8 Things I Wish I'd Known About Trading Options (Week 12 of 12) | Getting Started with Options

8 Things I Wish I'd Known About Trading Options (Week 12 of 12) | Getting Started with Options

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Yes. Well, Good morning, everyone. Welcome to getting started with options. My name is Barbara Armstrong, coach with Tdameritrade. I have the pleasure of having Michael Kealy with us in the chat today. He

brings a wealth of experience in the world of trading and investing in general and has a lot of knowledge in the world. Of options as well. So Here's a question. What do you do when

the market isn't bullish? If you've been primarily a stock investor and one of the things that we can do is hone our skills in the world of options trading because one of the things that I found really appealing about the world of options when I started 10 years ago. Um, into this world of becoming self sufficient in managing my own money was that with options If the market was going up, I could use different options strategies to take advantage of that, if the market like in the in 2000 and 15 at the end of 2000 and 15, the S and P 500 was up less than 1% So that year, you know the market spent a whole lot of time going nowhere, and there are options strategies that can take advantage of a star. AWK that's trending sideways or a market that's trending sideways. And then of course we come to today where we're seeing like a sea of red. We've seen a lot of red in the market over the last week year to date, every single major market. Um, index is down somewhere to the tune of between. You know six and 20% So

you know we can use options to take advantage of stocks or indexes that are down trending and we can perhaps profit from that. So what are we going to talk about specifically today? Well today is either you know, we could make it the last like session 12, which is what I'm officially calling it in a 12 Week series, but we could also make it session one and it's kind of the 68 things I wish I'd known about trading in general and options trading specifically when I got started, so That's what's on the menu today, so you may want to, like, sharpen your pencil and be ready to take some notes. I like to place a trade in every single class and this class will be no exception. Spoiler alert. I think it's

going to be embarrassed strategy , and we'll make it a simple barrier strategy, so it'll probably be a long put so I want to thank all of you who show up each and every week. It's so great to have you all on board. So you know when I can't begin to read out every name, but to Lillian, who wins the prize for being the first one into the chat today, Lillian and Lamar and AP, 5 14 and Charles and Osborne and Juanita Um and Peter and, um, Chuck and the rest of the gang, Thank you all for choosing to be here. I really appreciate it. It makes it so much more fun as a presenter to have a live audience now, So if you have questions don't hesitate to ask, Um somebody's asked if I could post that ThinkScript for my nasty with breakouts that is on my Twitter feed. So um, if you have questions, One of the ways you can reach out to me is through Twitter at BArmstrong underscore T d A, um, if we come over to Twitter, actually. Uh where did

my Twitter go? Let me just get rid of this whole thing, And I bet you it will be in behind. Um yeah, I have posted at the very top. Of my feed. Um it's three pages and one is all the things that I regularly teach. And then

here are some scripts. And here's the Mac D one right here. So I was asked about that. Okay? So Yeah, so we're posting content on a daily basis at the You know, Every morning I typically post something that's kind of inspirational or good food for thought. At the end of each trading day post kind of a quick postmortem on what happened with the S and P. You

know, yesterday, I said, Gee, will the s and P make up its mind. It started out down gap down on the open. And then you know, ended up rallying to close up, you know, 0.57% and at one

point in the day, every single sector was in the red. There wasn't a single bullish sector. The energy sector was down by 6% It actually closed. It was the worst sector yesterday and closed down 3% but you know it. We ended up with six sectors in the green by the end of the day.

