Trend Trading - Bullish & Bearish | Technically Speaking: Trading the Trend

[Music] welcome to trend thursday my name is james boyd we welcome you here today uh this class is going to be on bullish trend trading trading trend weeks to months but we will also be talking about bearish trend trading as well as we also have some of those examples we like to welcome annette yeah and that there's been some pretty good powder here lately it's it's cold today that's why i'm inside dom seattle michelle uh seattle michelle nice uh yeah you probably know what well i probably know what you're thinking uh from yesterday's discussion that was interesting yesterday on twitch jx hello fans el diego monique tmtm ray and many others ray sorry we took that quarterback from seattle boy he's a great quarterback though broncos will take him so hopefully wherever you are you're enjoying yourself you're hopefully going to be uh in some warm weather or you're there now so just real quick remember as we get started here today john mcnichol is in the chat he's a fellow instructor and matter of fact we'll bring up actually one of the content pieces he actually uh uh posted and i uh i think that's actually gonna be a nice little bonus for you here today as a takeaway homework assignment now remember you can find john myself or any of us instructors on twitter we do post educational content there daily now remember with what we discussed here today is is intended for educational informational purposes only not investment advice recommendation of any security strategy or account type understand that options are not suitable for all investors special risk inherited trading options also understand when we talk about short options short options can be assigned at any time up to expiration regardless of the in the money amount okay and then the money option has a higher risk of being assigned early and also remember when we talk about uh using the paid money platform we will be using uh that paid money software application for educational purposes only and also remember when we talk about options if we do we will remember we we kind of want to reference the option greeks which is really looking at sensitivity to direction uh time and volatility now just real quick as we're getting going i want to kind of just give us a quick sense of what we're going to cover here today so first off i'm only going to look at the market just i'm going to look at really uh four charts when i look at the indexes we'll take a look at the spx vix we'll look at crude oil gold and the tnx the interest rates then what we're going to do is we're going to take a quick look at two of our bearish examples we'll take a look at crm docusign as well and then we want to practice maybe one bearish position okay and i know a lot of people say james i'm not good at bearish business and i know we're gonna practice okay we're gonna show two past examples and let's practice a new example here today and as we do that i want to kind of talk about the difference between really shorting a stock versus maybe using options for a bearish position second we're going to really talk about commodities maybe some new potential entries in that space and lastly we'll talk about some portfolio management uh as well in both of these portfolios so let's actually go ahead and kick it off now i know some of you are crushed that i don't have my north face jacket on no it's not what is this it's a polo okay now if we take a look at this spx you know when i woke up here today i i was thinking in my mind what type of price pattern is the spx in without even looking at the chart okay i will now the biggest actually thing is you know we've been in this descending triangle and this is not unusual that you kind of get this up and down up and down up and down and what you're going to notice is here we're still not at the end of this triangle now you might be thinking in your mind but james i am at the end of my patience okay well but that's not the market okay but if we take a look at that we're not even there to that break point potentially yet that doesn't always have to wait until it breaks up or down or does it go to the end a lot of times you actually kind of see it go very very tight before it really breaks one way or the other now in a descending triangle which way does it typically go does it tend to go like break to the upside break to the downside if in two weeks from now we actually saw the s p break to the downside would that be surprising based upon the price pattern maybe not with the descending triangle tends to be a continuation pattern and remember these little marks here here here here here name that movie i'm actually referring to here sign here sign here and what you're going to notice is those are all lower highs now if you get that movie oh man you're good okay and if you take a look at this you're seeing those constant lower highs now when you make actually lower highs and you get kind of like an equal level support it puts a lot of pressure on the support level okay so in our discussion today there's probably going to be a bearish example okay now if we actually take a look at the vix one of the things that we kind of mentioned is a little concerning when you take a look at the vix you don't even really see the vix still uh kind of getting to capitulation you kind of see the vix staying up at these levels it's very difficult to get a market tradable bottom if you don't get a spiking on the bix and it's not spiking it's just this gradual climb up now remember if the vix is at 16 it means that the index is fluctuating about 1 the spx if the vix level is at 32 which is pretty much it if it's at 32 that means the s p is fluctuating on average about two percent so in our current market you know we've had this up and down volatility and it's not just down it's up too so keep in mind that the investor might want to kind of be aware of