Technically Speaking: Trading the Trends | James Boyd | 12-5-19

Technically Speaking: Trading the Trends | James Boyd | 12-5-19

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hello and welcome to technically
speaking on trading the trend weeks to months my name is James Boyd great to be
with you here today hello bill and many others bill says good afternoon James
and Boyd disciples bill is a funny man if you’ve never met bill he’s a funny
man bill hopefully you and your family are
doing well all right just real quick as we’re getting started you can also
follow me on twitter at jade underscore TVA or just search for James Boyd and
I’ll show that in just momentarily I also want to give us a quick reminder
that as we talk about examples here today if we were to talk about options
remember that options are not suitable for all investors special risk inherit
of trading offices please make sure that you’ve read the previously provided copy
of the characteristics in risk of standardized options also in order to
demonstrate the function of the platform we will be using actual symbols past and
current examples remember though that TD Ameritrade does not make any
recommendations determine suitability of any securities or strategy and also
remember that you get to pick the stock and the strategy and also remember that
if when we talk about terms such as the option Greeks know what they mean how
they apply now what are we going to cover here today first off I look at
this we’re going to take a look at the Nasdaq we said last week that if the
markets gonna maybe kind of pull back in a little bit maybe revert back to the
mean a little bit or pull back to maybe where a breakout was you’d like to see
that the Nasdaq and the Russell might provide that move down we’re gonna take
a little nap because of that we’ll take a quick gander at the volatility we do
have a jobs numbers coming out tomorrow want to kind of see how the market
setting up going into that and also we’re going to talk about our current
positions trend analysis and we’re going to do this from a perspective of a
longer-term trend trader what are those trends what could we
maybe be considering as the stock maybe kind of goes from strong up to maybe
reverting to maybe to the middle we’ll talk about that and then position new
position considerations what stocks in the current market are going up in are
there any and the learning outcome here today is to learn how to
in its trend trades now I think there’s two things that are really important
here we’re gonna talk about a process and we’re going to talk about sticking
to that process and what you’ll find is as you understand what the process is
you’re investing can kind of become I’m not going to use the word boring but
you’re gonna know what you’re probably going to pick and you’re gonna become
more confident and just executing your plan which i think is exciting now just
real quick as we’re getting started here when we take a look at the Nasdaq let’s
take a quick peek as we look at the Nasdaq what I want you to notice is no
major change from yesterday till today we had a candlestick and it probably
looks stronger on the Dow but this candle kind of more looks like a hammer
if you were at support but if it’s up near resistance this would be more of
what we would call a hanging man candlestick if it’s really up near
resistance and I think you could see that probably a little clearer probably
on the Dow Jones and if we look at the Dow Jones what you’re gonna see is kind
of think of this as maybe a little plateau of what we had before let me
draw that and it’s right there okay so a member hammers and hanging man look the
same it’s just where they are if you’re saying that we’re up near resistance
whether we look at the Nasdaq or you look at the Dow Jones okay
technicians might view this more as a hanging man up at resistance as this was
like the old plateau area we fell down below that support area lower low and
now we’ve come back up now this is this also if you zoomed in on it could also
maybe even look like a dark cloud cover or a bearish engulfing it just kind of
depends upon where it ends for the day now if we also take a look at the
volatility and the volatility is very critical here volatility today getting
down below that shorter term moving average still sitting here about 1464 or
so so it’s not low it’s it is more elevated and that means that probably
more stocks have struggled in terms of holding support okay and that
what we’re seeing right now now let’s take a quick gander here okay okay come
with me let me drive the bus here and what I’m going to do is I’m going to
take a look at let’s say just a list of Dow Jones stock so on a daily basis a
process could be for a trend investor to look at the trends but also to look at
the market watch and use the scripts to kind of paint a picture of what we’re
really seeing now if you said James I don’t have the same column headings you
do well it is Christmas time and I want to give you a gift and I I love gifts
and if we for example my gift I like to give to you is right on my Twitter page
right the very top pin to the very top it’s gonna give us right there the
scripts and I move my cursor either way you’re gonna see that any script that we
have is going to be right there and it will tell you what the column heading is
and in that blue color that is the script code that you need okay it’s
right on the Twitter right at the top now what I’m going to do is let’s kind
of go back to this and you’ll see that there’s different column headings you
might not pick all you might kind of like a buffet pick and choose which ones