So who knows where we'll be by the end of today, But you know, this is the kind of content it's not just You know, Here's a picture of my dog. Every once in a while A Michael will post a picture of his dog who is kind of half dog half pony. Um and you know, it's kind of neat to get to see some of them behind the scenes stuff as well. Um, And if you are watching this in the archives if you've got a question, and you Don't want to go into the land of Twitter. You

can just post it in the comments section and I do look at that at the beginning of every trading day. Okay So this is our getting started with Option series. It's 12 and a 12 Week series. Um and but don't think that if you're brand new that you won't get something out of this, In fact, this might be the perfect place to start. And if you are new, please feel free to type of greeting into the chat and just let us know that you are here so that we can welcome you know that everything we discuss in this class is for education and informational purposes. Only

none of it is to be construed as an investment it investment advice or recommendation. To trade any particular security or strategy in any particular way that options aren't suitable for all investors. There are special risks inherent to options trading that may expose investors to potentially rapid and substantial losses. Um and if you're new to tdameritrade you, um You know, you need to get approval to trade options. Yeah Yes. So somebody is striped

into the chat bar bar brought me kicking and screaming into Twitter and I need to make this confession Tdameritrade brought me you know, dragged me kicking and screaming into the land of Twitter. I kept hoping they were kidding, and that it would go away and it didn't And now you know what? I really love that I have this opportunity to share information with you outside of Webcast like this. So you know, it's turned out to be a really great thing, but, um, yeah, I wasn't leaping at the opportunity in the beginning. I don't know about Michael, but you know it. It took me a minute so and it, you know, welcome to those that are typing in and that are new. So today we're

going to do a long put but along put like a long call. Whatever we pay when we buy that that call or that put, we can lose. Technically speaking that entire amount. We could lose the entire amount. Okay so we just need to be aware of that, and we need to be aware that in this class we tend to use the Thinker swim paperMoney platform to do our example trades and in all of the other classes that I teach, we follow up on those trades, then week to week, and so it's really a great way to become familiar, not only with the platform but with the concepts that were teaching in a real live market environment. But you know, with

paperMoney. If you make a mistake, it's not costing you real money. Okay so that's important. To understand. All

investing involves risk, including the risk of loss, so this class has been designed to be taught in about a 12 week rotation and next week. We're going to go back to week one, which is an overview of the basics. I'm going to put a new spin on it this time. Um and then we look over a period of three months at at 10, different trading strategies. And so

there's a little something here for everyone. And if you're brand new and you're just trying to figure this out, you know you might be kind of looking at this and saying, Okay? Um you know, I don't have a big account. And so this idea of these long options. You know where there's a limited , there's defined risk. The most

I can lose is the amount that I paid to get in. This looks really interesting to me, and there's a companion class. Every class that's taught here, so if you want to learn more and start mastering long calls and long put, so this is a bullish strategy, Long calls on puts his bearish There's a class taught on Mondays by yours truly at this very same time. Okay Um, if

you maybe you have a lot of cash sitting on the sidelines and you you're interested in maybe employing some of it, but maybe on a shorter term basis. Now there are times in the market when cash is alleged digit emit position, and some people might feel that this might be such a time for such a time as this And that's legitimate, But you know when we come through this period where the market is pulling back , and we want to get in again, you know these might be strategies that are of interest. You know, And then you, you know you might be approaching retirement. And you might be saying, Well, you know what I'd really like to try and generate an extra $500 a month. Or maybe

it's $1000 a month depending on your account side and your lifestyle. Maybe it's 5000 month or 10,000 month. Whatever that number is for you, but you might want to use like a conservative. Um higher probability type of strategy. And so you might say, You know what I think you know.

Credit spreads are the mom .com. And this is where I'm going to focus on others might say, You know, I'm pretty good on directional strategies. And yet I want to have something that you know, has a little, um less risk than along put, so there's a lot we can do here. Okay And you know 10, different strategies and protective put is actually along. Put that we're

just using to protect a position of stock position. And we can kind of do that in a variety of ways. So you know options and you may say like, how can you in a beginner class? You know, there's only puts and calls right. How can you stretch that into? You know, a 12 week program. It's because you can put them together in Bunches of different ways, and you can use them for different things. And

so you know, there's really a lot we can do here. Okay so I haven't done it this way in the past, but what I thought I would do Is just created another slide that looks the same. Because I as much as I know you guys love seeing me struggle with my mouth and my little drawing to all. I thought this might work a little better, so it's really not lessons here. It's going to be these are the eight things I wish I had known to do when I started. First of all. And it needs to be first is what's your goal? What do you want options to do for you? And you might say, Well, I want to be able to make money when the market is pulling back. Or I want to be

