Active Trading Strategies | Pat Mullaly | 4-27-21 | Trading Stock and Options Post Earnings
so it's earnings they're shock events sometimes it hits stocks we own sometimes it hits stocks that we wish we had owned stick around [Music] good morning good evening good afternoon everyone on the big blue marble uh that we are on that we call earth my name is pat maloney this is active trading strategies uh and for anybody that's new this is typically more of a short term style active trading now there are i want to say hello to everybody in the chats get that out of the way right off the bat hello to alfred and john galt is in the room as well as whoops almost messed some things up there uh john galt's in the room woodsman wayne uh alfred terrance jb is cut is on the chats everybody knows jb uh sitting in for barb today um so edie or e day uh and christina and jason chesapeake uh mike mccarvel ricardo franco miguel all right so uh it is earning season earnings affect stocks we own earnings affect uh stocks that we don't own and we and so how do we deal with all this that's what we're going to talk about today one thing i want to make sure that you understand there are some new people in welcome welcome welcome this is not necessarily an uh totally an options class i'll show you how we're in technical analysis more technical analysis active trading strategy although we will look at options today and use that for a couple of things let's figure out what we're using it for but first remember everything we're doing here for educational purposes only not for recommendations options are not suitable for all investors there are risk inherent to options trading remember that we are going to use actual symbols that does not mean we're looking to make as td ameritrade to make any kind of recommendation about the suitability of the security or strategy because remember any investment decision you make in your self-directed account is solely your responsibility past performance of any security does not guarantee future returns any stop loss or stop uh loss orders i should say not guaranteed to fill at that activation price all investing involves risk including the risk of loss zero commissions on u.s exchanges to stock etfs and option trades options do carry a 65 cent per options contract fee all right delta gamma vega theta price time and volatility how we determine strategy how we determine our directional risk in the market oftentimes but not so much here today so today the agenda trading after earnings considerations today are going to be priced we're going to look at volume we're going to look price relative or relative strength we're going to look at rsi and we're going to look at some trade examples re-entry examples trades that we got out of short-term trades we got out of last week that we may want to figure out a way to re-enter or at least keep ourselves abreast of what might be happening in that management uh techniques on trades that we own that may have gotten hit by uh earnings and then some new trades so let's get out there and uh get rolling uh boom so uh first i want to uh for anybody new obviously you found how to get here that's oftentimes found up here in the education tab and in that education tab uh i forgot to pull up my uh drawing tool in the education tab we have webcast in those webcasts if you click on webcast you will receive in your screen a screen that looks like this now i bring this up because of the comment in the early on before the before the webcast about wanting to learn about options tomorrow tomorrow at 2 eastern time i'm going to be doing technically speaking technical analysis and options uh so that'll be more options oriented today we're still going to talk about options we're also going to talk about stocks and that's in this active trading strategies and then on friday of course the advanced charting techniques a lot of what i do is going to be more intermediate and advanced similar to james boyd if you want to get more on options and you can pop up here where it says uh instructor and then click on dear old james boyd and you'll find callers and synthetics more intermediate and advanced stuff on options so james is going to do a lot about options as well so hopefully that was helpful for those people that are new and anybody in the archives welcome uh the archives are still down there they're doing some uh maintenance moving some things around so those should be back up uh and and you'll be able to see the recordings uh hopefully tomorrow i think it's tomorrow so we'll keep our fingers crossed on that now let's get going perceptions of beliefs and options of the market uh the market's really kind of flat right now and the last two days really struggling to go nowhere today we are uh seeing that there is as much buying as there is selling today on a flat day where the market's not moving any any which way the uh advancer or mcclellan oscillator is slipping back the mcclellan oscillator keeps crossing back above zero but is struggling to get back above our or our goal our really uh bullish goal point at 150. okay well i want to spend a lot of time on that because we've got a lot to do let's look at federal express federal express did not have earnings fertile express is uh is a uh what we oftentimes see with earnings and that is it's moving in sympathy with another company very similar and that's ups ups had earnings last night you can see it's a strong a strong push to the upside so when we think about the the price volume relative strength uh price relative compared to the market and rsi you know which one do we really want to choose out of those two if we wanted to if we if we wanted either one of them a lot of people look at these and they say oh my gosh i've missed it right not necessarily sometimes stocks