interests you the most that now also when we go back to this what I thought
was very interesting I’m looking first at the Dow Jones and what you’re
noticing on the Dow Jones is up in the Dow when we look at let’s say stocks
that have R or I should say this that have had a 20 day high or 55 day high
well if you say James I don’t know why that’s important well right on the
twitter right at the very top I state that a 20 day high that would really be
a shorter term break out the 55 day high would really be just a longer term break
out the one in green means yes it meets the criteria this right here one in
green again meets the criteria if it’s black like that it does not meet the
criteria so when you look at 30 Dow stocks there’s three of them that are
meeting the criteria in some shape or fashion three four
Rison JPMorgan and Nike that’s it three out of 30 which is going to be 10% okay
now if we looked at let’s say the Nasdaq we come back to the Nasdaq we pull it up
Nasdaq and say jeez how many stocks in the Nasdaq or maybe showing let’s say a
stock that is really breaking out to a new high whether it’s a 20-day high or a
55-day high well we’ve got a hundred stocks in the Nasdaq it might be 99 but
let’s say it’s a hundred one stock and it’s Mondelez and it’s really a stock
that’s hit a 20-day high not the 55 so what does that tell us what is that
telling us we’re seeing a lot of bullish examples right now what is that what I
just showed you have to do with the volatility well if the volatility the
VIX is going up that means that a lot of those stocks are struggling to get maybe
Co holds or bounces off support that are holding and or second stocks that are
struggling to really get to let’s say breakout areas whether the shorter term
breakouts or longer term breakouts we see evidence of that this is not James
just making this up we can see it and there’s less stocks right now doing that
now does that mean that I should mentally check out for the next 500 days
no of course not these can quickly turn around sometimes
but sometimes if you look at this is the volatility is still up some of these
stocks might try to come down to some further areas lower and maybe try to
start to reverse and start the cycle over again okay all right now what I
want to do is let’s kind of just real quick what I want to do is are there any
questions on the posture with what we just talked about we looked at it we saw
proof of it through the scripts there any questions on the posture anything
like that anything that’s really confusing you in terms of stocks okay
notice how I clarify that question okay good now what I’m going to do and I’m
going to look for those questions if we have those I’m going to go to
stop just real quick and one of the stocks that came up was a stock I’m
gonna bring up let’s say JPMorgan now when you look at let’s say a stock like
JPMorgan some of the stocks so when volatility is up if some of these stocks
are still going to a brand new highs it’s probably a reason for that it could
be a news reason it could be the analyst firm XYZ raise their price target etc
it’s probably some underpinning report that’s causing the stock to buck the
trend of the sector and of the index so if we were going to look to buy stocks
the concern would be if we buy stocks and we buy those stocks in rising
volatility there’s a risk that those stocks might in the short term they
might not do as well these stocks are still correlated or tied back to what
the index is okay now if I go look at the stock and if we were going to go
take a look at that long-term trend so if we look at the three-year weekly
which is what we want to do we want to kind of cess what is the longer-term
trend and it’s primarily just gone up what you’re noticing is that stock in
the shorter term still grinding away to the upside now if you didn’t catch this
yesterday we change that 10 period moving average to where it’s the blue
line historically we’ve always used the blue for that 10 period moving average
and the green so we can decipher the difference is the 20 period both of
those lines are still up still now if we come back one of the concerns might be
well if we get into a stock and we get into we enter stock based upon the stock
really let’s say getting above these recent highs can it hold the breakout
and when the volatility is rising an investor might choose to not take a full
position maybe half they might choose and say could I buy the stock and maybe
look and see are the puts how expensive are the puts now I’m going to ask you
know open-ended question if you look at the
option table are these puts probably gonna be that expensive based on what
I’m showing you so I’ll kind of guide your eyes a little bit if we said if we
went out let’s say 30 to 40 days here and if we look over here let’s say
you’re about right there these puts probably gonna be pretty expensive so if
we bought if we bought the stock and we bought the put to protect the stock for
X about a period of time if the implied volatility was between blank and blank
you fill out the blanks probably not gonna be that expensive that means tell
me what I mean by blank and blank fill in the numbers want to make sure you’re
getting that what you’re gonna notice is when we come to this and I’m gonna step
one I’m gonna left-click on the stock right on the ass price right there step
one we’re gonna buy that stock left-click now number one click on the
ask stock buy plus one hundred step two I’m going to come down and say single
order first triggers seq James why would an investor maybe choose buying of the