able to continue to grow my account. I mean, what prompted me to get into this whole world in the first place was 2000 and eight and nine, which is now known as the great recession when the average account fell somewhere between 40 and 50. And if you're approaching retirement , you may not want to take your giant heat and see it cut in half. And even if you're not in

that boat, you may not want to see your giant heat cut in half. Maybe you're 25. And I didn't exercise in trading a smaller account on Friday, right at the beginning, and you know what? I'm going to put a link into that? Um You know what? Maybe if we've got time I'll go back and do it again. But I'm going to put a link into that class because I went out to something called the money, chimp .com calculator. And it went through . It was kind of mind blowing. Because even if you're at the front end of things, let's say you're 25. You've got 40 years

for things to grow and you're saying Well, things can recover . Um do you really want to incur that flesh wound? And you know it can be a very big deal. In fact, let's go out hadn't planned on doing this, but let's go out and do that. So if you go to money, chimp dot com, let's say you're starting because in trading a smaller account We start with $20,000 at the beginning of the year. And for those of you who were in trading a smaller account on Friday, Um I'm going to apologize up front . But let's say that you know, like this year the market is depending on which index, you're looking at down somewhere between five and 15% So let's say that this year you end up Losing 10. And that that happens two years in a row. Okay, screen. Sorry. Uh there we go.

Okay so I fixed the screen. Okay So let's say this happens two years in a row that we don't end up making money. We end up losing money and we end up losing 10% So we take our 20,000. And we end up at 16,360.

Okay So do you see that on the chart here? Here's our future value. So if we had $20,000 And we lost 10% 2 years in a row. Now remember great recession. We weren't down 20% The average person was down 40. So if you wanted to make this even more impactful, let's not go all the way to 40. Let's say that over

three years were down 10% each year for three years. So now we're at 14,709. Now let's say okay, now I'm 25 years old. I'm

not. I know shocking. Um but now , if we use 40 years to grow the next 40 years we're going to get what the S and P 500 has done on average, including recessions. Okay? Um it has averaged about a 10% return. Now I'm not talking bonds and everything else. I'm talking just the S and this is the S and P 500. So If we take that 14,790. That we have left

14 7 97, and we didn't blow up our account. We didn't end up with like 5000, but we're down 10% 3 years in a row, we'd end up with almost 600,000. And you may be saying, Wow. And you know

what? This is $600,000. And you know 4 22 and we didn't even add anything more to it. We just let it grow over time. So this is the power of compounding right? Like this is this is pretty staggering Like to me. This

stuff blows my hair back. I think it's pretty exciting, but let's say that we were able to use options with our $20,000. And we ended up not losing money at all. It's like, okay, so let's say we just had our $20,000. And it got to grow for

40 years at 10% instead of taking that flesh wound. For the first three years. How much would we have? Then We've gone from so 589,000. We'd have a

million and 74. And milk almost double not quite double. But almost double. Now in our trading, a smaller account class the last two years. It's grown

by Like 40 50. The year today while we got really hit the beginning of this week, but I think it's still up, 20% say. So let's say we could have three years right at the beginning where we're really active and let's say it's not a 40% return , but let's say we get a 30% return. Rated the beginning with

R $20,000. So now we've got 6 48,050. Is it possible? Well, we've just shown as possible because the last two years we've been up 40% a year. For 50. By the end of the year. So to say, 30% is we've seen us do better than that. So now you know our

20,000 and three years has grown to 6 48,050. Now and in real life, You know, like at the beginning of each year, I take that account. It went from 20,000. You know to 30,000. And

then I put it back to 20,000. So I you know, I go back to kind of zero or the beginning it each time. But now if I take that 6 48,050. 48 6 50 For the next 37 years, it just it grows at the S and P 500, you know, rate over time of 10. Now you've got a

million nine. Have I interested ? You in paying attention to the power of not inflicting a flesh wound by, you know, not being interested in learning all you can You know, like you've gone from 589,000, potentially to almost two million. And I encourage you. You know, this is a free resource out on the platform money. Chimp calculator

.com. I'll put this into the chat. Post it on Twitter later today, also. Um but, yeah, I encourage you to play play with that. Yeah and you can. There's lots of other things we can do.