what type of assets they're buying in are they more volatile assets or they tend to be less volatile relative to the market now just briefly on when we take a look at crude oil crude oil selling off a little bit here okay price actually trying to get down below the 10 period moving average gold itself sitting here at the 10 period moving average we'll talk about maybe an example there and the good old interest rates okay we saw uh see uh inflation data this morning it was actually showing for february 7.9 highest inflation rate 40 years okay so you're gonna see that the interest rates have come back up with the fed again in line kind of are they going to have raised rates is it going to be just 25 basis points or they're going to try to be more aggressive now all of these things that we just mentioned here in five minutes these are kind of pressure that's on the stock market right rising rates typically in the short term could be negative for stocks in the short term we've got a lot of other things on the outside that are kind of trying to maybe hold the market down as well but let's take a look okay so i want to kind of bring up just real quick now a question and the question was from ron what do you think about the 50 crossing the 200 now rod uh uh no it wasn't tommy boy no that's your first guess rod actually says what do you think about the 50 crossing below the 200 well if you don't mind let me kind of put maybe in this case the 50 on okay 50 and then what i'm gonna do is i'm going to bring this back and i'm just going to add a simple moving average let me just kind of add the simple moving average okay and let me kind of change that here to the 200. now rod's asking the question so i want to kind of just see if we can't answer that on the go here okay now if i bring this up a pretty standard looking chart we'll take the exponential moving half average off let's set it up like his question is asking what do we think about the moving average now i want to kind of just verify let me just take that off yeah there you go okay so when we actually take a look at the spx and i'm i'm thinking that's probably what his his question was on this is the this is the 50 period moving average excuse me that's the two i want to verify me go back to that let me fix that let me grab let me put that off let me just take off only this yeah i was like that doesn't look like the 200 does it [Laughter] all right now if we actually looked at this and said where are those longer term moving averages uh well the red line that's your 50 period moving average okay the simple moving average and the blue line that's your 200 period moving average why is he asking the question well because it's almost trying to cross now so you're going to see that sometimes when you back this chart off you can get prices to get down below there now if you look at this in terms of the 50-week moving average this red line we haven't been below this in a long time okay it's been back to to almost two years ago so on a daily chart you're right brad you're seeing almost a crossover which is not a good thing for trade when you look at the daily chart well in this case when you look at this uh weekly chart you're also seeing this getting down below the 50 and we're not so far being able to get back above it now remember what i said last week sometimes when trends go down people fight the trends you know anyone like that okay so the one thing is we're kind of seeing now is we're not really seeing stocks making higher highs and higher lows we're not seeing stocks or indexes really get above their levels of resistance so there is really some weakness there so right i agree with you i mean it uh we tip we tend to look at the maybe the 10th uh 30-day moving average that's already crossed negative the market has been unable to get above the 10 which is the kind of momentum line still showing negative now what i want to do just real quick is i want to bring up something and what i want to really bring up is we've talked about the other day kind of the portfolio value and the balance okay and i want to kind of bring up something and i want to kind of make sure i give you a little homework assignment so this account started out the year at 125 000. and what you'll notice primarily it has a lot of bullish positions okay stocks cover calls short puts long synthetic verticals there's there's a lot there's a lot of positions but there's a lot of bullish positions but what i want to kind of do is there was a question regarding beta waiting okay and this account is positive for the year despite there being quite a few bullish positions now i want to kind of go to this before we look at our first bearish example okay now how many of you have ever heard of us uh heard of anyone talk about beta weighting okay now what you can actually do is i'm going to go to the old layout which is probably how you typically see yours unless you have your monitor page set up if you click on the three lines what you're going to notice is it will say oh layout and once we actually are there what you're going to notice is there's going to be where it says position statement beta weighting and if we click on baby weighting right there a lot of investors might be wondering how is this account and maybe the other one maybe even positive or not down as much well let me kind of show you where it stands is we're just going to type in svx now what is spx spx is just the good old s p 500 index now i'm going to show you the video in just a moment and if we scroll down what this is really doing is if we scroll down it's going to show us the beta weighted portfolio for this portfolio is only 21. okay only 21. now remember the higher that number is the more sensitive this portfolio is to direction the lower the number is that means that this portfolio is not as sensitive to market direction now this is not a bad thing to actually look at and let me kind