put versus setting the stop well if you look historically when you get stomped
out on your positions there’s a high likelihood that the stocks when you got
stomped out you got stomped out when the VIX was spiking if you know that there’s
still a risk of that potentially to rise you might choose to buy a put which
contractually gives you the right to sell the stock at the strike price from
now into expiration now remember we’re buying a put price we’re buying a put
strike above or below the current price okay answer below okay we want to have a
right to sell the stock if it were to go down so if we’re going to let’s say go
out to the January 43 days expiration and let’s say for example we pick and
let me pick something a little bit closer let’s see what we can find the
week these are going to give us more strikes something that might kind of be
more to the liking of the investor what they’re willing to invest to
protect so we have really a Delta here of 31 35 40 again lower Delta’s below
the current market price so if we take a look at this we want to now analyze how
much are we paying relative to the stock price well if we picked a put and I’m
gonna choose a put like the 31 Delta and that put is really 129 okay and what I’m
going to do is let’s kind of go to the board and let’s kind of work on this
together okay so what we got right now is we have the stock price at really 132
89 if we buy that put let’s say we buy that put for let’s say 167 we’re really
kind of saying well how much are we paying so all we’re going to do is this
on a calculator just take a dollar 67 and we’re gonna divide that really by
okay divide it by there we go 132 132 91 and what you’re going to get is you’re
going to get a percentage the investor the lower that number is to 0 which is
not realistic but probably the lower that number is probably to 1 the cheaper
the puts are if you’re using an expiration of 30 to 40 Delta now if we
run those numbers together let’s do this together beat me on it I want you to
beat me on it 167 divided into 132 91 it’s really going to give us about 1.2
percent I said that if that number was closer to 1 these puts are not that
expensive now if we take a look at this how do we actually set this position up
well in terms of setting the position up let me go back let’s kind of clear that
wipe that okay and then come back to that just a moment let’s put that
position on let’s talk about how we do that so now what I’m going to do is I’m
going to bring this up there we go I’m going to go down
which says first triggers seq we got that we’re gonna left click right on
that 169 right there and now what you’re going to see is we’re just buying a
stock okay buying the put the risk there is from
the stock current stock price down to the strike price that’s about three
dollars and 89 cents okay simple math there we’re gonna add the value of the
put assuming that we lose all of it so for every hundred shares of stock that
we buy the stock risk about 389 the option assuming we lose all of it a
dollar 69 and that’s probably going to be somewhere right around 550 okay now
the understanding the risk is very critical this is not theoretical risk
contraction we have a right to sell the stock from now into expiration at the
one twenty nine the thing you need to remember is if the stock goes down below
the one twenty nine it does not mean you’re out of the position this is not a
stop okay so if the stock goes down to 125 and then bounces back and then comes
back up you still have the right to sell the stock at 129 okay we’re trying to
brace the stock just in case there is some volatility risk or price swing so
now what you’re going to see is the transaction fee to buy the stock zero
the transaction fee to buy the option sixty five cents okay and there’s the
totals now if we’re going to put this in when we buy the stock and we buy the put
together again this is called a married put buying the asset and at the same
time we’re buying the protection on the stock the protection is a part of the
investment and the stock would need to go up the value of the put by the
expiration to least be above breakeven okay now what I’m going to do in this
case is I’m going to go ahead and say send that order let’s do that there we
go so there’s on JP Morgan bought the stock
check and now we’re actually buying that we bought that put as well with it let’s
take a look at what that position looks like now we already had two hundred
shares already so we just added to the amount we have but one of those that’s
what a-put looks like and you’re gonna see the value of the put we’re gonna
initially be down of course because because of the spread okay now let’s
kind of talk about some lets to kind of talk about a newer position one more so
if we take a look at let’s say a stock like Lille what we’re probably going to
see when the volatility is going up stocks that hadn’t really performed that
well they could proudly start to her maybe reverse trend I’ll just give you
two of them lly okay kind of more of a classic basing pattern reversal and
maybe another stock like ttwo okay those might be some stocks where
you say this chart does not look like the market these stocks all of a sudden
you’re like well we haven’t seen these before well these are the stocks that
are have lower correlation to the market now when we talk about the trend trading
the trend weeks to months it’s not that this trend is not up trending it has
been up trending it’s just been in the process of really pulling back down to
some longer-term areas of support and if we draw this line
most of the touches are right here now I know what you’re thinking geez could