But anyway bachelor regular programming, So when I looked at that, and then I thought, Wow. You know, I've got time I want to grow my account. I wanted develop a skill set. That I can then share with my kids. Oh, you

know what I did when I need to do To be able to continue to type on this. I'm going to have to Bring it out to here. So I apologize that this doesn't look as tidy. But then I can type. So

I have a goal and maybe your goal is to beat the market. You know, or maybe your goal is, um you know, to grow by five or 10% a year. Maybe your goal is income and is to generate an extra 500 or $1000 a month. You know that that but you have to figure out what you want from this And so that's important. Okay so the second one second one is. Um Yeah, I have a plan. So now what's your plan? And specifically like Are you interested in credit spreads? I'm just making stuff up here, You know. Do you want to look at

credit spreads? Are you interested in you know long options. You know. So what strategy? Um are you going to try and focus on first to help you achieve that? And then further on that, like, then where are you going to find the time? And I'm really big on scheduling. Like I get up at a certain time in the morning. I You know, I have a couple of hours of things I like to exercise in the morning and do things And so if you have a full time job like, you know, I had a business that I was self employed. When was I going to

figure this stuff out, so I blocked time in my schedule to dedicate to attending classes like this and then to practicing And I took it seriously. Because I wanted to be able to generate serious, consistent returns. I wanted to treat this like a business and so I blocked it and that is part of your plan. Right, Um You know is time. Is you know, when are you going to have the time to do you know the classes to trade? You know, you've got to schedule it. So this is your mother speaking. Ah

Okay, So I'm gonna take that out. Now that I put it in But yeah, What's your plan? Um three. Planned for loss. Now, why would I say something crazy like that? Because I can guarantee you if you do any amount of investing on your own or trading on a regular basis, you are going to have trades that are not profitable. This is

also called position sizing. Sog called the sleep at night factor , which, um, I first heard from Scott Thompson. And so if you say Okay, I'm cool with risking $500 on a tray. And you go. Okay Try $500 like I I'd be okay with that. And then if you look at it, and you say I could still sleep at night. Well, okay. What if you had five trades and row? That we're losers. Now you're

talking 2500. Are you still okay with that? If you're not, then that $500 is too high. And if we come and look at What we did yesterday. And just let me come

back to my screen here. And bring this over. Just for point of reference. And you know what? I think This is one of the first times this has happened or scratch pad. We kind of looked at. We had three trades that

went south. That were not profitable. Um and then we ended up with four trades where we got out with a profit and it ended up being a bit of a net gain. Um

but you know, it could have been a net loss. And so this is it's important that we have a number that we're comfortable with. And were these trade successful. I would say every one of these trades was was successful if you define success. As a trade where you had a trading plan where you followed a set of rules where you got in at a point like if we went back and looked at each of these trades, we would still say yes, it totally made sense. Why we got into at sea when we did in the type of trade that we did? Yes it did make sense. You

know the trade that we did on Apple. And you know that one was a little bittersweet because it was a bearish trade and we got stopped out because it rallied for a couple of days. Um and then it went right down where we were. We were expecting it to go. And you know what? But it

was a small loss. It was a $75 loss. So was it successful in that it made sense when we went back and looked at it, what we did and why we did it and how we did it, And then we followed our rules. So that are you know, when we did get out of the trade, we got out with a small wound, not something that was going to blow up our account. Okay? So you know, this is this is important. And tracking. Our

