Weekly Chart Potential Breakouts | Technically Speaking: Trading the Trend
hello and welcome to trading the trent trend weeks to months my name is james boyd we welcome you to technically speaking for thursday we'd like to welcome edward the moon jay grace annette pierre yes and that says it has been a fast week that's true every day this week has felt like the same where the market tends to be up and tends to be holding the top of the channel we've had this same day three previous days could this be a forum ah a little fun there hello scott krishna troy and many others welcome now this topic of trading the trend weeks to month is critical you know we're not talking about maybe just trying to make a little bit along the way the investors trying to find some stocks that might outperform the sector might outperform let's say a benchmark trying to find some of these stocks that could have long-term holding power okay which i think when you talk to most investors might say geez i'd like to at least have some of those in the portfolio don't want to be getting in and out of everything maybe the investor wants to maybe find some stocks that might be an out performer and try to hold on for that long-term trend we're going to talk about that here today i remember i got my good friend michael keeley in the chat uh initials mk you can follow michael myself on twitter we do post educat educational content there daily check it out and also as we're getting started remember that options are not suitable for all investors special risk inherited trading options remember that there's a pamphlet called the characteristics and risk of standardized options make sure you have that you've read that and also we're going to demonstrate the function of the platform we're going to use actual symbols remember that td ameritrade they do not make recommendations to determine suitability of the strategy uh that's up for the investor to decide any investment decision you make in your self-direct account is solely your responsibility and last but not least as we get started remember the option greeks know what those are sensitivity to now as we're going to get started i'm going to kind of change the format a little bit okay we're going to actually hop the last couple days actually about the last week last week we talked about selling puts aggressively we've talked so much about new positions i i think it needs to we need to spend a little time talking about some what about some current position management especially as we're going into this labor day on monday now michael keeley volunteered to work on monday so he might be here and maybe anyway i'm just messing he's not going to be here okay so but i think we need to actually talk about current position management because the issue is not that the portfolio does not have positions okay but what about the management of those number two what are some new business position examples where we look at maybe shorter term setups in longer term trends okay so another thing for that as an entry setup while it's already been in an upward trend for a while but then i also want to kind of go into like let's kind of just focus on weekly charts only start there and then let's look for some potential setups of trend price patterns etc starting with weekly charts and i know at the end of the week thursday friday i do this a lot okay now as we go through make mention uh if you have questions go ahead and just ask we're not asking you to hold it to the end don't okay just go ahead and ask now as we do this what i'm going to do is i'm going to go to the monitor tab and one of the things this big money account has actually been doing quite a bit of is for some verticals uh it has more sh it has more verticals than short puts okay and i want to kind of start with this position on aig now how many of you buy quick raise enhance do vertical type trace now this right here is a long call vertical it's kind of similar to a cover call in the fact that it has a long position that's not shares it's the call and where it's similar to a covered call it does have a capped up side with the 55. now there is 12 contracts here that were placed okay now what you're going to notice is when you look at this position the delta for this position on aig it's 380 okay so what does that really mean well if the stock were to go down a dollar it would be down or give back about 380 dollars if the stock were to go down to two dollars what's 380 times 2 760 yes now what you're going to notice here is i want to kind of keep in mind that if you look at let's say the theta this position still has positive theta which is kind of nice considering that you're coming into the three day weekend now this position right here does actually have a gain on realize of 56 now tell me what you would consider if there was 15 days remaining and the investor had potential where they could grab that unrealized game how many of you would be thinking about james i might want to consider grabbing that unrealized game now as i pull this back up let's take a look at this if we look at aig what you're going to notice is this is what the trend is doing now if you kind of look at the trend it kind of looks like it has a prior high base run back up it's made a higher low here touching the 10 period moving average touching the 10 period moving average here and now what you're going to notice on the chart it kind of looks like a ascending triangle if you will if you actually look at this here's the pole and that's a pretty good pull okay now orlando says tape the green now i want to kind of push back and orlando we're good friends okay how many of you ever feel like you actually are just picking up 50 or 100 bills and missing the thousand dollar bills any anyone in that situation you know someone like that where you say i'm good at taking gains but the problem is my my portfolio is kind of like well it's always evolving or there's always new positions that i have in just recently and i don't really have any positions even