someone give me a list of 10 stocks a day that look like this that maybe have
a longer-term trend that are maybe coming out of a basing pattern yes you
could pull up that list yourself and you could be able to actually look at 20
days or 55 day highs and that list is given to you every day because if you
had the scripts on the chart that’s how I found this one you get it someone
already gave it to you okay so that’s how I got this one I’m
just doing the same process that you might be doing now if we take a look at
this we go back to the one year daily you’re gonna now see that if we look at
this where’s the level of resistance well if we go back and take a look at
this the level resistance the old area was right around about right there
okay probably right about 115 now if you take a look at this this chart the stock
God above 115 pull back but didn’t pull back to 115 this is why we say that
support is an area but if the stock doesn’t pull back down to that 115 area
that’s kind of good because investors maybe were eager to maybe buy the stock
just even in any pullback okay so maybe that Dale calls that impatient
buggers okay that’s the terms I’m quoting what you said okay those are
that’s his language and I I think that’s a nice way to say they’re eager to buy
they’re impatient in other words now when you take a look at this the chart
really has kind of more of like a flag set up where it ran up kind of sideways
consolidation a little bit of a pullback and the stock what you’re going to
notice right there is that stock where’s that lowest most recent red candle well
that lowest most recent red candle it is right here
now what you’re going to notice is the current price is above that high so this
is an example of two things number one it is an example of cold that is above
support that’s so critical do not forget what I just said there go holds below
the support that’s not what the technician is looking for they’re
looking for a co holds that are above support the second thing we actually
also see on this chart is we are getting above a 28 perhaps a 55-day high so it’s
a bounce it’s also a breakout and also if we kind of said James what about
those lines again well you’re gonna see that the blue line that’s your 10 period
okay and the green line right there that’s the 20 both of those are really
showing up now even with all those things as an
imply that it has to go up no absolutely not the stock could go down tomorrow
okay could drop down below the support level tomorrow we’re just saying look
right now it’s showing that more investors currently are buying now if we
take a look at this chart what’s the potential next level of resistance on
the chart so we go back and we take a look at this and let’s kind of draw this
and I’m gonna go to the board and let’s kind of take a look at this together so
we’re trying to kind of get an idea of maybe where the support level is you
know I kind of move over here just real quick but if we take a look at this what
you’re going to notice is the price is and I’ll kind of give you some markers
here here’s one twenty this 125-130 right and let me zoom in now but so if
we take a look at let’s say where those old price levels are okay this area
right there those double tops right there those that’s probably where we’re
looking and if you take a look at this right there that’s kind of a marker as
well so if we kind of keen we might say let’s say in the ballpark let’s say 123
or so if the stock really got above let’s say that 123 that might get us in
the area let’s say 133 now what’s kind of interesting about if the stock can
get inside that old channel if it can okay if it can break inside this old
channel the movement back to the upside can sometimes happen pretty quickly and
technicians who have experienced they’ve probably seen examples where that’s
happened not always okay but the idea is can that stock continue to go up and can
it break inside this old channel and if it can could it move could it go back up
to the top this is classic if it breaks the resistance the path of least
resistance is it goes up to the next level resistance now the one thing I
wanted to impress upon your mind that’s great if someone knows that but the idea
is how have you shown proof of you understanding that and placing trades to
see examples of how that really were so it’s the application list so let’s
kind of go back and work on this together and so what we’re gonna do in
this case is we’re just gonna buy the stock itself looking to set the stop
underneath that support area now we might pick an area let’s say 116 we
might pick an area let’s say 115 those might be some areas that you might be
looking at well if we took let’s say 116 we set a stop below there okay 113 68 so
if we took 116 and we set a stop below that by 2 to 3% that would be 113 68
okay so if we go back to the chart now okay
trade go back to the trade page we’re gonna right click on the ask price go
down to buy custom we’re gonna go with stop if we go buy custom with stop now
what you’re gonna see is here’s the current stock price okay now what you’re
going to see is we’re just going to type in that price of 1 1368 okay day two GTC
so I want to bring up a point here let’s say I came up to you and I said to you
I’m not very good at exits you asked me the question well where was your exit
I said back to you well I I don’t have an exit and then you said to me and said
well I think I don’t think you’re bad at exits I just don’t think you had an exit
ok I want you to recognize that we’re pre identifying ahead of time where
we’re considering and getting out ahead of time please have a plan in place