of show you something um going to bring this up grab that let me slide that over right here now what i want to do is i want to bring up something that uh john mcnichol actually did a while ago now how many of you guys and gals know who this is okay you might be thinking wow what a good looking man okay and uh he is a good man okay now if you take a look at this john mcnichol who's also in the chat with us he did a video it's about seven minutes long and he talks about two main points here okay so if you're not on twitter go to twitter you can go to my account john if you want to retweet this yourself this talks about two main issues number one is it talks about delta and it talks about what is positive and negative delta if someone has positive delta the bigger number that is the more sensitive the portfolio is to direction but and if the death is negative that means it's a bearish position or a bearish portfolio okay it means it's not as sensitive to market direction might even benefit if the s p were to go down but he introduces something called beta weighting and beta weighting he mentions that someone buys a hundred thousand dollars worth of technology stocks and then buys a hundred thousand dollars worth of utility stocks is that the same and the answer is no it's not hundred thousand dollars of technology 100 000 utility is not the same and what he talks about is when you beta weight it it really kind of looks at those assets relative to the spx if that is what you're basing the beta weighting off what i want to do is homework assignment number one from today's session is i want you to go watch the seven minutes because if you're wondering how are those two accounts maybe not getting hurt as bad matter of fact if you actually kind of look at both of them they're actually up for the week even though it's been kind of a trashy week in terms of price action when you look at let's say the ira and you say well where is that at it's slightly up so even kind of in a crummy week you're going to see them not really getting hit that hard talk about for example delta and hedging but also i think you could even also add what john mentions which is that beta weighting see where you stand and the one of the things i want you to listen for in that discussion he talks about is what does that number represent and he says it about the five or six minute mark he mentions what does this number represent i want you to see if you can answer that question i'll give you a hint it's about the five or six minute mark so be watching be listening okay so make sure you do that now if how many of you investors are thinking james i think that maybe the market might be at maybe more risk of maybe declining now let me kind of show you a couple stocks okay and i want you to tell me what they all have in common netflix starbucks okay sb ux tell me what they have in common disney mickey d nike i'll give you kind of let me see them okay if you netflix starbucks disney mickey d's nike what do they all have in common well what they all have in common is they're all in the discretionary space when you look at the discretionary stocks they've been sold aggressively now one of the things that i think investors are starting to kind of maybe at least ask is maybe is the u.s economy going into a

potential recession and are some of these discretionary stocks discretionary things are things that you don't necessarily need okay you may be i i think a discretionary you want them you don't need them need is staples discretionary is you want okay now i know we could argue that all day long like i need a harley davidson you want a harley davidson let's look at our first example and what i want to do is i want to come up to a i want to go back to a stock and we want to kind of look at the example of netflix now netflix on its last earnings what you're going to notice is there was a pretty large gap they kind of missed i i'm not sure if they missed or they guided lower but if we were to look at let's say this price pattern what type of price pattern do we see now i'll kind of we'll kind of play pictionary a little bit here and then you kind of tell me the price pattern that we're seeing downward sloping line of resistance equal horizontal support okay now what type of price pattern is that now if we kind of said in the current market what type of price pattern do we see the most the answer we see descending triangles littered all over the place which is lower highs and equal lows now i want to kind of talk about this which is what is the difference in terms of the bearish tools or strategies to try to take advantage of a bearish trend now how many of you this year wished that you said geez i wish i would have been educated on kind of learning about bearish trades in general because maybe my my portfolio big money wouldn't have gone down as bad okay and the one thing is is sometimes people aren't comfortable i want to bring up an example of what a short sale looks like that's not what we're going to do a short sale how many of you have heard of that before a short sale of a stock is when the investor shorts the stock thinking the stock is going to go lower what is the risk of that what's at least one risk of that well the risk of that is it's undefined risk there's no expiration date okay uh the investor could be liable for or have to pay the dividends on the stock etc among other things okay shorting the shares is risky because the stock could go up it could be purchased for 300 by some company and the investor has no max loss that's a dangerous position you better know what you're doing even then you might still get hurt sometimes that's why some investors say you know what i'm not really sure if i want to go there but maybe consider maybe an option and when someone's actually learning about bearish trends in general they might say look i kind of want to do trades maybe like verticals where there is