though the market's been going up since last march it's like a moving caravan of positions well so let's say the investor said they want to take the green but they said well maybe this trend could continue so if the investor's saying look i don't want to just make hundred dollar gains i want to make thousand dollar gains more than that well that kind of evolves if the investor needs to kind of allow the stock to exhale pull back and maybe actually try to ride or stay above the support level now let's kind of show this i don't normally talk about this but let's say the investor said james i'm going to stay along the trend but i'm going to kind of keep a leash on this a tight leash and i'm going to use this recent pullback of about 54 and i'm going to set a stop about 1 below that now if this trend continues wonderful okay but if that stock were to go down below 54 i don't want to give it all back and then go into a losing position when this position only has 15 days left so if the investor said i want to kind of set a stop the investor who actually does this is like a stock trader they're saying look i want to be in as long as the stock stays up above support and an investor can classify or state where they actually think that support level is and they could actually specify and type in i want the stock to stay up above well one percent we said one percent below 54. that's gonna get us right to about 53.45 check me if i'm wrong and now what you're going to see is and this is especially important as you come in closer and closer to expiration you're kind of really trying to do risk management you're saying look i'm running out of time but i also in this case want to see if i can't lock in some profits okay we'll have to see how that works but now as we go over the labor day if that stock were to stay at 53 45 or higher this stays in there is some upside left there to make how much well about another 45 percent worth but once we start getting inside about 10 days before expiration i'm just counting 14 13 12 11 10.
tuesday is gonna be 10 days expiration come tuesday the investor is kind of really saying what am i going to do with this position now i'm really actually getting closer to expiration so by tuesday we really need to review this again and say how much of this does the investor have now if that stock were to go up a little bit more burn some time to pay off but tuesday maybe that gain is maybe at 65 or 70. okay excuse me now the paper money account is just going to go in and go confirm and send it's going to actually see that that commission this is for 12 contracts 12 contracts that's why it's 15 60. and if that's okay gonna send the order right there now what i'd like to do is let's kind of mix and match okay so we talked about aig right there we're going to come back and we're going to look at the next position which is crm and we're going to come back to that in just a moment okay we're going to do one management we're going to look at one new now one of the examples i want to really bring up in this case we want to actually go back to and if we're talking about trends okay so someone is asking and i'm going to start with a stock we've never heard of before called de now it's john deere and i want to actually start by looking at this really this chart by a three year weekly time frame now if i just kind of zoomed in maybe about the last 18 months what do you see on the chart now someone might be thinking i see a chart in which i wish i would have been in well again one of the things we always talk about is if that 10 period moving average crosses above the 30 period moving average you're going to see that for a long time that stock used that 10 period moving average as a support and again that's why we talked about it but that doesn't mean that people do it okay you're going to see if that's talking about the temperature moving average there can be a very strong trend now what you're going to notice is lately as we see it kind of like a level support like 327 then we see another level support maybe about 334 we see a higher level of actually support let's say right about 351. and what you're going to notice is the stock so if we kind of looked at this and said is that kind of like a bullish engulfing the key word is kind of not quite and then if you actually look at where we are now kind of looks like maybe a hammer like but we don't really have a thick enough body of the candle the tail is there but we don't really see uh you know the body as big now if we go back to let's say the last week to where it's the lowest most recent down week it's going to be right here now if we were to look at this week and say what was the high of that week the answer is 383.35 we can see when i point to that or any of these candles it will say h for the high okay watch where i'm pointing i'm gonna point back to that red candle and now you should see 383.35 now if that stock starts going above 383.35 this is like a close above the
high of the low week not day week okay now let's say the investor said you know what james this is kind of a bigger dollar stock and by the way when you look at the longer term trend does it look like any price pattern that maybe an investor might be kind of thinking hey i've seen this before if you look at that type of price pattern and what i'm going to do here is we're going to draw using fibonaccis we're going to go back really up to where this went up to and then actually drop back to where it went down to and tell me what you now see on the fibonaccis you see where we went from 110 we went to 400. it's not did you know that the question is how much does the investor get number two if you look at this when it did pull back to the fibonacci levels it went down to the first retracement area and then it fell down to that first retracement area again kind of like your classic double bottom and then if you kind of zoom in what you'll notice is kind of the middle we talked about like that middle of the w where the price declines you mean it there it