where you a if it went down below let’s say this level or less where would you
consider them selling okay that is one of the most foundational things in terms
of risk management position sizing and then the exit part okay now the other
thing I want to kind of bring out here is if we bring this up we could also
bring up the target and so if you wanted to set a target we said the target on
that an example we kind of said maybe an area the initial target might let’s say
be right around about 124 if you want to set a target the second area that might
be right in the ballpark area maybe about 129 okay
so right right in those areas right there
that’s if you want to set a target so when I kind of role played with you a
little bit regarding like I was asking you like I just don’t think I’m good
with exits and then you said hypothetically back to me like where was
your accident I said well I didn’t have one that conversation has been had
sometimes I and I think sometimes that people kind of maybe they’re tough on
themselves because they they saw the exit they just never exited I think it
comes back to is having the order ahead of time makes the exits a lot easier to
follow okay that’s what we’re doing so if we wanted
to set a target we could if we’re just gonna set that stop right there dated
GTC I’m gonna now go confirm and send remember on the stock we just have the
capital that’s involved the transaction fee zero okay and if that’s what we want
to do right there now remember that stop that’s saying if the stock goes to that
price or less sell the stock we don’t know what price it could get sold at
okay like it to be as close to that as possible and if we want to do that we’re
gonna go ahead and say send that order okay now what I’m gonna do is let’s kind
of take just some questions here and I want to go back and kind of see are
there any questions that I missed and so if there are any questions let me know
I’m just going back and just making sure we’re all caught up okay now Cole also
mentioned okay is a regarding relative strength okay so this is something that
we’re always watching now by the way on the Twitter page and I’m just going to
pull this up just real quick right at the very top there
two things and I want to make sure you understand the differentiation okay so
the relative strength so let’s kind of pull this up and I’m going to move my
cursor out of the way and first off what I want you to see is on that third row
where it says RS and I’ll kind of guide your eyes a little bit right here it
will say RS okay st that’s relative strength short-term okay when we look at
let’s save just the RS itself that is really looking at the annual relative
strength okay the RS short-term that is only a
numerical number the higher the stronger okay so those are low difference so let
me kind of give you a little flavor what we mean right now and what are we seeing
right there in terms of that relative strength well if we just use let’s say
the market watch and if we go back to one of those column headings on the
relative strength the stocks that are still exhibiting the relative thing to
remember relative strength it’s just color-coded okay now there is
a number that’s in the box that’s giving it the color the stronger the green
color stronger the relative strength that’s had you’re gonna see that stocks
such as Apple not surprised Microsoft a SML SML Fizz V abd etc those are the
stocks that have actually performed the strongest relative to itself and others
now if we take a look at let’s say so that’s relative strength but if you
wanted to say I don’t want to look at the aunt the annual relative strength I
want to see shorter term then feel free to actually use that code right there
that’s gonna be right there okay and again what it does is says what’s the
column heading what’s the purpose for it okay and then what are those digits okay
so you can copy those alright now Ken also says in the question is there may
be a reason for maybe setting a stop on ly instead of buying a put okay so can’t
you kind of beat me to it if you’re recognizing that maybe
LLY if you could maybe buy the put instead of setting the stop and the term
we use is our o our so if we go back to let’s say the basic price and quote and
we go right down where is that give me that
return on risk that return on risk oh let’s go back to the kind of the time
frame we talked about 30 to 40 days that’s the one we have right now we
talked about the 30 to 40 Delta there’s two examples right here we’re looking at
let’s say what’s the are the RR is the math done for us and it’s just saying
hey you bought the option if you bought the option the put option and you bought
the stock right now the stock would need to go up 1.37 to offset the loss of the
value of the put okay if you bought this put right here the stock would need to
go about 1.6 one percent to offset the value or the loss the complete loss of
the put so as a stock buyer you’re concerned of how much would the stock
need to go up to pay for that put the higher that amount
the more you might shun away from doing that strategy okay the lower that number
is two one why do you say one well because you have to pay something for
the put right you’re probably not going to find something at zero with an
expiration of thirty to forty days and a delta of thirty to forty so the closer
to that number is the one that’s just saying there even cheaper okay but what
you’ll notice is can’t I’m with you on what you’re saying I’m picking up what
you’re laying down you’re saying hey look it’s about one point three seven