defined risk okay now i know it would be nice to maybe be in a short sale where there could be potential more gains but with that potent higher potential gain there's more risk now let's say the investor says you know james i want to sell an option where the investor thinks the stock could really stay below resistance so in this case if the investor said you know james i think kind of resistance might be in one of these two areas okay 362 383 okay what so we identified where the resistance levels if the investor said you know what i want to go look and see is it possible to maybe sell let's say the 380 and above the investors really if they would consider the 380 that strike really has a 39 delta 39 chance that the stock will be a penny above that strike okay now what you're going to notice is it does not require the use of the shares okay it doesn't require the use of the chairs the investor if they're going to consider options they have options approval they can just sell that option they can sell the 380 sell go right to where it says vertical now this is a short call vertical okay now if the investor did this sell vertical sell the 380 buy the 385 whatever the credit is that's the maximum gain now i want to kind of just show you this the investor wants to make sure they're properly position sizing and i'll show you why in just a sec okay so what you're going to notice is this will show us the break even the max profit the max loss and also what that buying power effect is which is the same as the max loss if this portfolio could really risk a thousand dollars how many contracts would it be doing now i want to kind of ask you a question sometimes when markets go down or stocks go down some investors kind of feel like they're dead in the water okay i mean you have a car i wonder if you couldn't turn left i wonder if you could only turn wonder if you could only go straight you couldn't turn left wonder if you for example could only drive straight but there was no reverse not knowing different ways in which the investor can benefit from different type of trends is awkward a little bit right because you feel like when you look at the trend you're like i want to be bullish but the trend's not bullish okay and so this is why we want to kind of take a little time to show a bearish example or two if the investor said james it could the portfolio could risk three cup a thousand dollars it would be three contracts three contracts would really be a max loss of 969 dollars now the comment came in from cola regarding why not maybe look at something where the open interest is a little bit bigger okay well could the investor maybe sell something a little bit bigger here well let's kind of look at the spread together 45 cents on the spread there 45 cents on the spread here okay now the investor might say i don't really see a difference in the spread but if someone's gonna maybe try to go with a higher number of contracts maybe they like to actually go to where there's a higher number of open interest fair but i don't really see any difference in the spread okay so the payment account is going to still sell a higher strike okay where it has a little bit better chance to be below that strike price okay now the mid price as we were talking went to 172. don't you hate that and now the investor said confirm and send now by the way based on what we talked about is this a bullish or a bearish position bullish or bears short call vertical bullish or bearish if the investor did this trade this is a bearish trade if this trade was entered in the portfolio would the portfolio be more sensitive to price movement or less sensitive to price movement of the s p it'd be less sensitive because it's a bearish portfolio okay so now what you're going to see is got a credit there there's the commission there's the net if it can get filled let's see if it can get filled send the order might take a set to actually see if it can get filled now what i want to do is i want to kind of take a quick timeout here okay now as i do this i want to kind of show you something a takeaway right now would be in the investors portfolio they should probably do two things number one they should probably look at let's say what is the delta on their portfolio and it wouldn't be a bad idea to monitor that number you'll find the investors that you really felt like they got hurt in the market pullback probably had a delta that was massive the investor that probably had a lower delta probably was not as hurt as maybe potentially the overall market the investor that was maybe neutral bearish they might have even gained in the market selloff you got to watch that delta think of delta as the speed okay of direction the lower the number this portfolio would be more insensitive too in the shorter term market direction the higher this number it would be more sensitive now if the investor second item i want you to focus on go to beta weighting and what i want you to do is go to the spx so now what you're going to see is when you go look at actually my twitter page and john's and for example watch john's video now you're going to see where it is your portfolio stand and all of a sudden you're going to feel like ah so that's why my portfolio has been doing this or that maybe the investor might consider paying back when the investor does cover calls protective puts callers maybe a short call spread what it's doing is it's bringing down the delta it's bringing down the s the the beta weighted that's the beta waiting on the portfolio and it's making the portfolio less sensitive got to get used to that okay when you drive you just don't drive 100 miles now because you want to you're actually watching your speedometer you should and then watching to see what's the speed limit in the area if you're seeing that there's more volatile conditions do you just speed up and punch it to 100 miles an hour you could but you probably say hey