is price declines price actually goes back up to the middle of the w price goes down again price goes up there's your w now what you're going to notice is the w the middle of it is kind of now acting as our as far as the new potential level support so this is kind of taking the taking the old lower high and flipping this into a higher low now let's say the investor said oh my gosh i can't trade this because it's 382. we might push back on that we might say well there's maybe long verticals for a reason okay long verticals now if you take a look at that if we chose the october with 43 days remaining what you're going to notice in this case is you got a 380 call now calls are good and bad good that they have a limited upside bad their negative time decay the investors paying for them if the investor were to let's say could i sell something as well they collect a premium of nine dollars the con is it caps the upside now so if this stock were to go up up up up up this is not going to be as bullish as owning the stock okay catch me on that it's not as bullish because there's a ceiling there's an obligation now if the investor were to buy the 380s and sell the 390s what you're now going to see in this case is buy one the 380 call sell one the 390 call there's the 490 debit now you can kind of do the math in your head and say this is a 10 wide spread 475 debit the difference between 10 minus 4 75 is 525 that is the upside potential now remember what we actually see is a 525 is the upside potential or profit maximum loss being 475 if the investor said they could risk 1500 and let's say the ira account they would be doing three in the margin account they would really be doing one now i'm gonna see if we can't get that to work we're gonna go single accounts multiple accounts we're gonna actually save for the margin account one and for that ira account it's gonna do three now we'll see if they fill okay but that's what it is margin account is is a lower dollar account has about 193 000 in it the ira bigger about 570-ish now the investor said okay i'm okay with that send it let's see if it fills and we'll watch and see what it actually does but it hasn't filled yet now we chose actually dear because it's in that longer term trend and the one thing i don't think maybe tell me from wrong maybe investors haven't looked at the fibonaccis maybe they didn't realize that stock pulled back two times to that first uh retracement level maybe they did not see the stock actually make a higher low and get above the lower high area now in in michael keeley's market week in review on friday at 4 eastern he talked about how john deere is not really just a machinery company and or industrial how it actually employs more check me from wrong michael uh it employs more technology software-based people than it does machinist and or industrial that was kind of the general theme of what michael mentioned is tech deer is also a technology company okay now i'm gonna bring up let's go back to just real quick now in no apparent order uh or kind of picking okay we're just going to go down to that second one now a question occasionally comes to me that says hey james can you talk about losing positions now sometimes the paper money count doesn't have losing positions so it's hard to talk about them so when we actually see one losing yes we get to talk about a losing position so let's talk about a losing position now that's kind of i'm not saying that's because of me but the market has been helpful not to have that many losing positions okay so i'm not saying uh yeah it's good to me i'm not saying that okay market has been very bullish now what we actually see on this is the crm what type of trade is that okay that's a short put vertical now remember with the short put vertical that's really a trade in which the investor is trying to be bullish wanting the stock to stay above 270. well what you'll notice is okay so that vertical on deer fills second what you're going to notice is there is protection to the downside so if this trade were to go down now the investor really risked to 260. now what you're going to notice in this case is we see that the delta four in advocate okay is really for the three contracts is 54. okay now the thing is if you look at this and say well what's the loss well it's like 367.
so this really means the stock is probably down about seven dollars because how many 54s actually fit into 366 it's about seven dollars so the stock has gone down about seven dollars from where this was entered now remember the traded expiration was or want wanted to be is the stock could actually stay above 270. so this already has a built in maximum loss now the investor has to decide are they trying to play to that max loss this paper money account trades to the max loss it also says hey look if the stock would end up in between the strikes we'll take it okay then we'll say we'll take it the paper money account will take it because the paypal account would not sell put verticals or short puts without the full understanding that it wanted the shares anyway okay so in this case it's down 33 it can only lose 67 more it's down 360. the stock technically is really down about seven dollars but when you go back and really look at let's say the trend and then say has the trend really changed well when you actually take a look at the weekly chart it kind of looks like a classic bull flag kind of just looks like it gave back a little bit from this last week so here's the upside movement here's the downside flag pretty good free hand right there and if we look at that we're going to see it's a cross back here we don't see on this chart that that that moving average is really breaking a support the other thing we might say is with the last week recent move or two stock might be a little bit elevated off support maybe it's trying to catch its breath the paperwork account is gonna let that play out and just let it go okay if we go back to let's say the daily chart now as we look at this you're gonna kind of see that