that’s kind of closer to the one now what you’ll find is when you open up the
strikes you’ll say James I’ve found one less than one but it’s not in that area
of a delta of thirty to forty that’s what I’m saying
okay now Keith okay looks like you’re good just let me
know if you have that script it’s right there now let’s go back to some stocks
and what I’m going to do is one of the stocks that we saw before was a mat okay
this is one of the stocks that’s in the portfolio so this class is really about
again trading the trend weeks to months so we’re looking at let’s say the Train
longer-term and so we’re going back and really saying well where is that trend
in is it still in a longer term upward trend
well the question now becomes when we draw resistance or support where do you
start well you might start going from right to
left and if you go right to left what we’re doing is we’re just kind of
nicking the bottoms of some of these lows now what are we trying to really
find out well as investors trading the trend trying to find out is the stock
still in that longer-term upward trend now what you’re going to notice right on
a mat is we are right now at that support area right now now here’s the
deal and I I think we’ve all been here how many of you have ever seen where the
stock broke support you said to yourself oh this is where I would have sold but
how come you didn’t sell well maybe the order wasn’t in there maybe you like the
company etc whatever well the thing is as far as a trend investor we’re kind of
treating this like almost like a profession or a job if you will where
we’re kind of saying look if the trend is not if we’re still not in that upward
trend and we start to breach a support area the job of that trend investor is
to say it’s not trending trying to put the capital to where there is still a
trend so let me give you two areas so number one is 55 the investor might say
look I’m gonna set that stop right below 55 okay the exit is a part of the plan I
don’t like to make decisions okay but the thing is if you don’t make a
decision you are making the decision and your exit plan would say I don’t have
one all right now James come easy on me and
that was a little tough come back no what you’re gonna see is maybe that
second area being let’s say 52 and a half now what I’m really trying to do is
I’m trying to really combat the things that might cause the investor to give
back those unrealized profits and also to a road the capital in the portfolio
okay and also cause the investor to be less confident now if we looked and say
look 55 is a support level and if we want to make sure that that stop was set
let’s say two to three percent below that support level that stop could be
set at fifty three ninety now I’m going to ask James a question James why
wouldn’t you do an example buying a put on this or colouring this or like
whatever putting defense on well the answer is why would an investor put on
defense buying a put or coloring the position at a support level okay
probably not you could but the idea is when you’re putting on protection you’re
thinking you’re more up near resistance if the stock has gone from let’s say the
high drop down again it doesn’t have to be complicated hey
look blue line goes red right there hey look green line turns red it’s been red
for ten plus days and what does that told us for 10 days in a row
sellers are in control it’s given ample time to put on some protection now
here’s the deal just because we’ve seen it doesn’t mean
the investor has done anything about it right we just keep watching it right so
the biggest thing is want to make sure in this case so if we talked about
protection which I’m going to show one example in just a moment 5390 is where
we’re gonna set that stop I’m gonna tell you I don’t want I want to challenge you
here I want you to be disciplined and identifying where the exits are I
sometimes as investors we kind of treat the investments maybe like baseball
cards or coins okay where we just put them in a shoebox stack them in the top
of our closet call ourselves a trend trader we want to know about support and
train lines but there’s no point in knowing amount of support and train
lines if we’re not going to do anything with the trend lines okay whether we’re
gonna buy off those trend lines or sell if the trend lines the point I’m knowing
about the technical analysis is that if we count off the support trend line we
might look to buy we go below that term line we might consider exiting the
position okay so we’re bringing it all together so we now have now here gonna
go to a map I’m gonna go trade bring it up position
want to make sure so on that the position only has about six hundred
fifty two dollars unrealized profit now what you’re going to see is going to go
to confirm skinny create a closing order gonna make sure that there’s a stop in
place now it says sell those 152 shares and now what you’re gonna notice is
there’s the stop price that we need to put in and with the number we talked
about was fifty three ninety now I want you to think about like you hired
somebody this is all hypothetical and they were supposed to check your
portfolio and they ask you two questions what is your exit and you tell them you
say here it is and you said the person then said to you okay now what I’m gonna
do is I’m gonna go through that pay pointing portfolio and I’m gonna check
and see if what you have pending is parallel to with what you told me so if
the kind of think of it as your you’re your own risk manager and I think
sometimes we always think about reward reward reward reward and but sometimes
we kind of forget until we sell something we’ve only have paper profits