gap and they run today ups gapped and it ran to the upside pulling back slightly so let's kind of walk through this and just make a decision based on do we want federal express who had earnings uh last week that's been in this intermediate term uptrend but sitting at its midpoint on uh at the midpoint of this upward channel above its 20 period exponential moving average above its 50 moving uh day moving average uh volume today very strong but you can see based on my uh by volume indicator there's a lot of uh selling going on so far and that's you can see that's indicative of that pullback today uh relative strength over the course of the intermediate term is up rsi momentum is still high you can see where momentum bounced right up uh rsi bounced right up off of its 50 level that's this blue dash line in there every time the r uh price gets to a support and rsi gets into that 50 level oftentimes we see a bounce it's when we don't see that bounce and it reverses the other way that gives us some major clues so if we look at ups now and i'm going to actually uh put this out on a nine month chart and get a little bit better information so this is a a kind almost a quandary for some folks because ups has been in this long term sideways moving average and this one we're probably going to use some options uh to put us into this trade or at least keep uh make us stay aware of this trade you know after a big move because a lot of people are frightened after a big move will it keep going will it pull back how often time how how often do we see stocks gap and then pull back well that's a possibility right and then they find some floor and then they start to bounce and head higher again so when we look at this long-term kind of what we might call a saucer pattern if i put this on a weekly through your weekly chart it's really a kind of a flat base without a handle we can look at it on that nine-month daily chart and some people might look at this as a as a sort of a handle it's not really from a textbook a standpoint a a true handle just doesn't have enough time but hey it's breaking out and that's all we really care about instead of getting all caught up in in in certain things but we still want to recognize that the whole pattern here is a breakout after consolidation the question is do we have accumulation and it certainly looks like that's the case uh today when we look at the volume down here volume is very strong on a very large gap that's some pent-up demand some pent-up energy that we saw come across here but it is a big volume move whenever we see big volume moves and we see big price action oftentimes that gets kind of wrung out we see you know they grab that they grab that sponge and they ring everything out everybody's in the short sellers are out the buyers are in and it may float a little bit higher so we want to take some advantage of this move versus federal express and it's okay here federal express certainly already in an uptrend but uh you know maybe hitting some resistance and maybe we need to wait a little bit on federal express so we're going to stick with ups so this will be a new trade remember in our exam or our agenda price we're going to look at new trades as well as re-entry management but price volume relative strength so on and so forth so let's go through the motions because we have to have some kind of prioritized uh you know method and and when we talk about uh buying in technical analysis we want some things in our favor we want stuff that's outperforming the market and we can see that it's starting to break out on price so price first price strong volume strong we'll see how it ends the end of the day that's why we're going to use a certain kind of option uh to uh to maybe give us a little bit more room but and still allow us to maybe bring in a little bit of profit but we do have momentum rsi really breaking out again into the oversold area the beauty the interesting thing that you need to understand about rsi and price is when price breaks out of a consolidation and rsi gets in the overbought area that may be a sign of continued or of a new trend so what we're going to do and you can do whatever you wish we're going to come over here to the trade tab and we're going to put in u p s and pop this in what we want to do is we want to consider the the price move today now if you're just certain 100 certain it's going to run like a banshee you could go out there and you could buy a long longer term call you could just get into a straight call option there's still probably some extra implied volatility pumped into these options so why don't we do this first let's do kind of a think about maybe a double bullish type of of a situation you could go out there and you could say well i want to buy a hundred shares of ups but i don't want to buy it where it is now i want to buy it when it falls right i want to buy it if it falls back down below this uh this today's low which should be in some sort of an indication of support oftentimes the top of gaps and the bottom of gaps gives some uh some kind of a support level as a matter of fact let's take this one out look at that three year weekly chart let's look at a five year a 20 year weekly chart these are all time highs after a really long consolidation so you can see now there's a couple of things we could do here depending on what you want to do in the short term and in the longer term this ups really sat sideways for a long time uh and then it sat sideways again after a rally and now it's breaking out again so this appears to be an accumulation area this is the important thing here so if you're really thinking long term uh but you want to give it a little bit of birth but you don't want to buy you don't want to put a limit order in because if we put a limit order in below this