that stock kind of maybe making maybe like a pennant type triangle or a bennett or symmetrical triangle kind of trying to create a new higher level support okay so right now it's down it's not at the doorstep of actually being an expiration it has 43 days remaining okay now let's talk about a new one okay now james when you say now did anyone today kind of catch the energy sector at all did anyone actually kind of see crude oil today can anybody see that is anyone actually thinking with maybe crude oil if you take a look at crude oil now we have not had a moving average crossover in a while okay and if you actually take a look at this what you're seeing is maybe that's trying to cross over has not yet gotten very close the last time we were up here it didn't hold now some investors kind of like the second time more than the first time okay in other words let other people test that first time and see if it works sometimes the second time could be better than the first time it broke out okay and we've seen that before okay so but what it did actually here really doesn't have a whole lot of bearing between what it really could do here so when we look at actually crude oil kind of bullish here and what we're going to do is we're going to look at maybe two trades in this space and we say this space we're talking about the energy space now i'm going to take a look at for example one stock conical phillips now the one of the things i want to really bring up is when these stocks actually pull back the pullback might not necessarily last forever and so the investor in being prepared now by the way what's the trend on this longer term it's up okay but if you go down if we look at kind of in the shorter term days to weeks it kind of has that downward sloping line of resistance and if we zoom in a little bit here i'm thinking we probably see a horizontal resistance as well are you seeing the same levels here okay now here's the deal when we see stocks pull back it's not unusual for people to kind of not feel it why don't they feel it well because the stock has been beaten down okay when the stock has been beaten down or sold off okay some people just don't like to buy after the pullbacks but if you said geez if i could ever bought real estate when do i wish i could buy real estate you wish you would buy in recessions why don't people buy real estate recessions because they're nervous they could lose their job right wonder if they actually had double mortgage payments etc etc but stocks are similar right once that stock price pulls back they're concerned how do you know it's going to go up well we could say that at any time at any time now if you're going to think about this buying a stock in a pullback is very interesting because there's sellers have already kind of beaten the stockton and if there have been buyers there hasn't been a whole lot of buyers to actually cause the trend to change now first thing what the paper money account is going to do is it's going to sell the put first so that's actually where the investor now why is the investor thinking selling the put well they might actually say i want to sell the put because this is when the implied volatility is the highest now james why is the paper money account selling the put it's trying to enter in the stock position provided at a discount that strike is at the 55. james that dealt is a little higher full you know that if the investor sells a higher delta strike they're saying i don't really mind to buy the shares the paper money account that's what it's thinking if the paper money account sells to 55 it's obligating itself to buy those shares at 55. now realistically how many shares could this ira account really do well it could really do probably about four contracts okay if it was gonna buy a full position the paper money account is only gonna do two because you'll see what it's to do in just a moment okay so about two contracts which is about a half position slightly less and it's gonna say sell two puts the premium there is about a dollar ninety six now is that a decent premium is a dollar 96 a bad premium for a stock that is at 56.51
is that a bad premium oh not necessarily it's actually 3.4 percent when you actually get the biggest premiums when the stocks have actually pulled back and or when that actually stock has upcoming earnings okay now if the investor were to sell two puts i'm not buying a downside put from protection for time's sake we know the collateral's a little higher but it's not back-breaking okay if the investor is okay with that this is selling two of the october 55s for a dollar ninety-six have a break even at 5304 which by the way is about three dollars and fifty cents below where it is right now now but where now there's some investor here that's saying yeah i wouldn't buy it until it did what well that investor might not buy the stock until it starts to go up above you thinking hey wait did james's computer freeze no it didn't up above resistance so the paperwork account is going to go right above resistance let's use example given one percent but the paper money account literally went up by one percent it's gonna right click about 1 higher than resistance maybe right about 57.83 right click now if it right clicks what it's going to do is it's going to go by custom and it's going to go with stop now guys and gals i'm going to tell you something okay people do not prepare okay they react to price movement they react this is for example what it's doing is it's saying look buy the shares which is going to add the other 200 your remaining shares just saying buy those 200 shares if conoco phillips gets at or above that price now if it gets at or above that price it buys the stock but it has to be at or above that price so if it never breaks out the only position that's in this is the short put the cash secured put which is a neutral to a bullet strategy clearly buying the stock which this is this is the bullet strategy now the paid money account in this case is going to use this lower band okay 50 340 less 3 and now what you're going to see is it's going to use the lower horizontal support level less three percent and it's going to have a stop at 51.79 just so we're on the same page where'd you get that number i took about 53.43 three percent and i'm going to get right near there 51.79