results is important also so but planned for law, so position size appropriately And, um, you know, I'm an annoyingly optimistic person if you know me, but what I know for sure. Is that there are going to be some trades that are not going to go in our favor. And I'm okay with that, because that's just part of Vicious part of the drill. It's like if you're going back to the gym and trying to get back in shape, they're going to be days where you wake up. And you, you you found some new muscles. Okay Yes. When? Actually If we go back to yesterday, we posted, you know, we kind of typed out a trading plan. You want me to post the

rules on on Twitter? I could do that. Okay That's a good idea. Okay, so rules. Okay. Next thing is rules. Um So what do I mean by rules? Well, what I mean by rules is, you know, um, have a have a trading plan. Okay for

have a recipe. And you know that I remember the very first event that I went to with Tdameritrade , the presenter who I just still think is a wonderful, wonderful guy, he said. You know, my wife called one day and she was shopping and we're having people over for dinner. And she said, I'm not gonna make it back. You

have to start this dessert and he said me started dessert like I've never made a dessert in my life. And she said there's a recipe on the counter. Just follow the recipe. Now if the

recipe was to bake a cake, and he's kind of flustered and he's you know, in a Russian, he's going okay, well, baking soda and baking powder. I'm not quite sure where she keeps them, but it really doesn't matter because it's only like half a teaspoon to a teaspoon of each, and then the cake comes out flat. And you're wondering why it didn't work. Well, he didn't put all the ingredients in And even though it may have seemed like a little thing, a little thing can make all the difference between success and failure, both in baking and in trading And, yes, there is a different trading plan for each type of strategy. And so I would say one know your rules. So yesterday we posted a

trading plan for you know an example of a trading plan for a long call. Um using a short term goal called 18, which is averaged two range. So in other words of Apple in an average day moves about $5. We said Okay, if

the stock moves up, $5 get us out or if it moves down, $5 get us out, and we bought a call, and we had both a target in an exit so each, um there's a trading plan for each one. And then I would say one. And then follow your plan. Have the self discipline to follow your plan. And then no when you may want to bend the rules a little. And what do I mean by that? Well in yesterday's long options class, and you know what? I'll post a link to that class if you weren't there. Um. But what we

talked about we had a trade on Starbucks. And it was a bearish trade and we were very, very close to our target. But Starbucks yesterday was starting to rally. So let's just come and look at Starbucks. In our target was 76 55 now had we waited, Um it would have come and hit our target because if we can see today that it hit a low of 76 11 and our target was 76 55. But yesterday it came down and then it started to rally and we had a nice profit. And we said do we

want to risk giving up the profit? We have for it to come down and yesterday it had come down to within, like 20 cents of our target, and sometimes something will get like this so close to your target, and then it won't quite go all the way. And so we made a decision. So you know today are we going to beat ourselves up because we could have waited another day and got out and maybe had a bigger profit than what we ended up taking. No. We made the best

decision that we could with the information that we had. And you know, I like to run a democratic class, so it's like how many people want to stay. How many people want to go and a lot of people on both Autodesk and Starbucks were saying, Yeah, Ring the bell. Take the take the

game, the bird in the hand and we did And when we look back on this decision and do a postmortem, would we look at that and say no. We were making a poor decision there. No We made the best decision that we could with the information that we had, and you know, and so for the next time, you might say the market seems to be pulling back and all these other things are happening. Maybe I should wait. Um but you know, you look back only long enough to review your decision, and then you move forward. Okay? But the idea is, But what in in bending the plan ? It was we decided. We decided

that we were going to not wait for it to fall that last 20 cents in the event that maybe it rallied and didn't hit that target, and we decided to take our profit. That's what I meant about know when to kind of bend your rules. Okay? Okay so next one is about emotions. And you know, um, it's really easy for me to say, you know, don't be emotional. It's like this is my money. I get it. I get it. But here are some four letter words in the world in the world of trading. You know what we call