given more market volatility maybe the investor decelerates the delta lowers the beta weighting of the to the s p because they're seeing more volatile conditions that's what experienced investors tend to do because they don't see super strong trends now what i want to do is let's kind of go just real quick to i want to see what questions there are okay so first i gave you the homework assignment to watch john's video okay two things i asked you to point out to really listen for it's a five or six minute minute mark he explains what does that beta number mean okay next i want the investor to look at where their portfolio dealt is and i want that investor on a daily basis to track that number the higher it is the more sensitive it is to direction and with that i also want the investor to actually track with that number as well what is their beta weighted number to the s p what you're gonna find is okay how someone's posture is how bullish they are and what is the sensitivity of that portfolio to the market if you missed the homework assignment it's not my fault okay eventually someone has to take ownership and say okay this is not this is for real now okay now if we actually take a look at uh yeah annette says my audi controls me i don't control it oh yeah there you go well maybe go for a ride with someone where they actually have to drive okay now charlie actually says worried about iv crush was selling a call well charlie i think you don't necessarily mean iv crush you would actually mean that the iv would expand right and if the iv expands the calls or the short puts become more expensive in that case the investor might say hey i might consider maybe like a caller type strategy where it's not as sensitive to volatility okay and we had a great discussion last week on twitter about that and how people don't understand what a color is and why people talk about a caller the people actually do callers or consider callers because it is a cover call but they're buying along put to and it's more numbing the volatility which is a big factor in the market right now so it's fair to say that but it lets me know that maybe you haven't looked at callers keyword is yet consider i teach that class uh on wednesdays now let's kind of go back to this third agenda item which is looking at commodities okay is the trend over in commodities i mean [Music] or is it the tabs right what is it okay is it chargers and taps well if we were to look at let's say commodities yeah we know that the crude oil is coming down a little bit here okay it's coming down but is the trend over i mean is it over is it all done trends over or is it maybe kind of reverting maybe back down to if we were to kind of take a look at these lows and just kind of connect these lows connect the lows connect the lows connect the lows is it unusual sometimes when something gets pretty elevated off support that some investors try to profit take into the price rally let the price fall down to support and then try to buy again so when things kind of get over exaggerated maybe in the shorter term maybe too much euphoria some investors say hey that was way off the diagonal line and some investors might be looking for the price drop now let's kind of talk about some of these commodities here i'm going to bring up a couple and tell me if any of them kind of stand out to you halibur h.a.l mosaic which is not crude it's fertilizer does that stand out too uh if we actually looked at another one b oop br bkr baker hughes okay and then if we actually took a look a look uh second one that's kind of that same area that the paid money account still has one position left cf which is fertilizer and then you also look at maybe one more oil one which is eog do any of these stand out to you as far as a potential bullish example now sometimes i like to kind of take the moving averages off because it really trains your eyes to kind of see the lows and the highs and it kind of has you kind of connect those well it let's say the investor said james i want to consider a bullish trade on eog now i wanna i want you if i ask you to kind of draw support where do you see support so i'm gonna go back and look at these recent lows here low here okay low here and all i'm gonna do is just kind of circle the lows your eyes probably already went here you probably already were thinking in your mind where's that support is it horizontal or diagonal well now what we're going to do is after we kind of circle those lows where is the diagonal support well all we're going to do now is kind of connect those lows low thing two three four five the more times the more number of tattoos we can get to that technician they're probably seeing that line might be potentially stronger have to see over time but now the stock kind of was up elevated off support now i want you to pay attention to the percentage when that stock goes up about eight or double-digit percent some investors like to profit take they say that stock is maybe a little inflated off its support level and it might come on down now that stock for example did come on down to the diagonal line now we kind of talked about the other day where some people don't mind to buy a stock or do a bullish trade at support regardless whether that candle is red or green now feyer said he doesn't like a red candle at support he wants to see a green candle now the one thing is that the investor says i want to see a confirmation of a bounce or what's called a close above the high the low day well the investor now is really saying okay how far is the is the stock off support now it's about seven percent off support the confirmation ain't free okay you understand that it's not free this is i want to see confirmation it's not free if the investor says i want to see the bounce that just means the investor is willing at least they should be thinking that they they you have to recognize that the investor is willing to buy