day to gtc that needs to change that okay now i cannot stress this to you enough wonder if people just did one thing meaning they started putting buy stops right above resistance do you think they would maybe stop missing out on these potential breakouts if they just did that only and guys and guys i'm going to tell you we talk about this all the time i don't know how many people use it so you tell me how many of you use buy stops now remember one of the things and i'm going to kind of play the risk i'm going to play kind of the idea that the investment says yeah but i don't like it because i don't know what price i'm going to buy that okay okay i'll take the push back but here we go let's say the investor said i don't like knowing that the stock could be bought at 57.84 or higher okay well let's say we said in this case 57 84 or higher and let's say we said okay there's a limit of what we're willing to buy the stock for 58.84 now that's just kind of an amount we throw out but the wider that is the greater the likelihood is that the stock could be filled okay if someone said i'm gonna do it at 58 there's less likelihood but even if i said 58.84 okay if the stock even were to gap up i'm just saying i'm willing the payment account's willing to buy a dollar higher than that limit price but there is a cap on what the investor is willing to pay so there it is the stock goes to 57.84 or higher buy and it's allowed to buy up to this area this price level but not any higher okay now one if the stock opens up at 59 and never goes lower than the order would not fill that's where the buy stop has the advantage okay now the investor says confirm and send send the order now what you're gonna see is this position is just sitting right above resistance okay now here's the deal if we pull up stocks like netflix where someone said the exact same thing oh yeah i would never get into netflix okay well when you kind of take a look at netflix well maybe the investor wish they had a buy stop maybe if the investors said well i'd never get into those companies for example like casino stocks i mean who would do such a thing look just because the investor wouldn't consider consider it for themselves doesn't mean that other people don't okay i'm fully aware of that okay i tend to be kind of more conservative and i definitely realize that just because if i'm conservative not everyone else is okay that's funny all right now uh and i actually thought that my wife she was a conservative one but actually turns out she's like the offensive aggressive one which is totally shocking and i'm like the conservative one didn't think i was but over time i found that out all right so here we go let's take another example here now what i want to do in this case is i just want to make mention of two other stocks in the energy space that might have kind of lower dollar stocks that maybe the investor going into next week might watch okay one of the stocks is actually kind of showing a reversal okay of the trend if we go back and look at this downward diagonal resistance we actually see for example that oxy has gotten above it and it's come very close to reversal now it's already gotten above the diagonal and if we look at that second stage or second level if it goes up much higher than 2650 it can actually be reversing okay we're gonna keep an eye on that we see a stock like apache last one in the energy space when we actually take a look at let's say something like apache what you're gonna notice is that downward sloping line of resistance we uh we would have to admit it got above that and then if we looked at well where's horizontal resistance we'd have to admit it got above that two so the point of this is that there are some stops that are actually maybe being played in the energy space based upon crude oil maybe reversing up people might say well this is that seasonal time of year where actually the markets went down but i i think if we even said it's a seasonal time of year there's been nothing seasonal about the last 18 months has there has there been any historical norms in the last 18 months so the investor is really having to look at the chart of what it's doing now and grade the evidence okay now so if we actually bj that's funny now let's take a look at another example now what i want to do is i want to go back to an area ixy now if we were to look at let's say ixy this is the consumer discretionary sector now if you look at this sector what i want you to notice is how quickly the price or in this case the sector has rallied back up to resistance now full disclosure is the sector still near resistance it is okay it totally is it's had really one higher low okay it ran up and then pulled back down to the ten ran back up right back into the horizontal and so far a very muted reaction so far okay now if i were to ask you and say let's kind of play a little game that maybe next week or tomorrow discretionaries break out and the an investor asks you what stocks are you in in the discretionary space or what alerts or buy stops do you have set if that sector were to break out go ahead tell us okay now we might say well james we talked about on tuesday maybe that amazon trade as far as maybe that stock filling in the gap now we know that amazon can play a pretty big uh roll into what that neighborhood does sometimes people will poo poo that and say yeah but it's only one stock but the problem is it's it's a big one that matters now if you look at this it's already gone through about half of that move already now remember don't you think someone backed down when that stock broke diagonal resistance don't you think someone could have said yeah i won't get in because it's already gone down they're they're talking