for a letter words. Hope is one of them, you know? And you know, I say, Don't be smoking the Hopi. I'm like, Don't start trading on hope Like so you you bought 100 shares of a stock and the stock starts down trending and you say, you know what? It's a good company. I know it's a good company. I'm hoping it'll go back up. I'm just going to

wait. Yeah, no. No or Yes, I got a nice profit, but it could go up higher that foam. Oh, that fear of missing out. Right? Um. Yeah And then there's I mean the old favorite. Okay let me just see if I can add that here. Fear part of foam. Oh, And fear can

keep people on the sidelines. So they see a great opportunity. They know how to take the trade, but they don't place the trade because they start second guessing themselves and that the little voices in in your head start having an argument. And so what do you do? You do nothing. You wait. You know, and sometimes waiting in patients can be a very good thing. But

sometimes waiting is just the result of fear. And it puts you into, you know, analysis paralysis. And so you know, Fear , you know, can lead to what I call analysis. Paralysis Whereas , like, okay, you're just gonna study some more. And you know,

I've met people that have been locked in the bathroom for a decade practicing And have yet to place a trade in a live account. And it's not that you want to do that before you're ready. But at some point like for me, I took a very small position size and said, I just I have to make it real. And I did

something very small, very risk defined, and then I did it again. And then I did it again. And then I did it again. But I started in paperMoney. But I treated it it. It's seriously and then, of course, there's you know, the other favorite greed. You know where we don't We aren't happy with a base hit with a small wind. We want the

like, bases loaded, knock it out of the park Grand Slam. There aren't many grand slams in life or necessarily in trading. So you know, this is where, um, This is where having rules and having guidelines it it prevents you from going down this emotional Sinkhole. And you know, and have there been a lot of sinkholes. Well let me just show you a couple of examples showing prices of percentage. I'm going to come to year to date. So year. Today Starbucks

is down over 30% from where it is right now, 34. How about Tesla? You know tons of Stuff on Tesla Year to date down 24. How about Adobe? So if you owned these stocks Um. I mean, it kind of breaks your heart, you know, Because I'm that you know the cheerleader, right? I'd like to see everybody do Well, you know, Adobe down 28. And so But if you

have a set of rules and for that you can go Connie Hill teaches are getting started with, um, stock investing on Fridays. And I think noon Eastern, Um, and you might want to check that out . But if you have a simple set of rules that says, you know, like if we looked at this over the last year, maybe you brought it here and it was going up nicely. And then you said, you know what if it Goes more than 3% below this 30 day moving average, typically not a good sign. So if you had bought here and got out here, you would have had a nice gain. And then maybe you got out here. Maybe love this company. You got back in

again. It comes up. Maybe you got out about here. So maybe you made a little bit or broke about even. And then if you're saying you know what I still love Adobe. But now you're you no longer want to own shares of Adobe, Necessarily. Not at this time. You'll say, you know what?

When it stops falling all look at it again. You know, and but could we be making money by trading options on Adobe as it's falling? Yes, we could. In fact , that was one of my three example trades. Um, potential that we were going to look at today. Okay so I've got a couple

of others to get through. I'm hoping that you guys are finding this helpful because I sure did. You know, and I've had this conversation with a lot of people over the years that it's not that you don't love Adobe or if we want to stick with the A's. You don't love Apple. You know, And this is a one year chart. You know, maybe you bought it here and you know it went up to 1 82. And then you

did that simple. He goes 3% below here. I'm gonna cheer it on from the sidelines. You know

, And right now there's a lot of up and down. Okay, so But that's having this is part of that rule thing. Yeah That's part of the rule thing, okay? Here's the most important This was the one like I needed to circle this one. Um. Don't try and master 10 different strategies at once. Pick 1 to 2 strategies, not 10. You know, because I'm thinking like I'm a pretty smart person.