that stock or evaluate the setup farther off support and the risk is more does that make sense for that investor that's why some investors say look i want to try to buy as close to support i can irregardless of the color of the candle okay so if someone got that yesterday they're thinking yeah that was nice now whether someone buys here or here it doesn't mean that the stock is guaranteed to go up they're just thinking could that trend continue now there is an upcoming dividend here okay on 314 i don't know what that ex dividend date is but we could actually check it but if the investor said you know james i want to buy the stock and maybe i just want to sell the call okay now i want to go back to the comment regarding this okay if the investor said look i want to buy the stock a bullish trade a hundred delta if they bought a hundred shares and if they said i want to sell the call well they might actually say look i want to sell the call where maybe that delta is between 30 to 40. okay

now if the investor did that if they bought the shares at 119 and changed sold the call at 121 that premium is four dollars so it goes from 119 up to 128 that's about nine dollars before that's 13 that's at greater than a 10 move if that stock were to close above 128 now in our current market we can't really complain about at least maybe some investors might not understand that we're in a period of very high volatility the premiums are high but with that we know that there can be that the premiums might be affected by rising volatility understand right click on that 420 we're gonna the payment account's gonna go to buy it's gonna go right to actually where it says covered stock why in this market would someone do a cover call strategy well number one is they might wanna own an online stock but they just don't want just that sensitivity to the stock itself by selling a call selling a call by itself is bearish delta it's going to make this position not as bullish as if the investor just bought the shares so what we now see is the investor is saying look net the stock less the premium the debit is 115.35 can the investor also set up up the stop the answer is absolutely first trigger is seq right click on that green line now create opposite order and now the investor could say is there a spot where the investor would say james i want to exit now based upon the trend well let's go back and evaluate where's that support level okay now what you're going to notice is that we kind of say where support it's about 119.55 if the investor said i'm going to take 119.55 excuse me 112.55 last two to three percent that stop would actually be at let's change that from limit to a market day to a gtc click on the gear now the investor clicked on clicked on symbol method less than or equal to now 110 29. okay now notice the action is based upon the stock getting below diagonal support okay now what is it getting out of it's buying the callback and selling the shares if the stock went down to this price or lower it's getting out of the option in the stock at their market prices okay if that's okay the investor is going to save the order confirm and send the commission for the stock no the commission is on the option contract 65 cents if the investor's okay with that now what you're going to see in this case is send the order so the one thing is we want to kind of bring out here is if someone said geez i know the volatility is high the bix is high and the premiums are high but i don't like being exposed to vega well that's why they came up with verticals now john mcnichol this week is teaching the advanced concept class where they discuss a lot of this the advanced concept kind of talks about some volatility type strategies tonight is number night four of four check that out okay because if the investor only knows a cover call and a short put if the volatility does go up that is a negative and that's where you get into advanced concepts or vertical type strategies now i also want to kind of bring up just real quick uh the fourth concept which is let's kind of talk about a little portfolio management shall we now the one thing i want to kind of bring up here uh before we actually go to questions i just want to kind of take a look at some good and bad positions so if i were to actually bring up let's kind of bring up uh here i want to kind of start with kind of some positions here we are looking at cf cf is what type of trade here what is it okay what type of trade is this is it a stock trade no what is well it's a short minus two the put and it was sold for 430 that you could the investor could try to buy it back for 82 cents it's an 80 of the maximum gain now if the investor said james i think they're having a forecast they don't know if it's going to come true but if they actually said james is that trend maybe trying to even go up potentially higher if the ambassador said james i think this issue with a fertilizer by the way i bought mine i think on tuesday had to almost well the prices were higher than last year so some of you are thinking i got to fertilize my yard this year if i wait might that affect the fertilizer price could it okay now what you're going to notice is if the investor says you know what if there's a short put already the investor if they didn't think the trend was going to go up any higher they actually might just say i'm going to exit if they actually thought the trend could go up higher they might in this case say look i'm going to roll the short put now by the way wait wait do they have to roll it to a short foot and now they could say look i want to exit this and i want to maybe put on a vertical where there's not that same sensitivity to volatility but when someone does that the investor does lower the maximum gain okay now let's show this as a short put though given that understanding right click on that line create it create a rolling order so what's now going to happen is it's buying back the option that it's in now and then what it's doing is it's selling a new one now remember when the investor sells that put okay they're trying to get a higher credit remember when you try to go for something higher there's a bigger risk somewhere if you can't see it someone else because they'll probably show you so if the investor says okay these options are the 14 april okay if the investor chose the same expiration 14 april the current short put is not even on the table okay because it's now so far out of the money but if the investor said i want to kind of try to sell that put with maybe a delta 30 to 40 again rinse and repeat some what's investments they actually might say well james could the investor maybe sell the 90. so