okay now we’re not talking about paper
profits we want to actually be with a harvest realize those gains now if we go
down let’s say confirm and send remember on
that stop that is saying 5390 that’s saying if it goes to that price or less
then sell the stock all right now and it remember it could be lower if we go back
down to send that order there we go now let me bring up one example and this has
been something we’ve been talking about okay Hugh come has been a stock that’s
in a non portfolio and it’s been an example of a caller position hundred
shares of stock the stock that we’ve eroded some of those unrealized profits
we’re still somewhat profitable but what you’re going to notice right here is we
have that sold call so call right there and we have the bought put right there
now first thing I want you to recognize is the sole call was was key word dollar
ninety four and now it’s eroded to 27 cents now what would you do with that
call if this was you and you were managing this paper money count dollar
94 has gone down to twenty-seven cents dollar ninety-four represents the most
we can make we’ve made currently about a hundred and sixty six dollars all of the
hundred and ninety four so we have a good chunk of this maybe ninety percent
of that premium the option might be could we roll it that could try to sell
another one option number two could we profit take on that call well if we
profit take on that call and we wipe this out now we wipe it out we don’t
have it what do we have left no we tell the
shares of stock and we still have the ball put okay now if we do that if we
right-click on that line and say create closing order by that cue comeback now
what you’re going to see is we’re managing the position we’re buying that
back one that we don’t have anything hardly left to make and what you’re
going to see is we’re going to buy it back about twenty eight cents one
contract transaction free survey says 65 cents
that’s what it should state there it is so we’re giving a debit back of 28 cents
so some of the premium 65 cents for the transaction feed there’s the total and
the only thing it really leaves us with is the the put now let’s take a look at
what’s happening on the charm well if we go back to the chart what you’re going
to notice is those two lines and man we’ve been waiting that’s what it feels
like you’re gonna see that the lines are still down
sellers are still in control but this is the first time we’ve seen in a number of
days where the price has been able to get above both moving averages we don’t
even see a warning sign that we’re turning yet no we don’t see it yet but
if that price starts to get above those that lot both those lines they could be
starting to reverse but we don’t see any signal yet to exit the put we don’t see
that okay now member the put gives us the right to
sell those shares at 8250 well guess what the stock is at 80 to 20 so if that
stock goes lower and lower and lower and lower
it doesn’t matter and since we were able to harvest some of those gains from the
call premium that’s reduced our stock price the average price in which we own
it for if the stock was to reverse we could actually then go in and say you
know what we’re gonna sell the put and just belong in the shares now we’re
gonna continue to monitor that but we need to make a quick adjustment in terms
of the management we did okay so that’s been a really a follow through we don’t
really need to exit that position quite yet there’s 15 days left here still to
work with but if we fast for 15 days if that stock were to close below the
strike price the stock would be sold or could be sold at expiration if we don’t
sell the put prior to expiration all right so covered some good ground
talked about some new examples we talked about JPMorgan we talked about Lilly
number two we talked about aim at longer term support level making sure those
stops are being kind of our own financial financial risk management
manager and then number four we talked to really about caller examples that
we’ve actually had exiting the call it only leaves us with a put kind of
thinking potentially that stock might potentially try to reverse back up we’ll
look and see how that plays out the one quick comment I would say with that put
is when the stock goes down like it has you might not need to sell another call
because the Delta of that put is probably pretty high and that means it’s
project protecting a good portion of the stock loss if it were to go down okay so
feel free to check on that now also coming up just shortly okay
ken rosewood be doing a class on advanced option strategies remember you
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as far as what we what we’re up to and what other classes we we have want to
give us a quick reminder that in order to demonstrate the function of the
platform we need to use actual symbols we did remember that TD Ameritrade
though does not make any recommendations determine suitability of any security or
strategy that is up to you to decide what you want to invest in I want you to
as a takeaway again have a clear exit plan whether it’s based off support that
the stops are set that you’ve done that risk management okay now that stock
doesn’t go down to that support level us an ambassador has have done your job as
far as executing your plan just like we’ve talked about here today so with
that said stay tuned for ken rose coming right up at the top of the hour
thank you so much for your comments and your participation wish you a great day
take care bye bye

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