You know, I did the course I went to a class like this. Um And then I thought, Well, I should be able to figure this out, so I joined a webcast like you're watching now, and there's one on long options, and there was one just on options in general. And so you know he might do. It was taught by a you know, a former coach. Um and you know, it was kind of one of those things where I'm trying to do whatever strategy he was trading I'm trying to mimic in paperMoney. Um and yeah, that did not work out so well, my friends. I don't care how smart

you are like, what do they say? Who is she? He or she who wants to be master of all ends up being master of none. So once you get to the point, and what I used to say was like it. Let's say you pick, um, long options or you pick credit spreads. Whatever it is. I should be able to go to Louis house. Wake him up out of a dead sleep in the middle of the night and say, What are your rules when you trade credit spreads? You know, When do you get in? When do you get out? What is your position size? You know what are all of your What's your recipe? What is your trading plan? And I mean it caught, you said in the beginning, I created like a literal checklist. I got these.

Well here's my Here's my Today's class, but I would have a checklist for every trading strategy. And I would go through and go. Okay If I want to do a short put vertical. It is the market of trending is that sector up Trending is the stock up trending. Um you know, where is support because I want to put my strikes below support. And if I'm kind of speaking another language right now, Don't worry about it over the coming weeks.

Um and then I got to the point where I could be going out to meet a friend for lunch. And I could know that I wanted to place a short put vertical on an index or whatever, and I treat tended to do the same type of trade again and again, and I could do it and just boom, boom, boom, Boom! Boom! I knew it! I knew it like I knew it like I knew it. But don't pick try and do that with 10 different strategies at once. Your mind may explode. You know, so you

know, and as your account grows or as the market changes, so right now, we maybe focus more on bearish strategies. You know , because and more short term strategies because there's so much volatility in the market. We aren't Maybe we aren't as confident in treating longer term. And that's okay. We can make money doing short term trades. When were particularly in the world of options that something that's that's a possibility for us and then you know, practice and I usually put this in two or three times practice practice practice. You

know, like, and I like to say you could no more learn how to swim by watching me do laps. Then you can learn how to trade by watching a webcast. You can get lots of great ideas. But if you are not practicing my friends, you've got to get in the pool and get wet. And there may be days that it's a little messy, and you may feel like drowning. But you know what? Put your wings on position size appropriately have a trading plan. Um and those things will

help save you. And it's by practicing quite often that we figure out what we don't know. Right? Okay And then my last one and cheese. I want room for that

. Let me see if I can move this whole thing up a bit. Base hits can be a beautiful thing. Which is small winds. Um can be a beautiful thing you know, so yesterday, you know, we got out of two positions. You know where

it was it a big game. No. Was it a modest gain? Yes but it was a game. It was a profitable trade . And we decided that rather than waiting, you know, maybe we earned a I think one of them. It

was about a 40% return. And the other one it was, you know, a 30 some percent return, but we'd only been in those trades a short time a week or two weeks. Um And so, you know this, but base hits can be a beautiful thing. You know, a win is a win, And when we go back to our account, I almost hate to look today. We're at 24,000. At one point I think we were at about 26,000. So we've given 2000 back, which is 10% of our account value, but we're still up. We started at 20,000 at the

beginning of the year. And so we're still up 20% year to date where you know when we look at the S and P as we did, or or the NASDAQ. You know, if we look at our NASDAQ year, today, we're down. What 15. 20% year today that's official recession territory on that index when we look at the S and P 500 were down, 12 almost 12. So we're

certainly outperforming the market. And how have we done that? Have we had a lot of losing trades? Will these cops Cvx and Apple were all in that account? Unfortunately etc. Which was the big win was in our larger account. Um but we definitely had losses, but we've had a lot of base hits that were winners. Okay And that makes all the difference so Base hits can be a beautiful thing. And I

will, um Post this on whoops. When we come back here, I will post this. I'll create a document and I will post this on Twitter. But you know, these are the eight things that I wish that I had known it and embraced in the beginning. So I do like

to do a trade at the, um in every class. So next week, we go back to the beginning and the basics. But if we said okay, we were looking at our friend Adobe. And you know, we could have looked at zoom the same way because zoom is down trending or we could have looked at Octa.

