to January so it's a little Rich for our blood but we have another account in the long call class that we could use to place that trade but we'll look at you know what we might want to do and I'd put that trade in after the class but we'll discuss it Monday okay so yeah that one's a little it's not as clean I I will admit the Nike trade is it's it's not as as clean as we would like and I like to take as little risk as possible it's you know and and but every time we place a trade if you position size appropriately and you know you're not correct then you're not blowing up your account and that's how we've managed you know to kind of base hit our way um so there's a question saying why is getting out of Nike prior to earnings important because we've seen a lot of stocks gap on earnings like look at the last earnings here on Microsoft to gap down and if we did a short per vertical we may have just gone from 75 percent to Max gain to a Max loss like that and so if we're trying to trade conservatively one of the components of that is not holding is something like a short put vertical over earnings yes our other kind of rule of thumb on that is we want to make at least a one percent return for every day we're in the trade and with that one we had a the Nike trade about of 33 potential return for a trade that we were going to be in for um you know for 14 days so you know if the premium was rich okay so guys that's a wrap we're out of time but this is where I say I sometimes will get like a little bit bossy we don't have a survey in the chat today but I ask of you just three things so word on the street is that um the majority of people 65 to 85 percent of people watching this are watching this for the first time go figure like I had no idea so if you're new to this and you found this valuable please down there there is a subscribe button there's so much confusion out there in the market if you found this valuable hit subscribe you can turn on your notifications so you'll make sure you don't miss this next week um and and join us the other thing you can do to help out a fellow Trader who may not have found this yet is hit the like button so and then last but not least don't forget to follow us on Twitter um both Ken and I at K Rose underscore TDA at the Armstrong underscore TDA um Ken just posted in the chat yes I teach long options Monday we're talking about short put verticals again and Ken Rose teaches a class just on short put verticals it is every Wednesday at nine o'clock Mountain 11 o'clock Eastern you'll want to join Kendra that he covers a lot of really interesting material within the short vertical realm so so guys that's a wrap for today again thank you for joining us know that everything we do in this class is for education and informational purposes only none of it to be construed as a recommendation on the part of TD Ameritrade or myself um yeah and know that all investing involves risk including the risk of loss um guys whether you're in 80 degree weather as I know some of you are or you are looking at making your first snowball of the Season whatever you choose to do this weekend I hope you get to do it with people you love and have a blast take care have a really awesome weekend and I will look forward to seeing you on Monday up next is Connie Hill and that's at noon Eastern and she will be covering um getting started with Stock Investing so I hope you'll join Connie for that take care everyone bye for now

2022-12-07 23:18

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