about the past the present when that stock on 8 23 got above the 10 it's now breaking out of resistance this is actually a higher low they're not going to get in because it got up it's not about the gap down point well what is that investor going to say now on 8 30 when it does you see what i'm saying the case of not getting in starts to crumble pretty quickly and then regret okay uh it starts to settle in so the biggest thing is the pass is a packs and if the price gets above resistance it's changing we want to also keep in mind that some technicians like michael keeley they're more of a macd specialist okay where for example the price goes down and the macd is at its lowest point but what michael kealy would always point out to us is hey look if the price has come down but the macd is not down as far it's just increasing the odds of the stock braking resistance but you guys and gals already know that i'm just pointing out the obvious but many times if you see a downward trending stock if that macd is actually going opposite the chances of reversing hot up are getting higher and higher now i want to go back just real quick and i want to kind of just double check okay i want to see if there's any position in that portfolio i know we actually got one filled that that one trade might be over okay it is so the paid money account actually already targeted out on that previous one it's going to use these down days as maybe a little exhale to see if it can't fill in that gap and then we're going to mention two other discretionaries okay now first off the investor might say oh my gosh it's a bigger dollar stock can't get in well this is where the verticals come in now the one con we would absolutely say on amazon and these bigger dollar stocks is the bid and ask spread is wider getting the fills okay or getting closer to the mid price is critical okay now when we actually take a look at this we're going to look at something maybe even in that higher maybe high 20 delta maybe something like this okay now i'm gonna use a five dollar wide spread so that way if someone said i'm not used to doing three thousand dollar stocks that we can just kind of show this on using a 3.5 wide spread
right click on the 3340. now what delta did that have well the delta here was really uh 29 okay 29 the open interest got some contracts there and what you're going to notice is this is not your typical 10 20 cents wide you're going to see that it's wider and we're wanting to make sure that this paper money account really gets the mid price now when you have wider spreads like that it's important to understand that in this case that probably holding closer to expiration is probably going to be the case to start to break down that bit and ask spread okay but we're going to do this as one contract we should pro the payment account should probably be doing three of them but it's going to show one contract now what you're going to notice is even on a big dollar stock like amazon max profit 150 max loss 350 okay commission 130 1.30 and so the investor can use these verticals to play these bigger price dollar stocks which is very applicable in the current market where many stocks are higher priced now it's going to send that order and then maybe look and see can that stock fill in the gap when i say the gap i'm talking about the earnings gap right here it's gone through about half of it and it's actually in the last two days just exhaled a little bit now i want to also bring up two other stocks that also might be on breakout potential alert now if i were to say to you hey what do you think about the trend of mcdonald's i don't think any of us would say it's a killer uptrend it's unbelievable it holds the temperature of moving average beautifully and all i don't think any of us would really say that but if we look at let's say the right hand side let's go intermediate okay couple weeks to months here we would actually say over time that really this trend has actually been increasing the lows have actually been getting higher and if we look on the right hand side and if we were to kind of play the little game of dot to dot to dot or go high to high to high amazon did fill what you're now going to see in this case is we have a downward sloping diagonal line of resistance okay now how many of you are getting an appreciation of the diagonal resistance like you said i'm not really sure if that's been impressed upon my mind if i could impress upon something i want you to become a master at seeing that line because if you actually if the investor starts to see the lower highest and connects those lower high points to make the resistance that investor probably has a better potential entry because it's closer to uh horizontal and or diagonal support and it probably also maybe has with that potentially maybe a higher implied volatility now if we look on the right-hand side what do you start to notice here on the right-hand side so we have lower highs higher lows and we're kind of getting to the point where we're getting in the apex of the triangle now how does the investor know the stocks are going to go up okay guys guys we just got to get that out of mind okay nobody knows what it's going to do in the future the investor is trying to manage their risk okay what happens after the trade is entered don't know now let's say the investor said james i want to enter a long call which has unlimited upside but maybe they said i want also kind of with this and just for time's sake i'm going to go back into this i'm going to look at a long call now this long call on mickey d's we're talking about the october expiration okay october expiration and if we looked at a long call that long call has a 74 delta the long call is 11.50