they're not rolling more out in time they're just kind of just changing the strike price they're rolling up in terms of the strike rolling up means the old trade was 75 the new strike is 90. gonna click on the 75 gonna go right here to where it says 90 and what now remember if the investor rolls is that a new position you better believe it is the pass trade if it's purchased back it's over the new trade becomes cf the 90 put 327 that's a new trade okay no it's the old you already have this no the pay money account already had the 75 the 90 is a new position if the investor wants to sell two of those with full understanding that what is this what is the obligation it's the obligation to buy 200 shares of stock at 90 from now until expiration is there commission yes 260. and then how much buying power is also set aside well since this is in the ira and that's not going to show quite right because it's it's factoring in the past trade that's probably going to be if we looked at the math probably about 17 000 of buying power set aside to buy the shares of stock a 90 stock nine thousand for a hundred shares but this is 200 shares so it's gonna be about eighteen thousand dollars less the premium now if the investors okay this they could actually go and say send that order and see if it will fill we'll watch that now what i want to kind of do is kind of wrap up number one is we did an example trade what was the bearish example trade we talked about well the bearish example trade that was discussed was netflix okay a bearish example trade on netflix a short call vertical the bullish trade we actually talked about commodity related was the example of eog okay we also some investors might want to maybe keep an eye on with these commodities is the commodities don't just come to your mailbox per se how are those commodities gonna be delivered is it trucks is it trains is ump trying to get a bounce here question mark and the third trade we also talked about is the cf rolling that option so kind of three examples here today now what i want to do is is there any questions okay now notice in these two portfolios the paper money account is probably doing two out of three bullish positions but there are maybe a third of the trades that might be more of a bearish example now i just want to kind of come to any questions here before we wrap it up now tony says i like to lawn fertilize in the winter yeah i'm doing my next i bought it tuesday to do it next tuesday it's a little cold out there to fertilize i'm kind of concerned that maybe the ground is frozen all right now any other questions that i missed okay now the one thing i want to kind of make sure is is a takeaway okay we talked about the market posture okay we also mentioned with this is john's video as a homework assignment i'm going to ask you about it she watched it twice very well done and remember i want you to kind of think about reflect back to how does your portfolio stand in the paper money account look at what the delta is in the portfolio start tracking that look at what the beta value value is in the s bench market compared to the spx and start to track that next week i'll kind of talk about how that number what is that number also kind of showing okay as far as the percentage but i want you to start off with actually how john discussed that this is something that i kind of track in my mind i don't i used to track it literally write it down but now i kind of think about it when you look at it every day you can do it in your head okay but as a takeaway john if you could retweet that it's on my page as well make sure you do that homework assignment okay now if you enjoyed today's session you said james you know i appreciate the class here today you gave us two kind of we practiced together and paid money account two bullish examples and one bearish example we talked about trends looking at them from a bullish perspective but also bearish and there are bearish kind of trends out there we had to get some practice and remember with what we discussed here today it was done for example illustrative purposes only if you enjoyed today's session reach out and smash the like button you can also follow us on twitter john mcnickle cameramaid any of us instructors we do post content there daily you could also subscribe to our youtube channel of trader talks and investor insights you have your homework assignment i think it's going to be interesting to see how kind of what you come away with and that's also going to kind of tell a picture of probably how the portfolio is really done relative to the benchmark of the s p the more you understand what that portfolio delta means the more you understand as far as what that benchmark number is when you beta weight it to the spx the more you start to understand how bullish you are or neutral or bearish and that really is a strategy or a sentiment of the portfolio okay so i'm out of my time here today i want to thank you so much for your comments your participation as well stay tuned for our next webcast coming up right at the top of the hour with that said

2022-03-12 17:56

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