You know a lot of these look pretty similar, Don't they? Just a nice, steady downtrend And you might say nice. What's nice about it? Well if we want to trade bearish, Lee You know, it can be a nice thing. Um a, you know, And so let's actually look at zoom. They're all it's interesting because they're all starting to kind of rebound event. So if we use Adobe as our example, because we don't have much time when we buy a put what does it mean for those of you that are new. Well, if we buy a

put It gives us the right. To sell the stock at the strike that we bought at any time between now and expiration. So how does that work? Well, let's say we buy this Put At $400 we buy and you know this is a pretty expensive stock, so we buy a put it 400. That's our strike, and let's say Adobe continues to fall. And let's say

we pay $15 for this Put How much could we lose? We could lose. And if the multiplier is 100, we could lose $1500. So you know that's not chump change. That's what we're risking. But let's say Adobe falls to 3 50. And

this isn't a prediction. Let's just just making something up here. But if it were to fall to 3 50 you know it would. What

would this option be worth? Well I have the right to sell the shares at 400. So this option has got to be worth at least 50 bucks. Right So, in this case, like this is where your eyes get big and you're going like Wow. Like I am a pretty happy camper here because I just tripled my money. But if it goes up. Who's gonna want to buy a put for 400. You know, like if you have the right to sell your stock at 400 if it's trading at 4 20 Um the answer is not many people unless they think it's gonna go down again. But if it expiration,

it's trading above 400. This will end up being worth zero. Now depending on how much time you have to expiration. There could be some time value in it, but that's how buying a put works. Okay so we're just going to go in and just buy a put Trying to put it in this account. And on Adobe. If we

come out, and we say we want some time, if we come out to June, I was wrong Now if I come out to may, we've only got 4 24 days to exploration. It's about 1700 for that $400 put. Are there other people doing the same thing? While there are 151 puts that were bought and sold today over 3000 on the books.

And if we were doing this as a very short term trade we could go with May We think it may take a little longer or if we were doing this as a trend trade? We might want to come out to June and you can see this same Option just with more time and time has value. You're paying for a lot of time here, so this would be 25 90. Um you know another almost $800. So we're going to do this one and it's just to show you how you could buy a put . We're not going to put targets on it. We'll save that for next week. Really? The purpose of today's class. Was to go over

those eight things that I wish I had known, but that's the mechanics of how to buy a put And so. This is our page. We're going to come down here and put this into our long puts. And this is a bearish strategy. Why Because we make money if the stock goes down in value. We lose money. If it goes up, and

it's directional. It has to go down in value in order for us to end up making money on this on this trade. Okay so there's a couple of things one. Um if you're new to think or swim, you can get a guided tour from your own home with a specialist on thinker swim simply by booking an appointment, and I don't know if Michael has posted the link to that. If he can find it and

post it. That would be great. If not if you go to the archive on this and look at the comments, there will be a link for how to take advantage of that. It is free my friends, you can do it once every six months. I would highly recommend it. Um The second thing is that there has been a survey posted in the chat . And so here's my Ask for you, Um these classes are designed to help you achieve what you want with your trading. So if you will click on that link, there's three quick questions. It's like

feeling like between a one which, like Holy cow, but she ever horrible. I'll never go to one of her things again to 10. It was the bomb dot com and I loved it. Um and everything in between. But there are comments . So if you let me know what you'd like to see what you'd like to see more of what you'd like to see less of what you really liked what you didn't like, Then I promise you every comment you will put in. I read the management team reads, and it will help us craft and even stronger. Um next series for you

. So that's that If you enjoyed this hit the like button, it lets other people know that you thought this content was valuable if you're new, and you want to link arms with us next week, we start a new session. Um you can turn on your notifications and get a reminder of when this class is coming on board. So that's it. I am over my time, so I do apologize for that. But know that everything that we do in this class is for education and informational purposes. Only none of it is to be construed as investment advice know that all investing involves risks, including the risk of loss Gotta fly. Thanks

2022-04-28 06:46

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