now if we take a look at this what you're going to notice is i want to kind of take a look at one thing you know what it's going to go out we're going to change that to the novembers you're going to see that the premiums on the right-hand side is going to be a little bit more helpful than the octobers the call premium for the 230 call fourteen dollars to sell the put well four dollars ish now what you're going to see is if we said well what is that called if the investor were gonna gonna go along the call and sell the put but we know what that's called because we do a class on it every wednesday and i just spent the last five i didn't spend i spent i invested the last two weeks talking about a sample plan of long synthetics last week was part one yesterday was part two and what you're going to notice now is if we take a look at this buying the 230s and selling the 240s you're now going to see what the debit is well the debit in this case let me kind of see if that's right the 230 call 14 230 god that doesn't seem something yeah there it is okay i just figured that out i don't know why i changed that there it is so that's fine 230 yes check 230 put yes check debit is 968. why does it matter that's going to tell us the break even so if you look at where the stock is now 239 32 now what you're going to notice is the breakeven is literally 239.68 now remember if we said what is the delta on this trade if the strikes are the same well if the strikes are the same okay it's going to be a dealt of a hundred now if the ambassador said james i'm going to use that 235 area as far as the potential level of support 235 less 2 to 3 percent like a stock investor maybe that investment says you know what james i'm going to set that stop below that lower diagonal support and if we went down a single order the first trigger is scq how do we flip that order when in doubt you right click ah there it is create the opposite order doink and now what you're gonna see is limit to a market day to a gtc this is just conditional and now we just fill in the last thing click on the settings that little gear or column and now just typing in the price if mcdonald's goes at or below 227.95 exit now this is going to be very stock-like so if we said well what would be the potential loss well one of the investors bought shares at 239 and they had an exit at 227-ish 228-ish about how much would that be well we know it would be about eleven dollars if they had a hundred years in stock it'd be like eleven hundred dollars okay now if we did this and said well let's throw this up on the analyze tab let's do it right click on that line analyze the trade the line here is going to really mimic as if the investor is really long the shares of stock okay now on any type of well on any trade where you have a let me actually go back and do this right here if the investor does not have any protective put below which absolutely could be purchased we talked about that in the wednesday class if the investor has an obligation to buy those shares at 230 and if the stock weren't going to go down down the risk is all the way down to zero okay simple thing to do if we were to speak to that the investor might say you know what james i don't want the risk all the way down to zero as we talked about the last two weeks the investor might say i'm gonna go look to maybe buy a put with maybe a delta of 10 or less example given probably the 200 so if we did include that the risk would probably be right about three to four thousand dollars total max loss that's it the stock were all the way down below the 200. so remember
if someone sells a put and buys to put that is a defined risk trade that's why they're buying the put is the long call a defined restraint it is okay there you go hopefully it answers that question i'm going to confirm and uh send that order now i want to kind of see what's kind of holding that up go back i don't know why that didn't take but we're going to put that in that's actually 227.95 now one other stock we want to keep keep a mention on going into next week is actually on walt disney last stock i'll mention here confirm and send there's the trade remember the buying power effect is higher because in this example it's not showing the bot put if that's okay send the order that's going to try to fill last stock watch you pull up as an example of maybe a shorter term pullback in a longer term type of trend it's walt disney okay what's the trend on disney as i kind of backed this chart up to a three year weekly this is what it's really showing when you look at this also on the bottom as michael keeley who focuses on the macd might kind of bring this up it's getting actually less bad support has been built over time if that stock house of next week starts to really break out of the resistance area which is trying to that resistance area is probably about right there maybe even a little bit higher about right there and you know if you start to kind of see that rotation and where the price is maybe not falling down below the 180 or the 175 it's actually increasing the odds of it breaking out of resistance so let's keep these two stocks in mind mickey d's disney we also talked about amazon okay now we also did a number of trades here we actually talked about conocophillips we talked about oxy we talked about apache and we also uh for example brought up the example of john deere now one other stock there might be let's say even caterpillar i'm out of my time here today but i want to thank you so much for your comments your questions and your participation we tried to give examples of maybe some stocks that were beat down a little bit or other stocks that might have a little bit type of stronger trend we also did do some stock trading as well but then we also incorporate incorporated with that using options as well that have defined risk now remember with what we discussed here today we demonstrated the function on the platform we did use actual symbols stay tuned for our next webcast coming up right at the top of the hour again thank you to you and michael keeley uh for all your questions thank you michael keeley for helping with those questions in the chat stay tuned for our next webcast coming up and also just know that michael myself will be on twitter throughout the uh today and tomorrow
2021-09-06 02:02