today's low here it may not get filled which might be okay you know for some people but what we're going to do is we're going to just be just because of the size of the move the size of the volume we still have a lot of market left in today's a lot of time left in today's market so let's go in here i'm going to click on this may 28th excuse me may 21st may 21st 24 days till expiration this is the standard uh standard uh expiration it's not a weekly and we're just going to take a look at the puts if we take a look at the puts the reason why why we're looking at puts is when we're not doing a speculative it's going to drop like a stone we're going to we're going to put a play in place uh a option in place where if it does drop we can buy the stock at a lower price so a cash secured put you're going to you're going to have to be able to buy a hundred shares of two dollar 192.16 uh or so wherever you
put your your uh strike price but the point is is that we can put a limit order in and price may not get there or we can put in or we can go ahead and sell a put bring in some uh some uh credit and if price decides to run that credit will shrink and then we can make some other decisions about either buying the stock buying the call down down the road you can also do a short call spread but we're going to kind of err on the on the fact that we have such large volume today and it looks like it's going to be as much volume as we've seen in a year and it may decide to drift sideways because of the gap size of the gap up 10 almost 11 percent more than that earlier in the day so we're going to sell a put spread or not a put spread we're just going to sell a put i keep clicking back here let's look at today's low today's low is 189.71 and you can see that in the right over here in the open high low close if you can move your cursor around if you're new that's where you find that stuff so today's low is 189.71 we'll come back over here to the trade tab and hey you know we can buy it right at today's low a lot of people wait a few days to see if it can pull back to that low before they buy stock that might be where we see uh some support coming in if we see that support coming in great if you want to get a little bit further away you might buy a 26 delta option meaning the probability of it being in the money on expiration it would be only 20 by a penny would only be 26 percent in theory it's a proxy it's not perfectly mathematical mathematically correct but so that that depends on what you want to do remember to get put this stock it has to be at these strike prices on expiration it doesn't mean people can't put it to you before that can happen so what we'll do is we'll look at selling the uh 265 put at the 190 strike which is just right at near today's low and then we'll look to possibly buy that stock or or reassess it when when the right time comes the purpose of this oftentimes is how many times have you or anybody you've known said oh i'm going to watch this because when it pulls back i'm going to buy it right and you don't put a limit order in you don't do anything and then you forget about it and then it runs right so we want to keep our we want to keep our eye on it we want to also be able to take a credit in if the if price pulls back or if price runs and if it does pull back and we end up buying the stock we also have a credit to add to that position so in effect we have a stock for a certain price with a credit and when we put that all together there's a lower uh we we have a better chance of making a profit so here you go let's go ahead and send that off remember there is credits or excuse me uh commissions of 65 cents per contract here we're only going to do one and we're going to send that off okay so that is one way to use options that is one way to use options on earnings when we get a big gap on earnings that is also a way that we want to compare two stocks in the same industry in the same industry group that do the same thing and try to pick one that may have more upside momentum so remember relative strength is strong we're breaking out on price and we have rsi showing us strong momentum now here's one is what we're going to look at for reentry this is a short term trade we made a couple weeks ago and we took profits on it now it has gapped up this is pulte homes if you want to re-enter this one you've got a couple of choices you can sell a put just like we did but you want to survey the situation first so let's go out to a five-year weekly chart and see where we are so last year's sell-off you can see here similar to what we saw with a united parcel ups but it's gapped up today it says following a rally and following a consolidation area over in here so we may decide to go ahead and do something similar to what we just did selling a put there's nothing wrong with selling a put if you think it's really going to run we want to take into account a few things this gap did not have this is pretty interesting if we look at this volume today because of the pullback of course early in the day that's going to register a lot of a lot of downside volume meaning that the trades that went off were on the downtick more down tick trades than uptick trades so that's showing a bit of a selling bias as we can see in price strong gap but not really a ton of volume it's going to exceed the 50 period moving average of volume and we have this uptrend in relative strength and we have let me pull this up the rsi continuing to look at a possible breakout in here so where we saw the the the plane leave the tarmac was right here we had some get big volume it broke out here and then it consolidated just for a few weeks and now it's trying to break to the upside again so we're going to do you know again something similar we're going to go ahead and sell a cash secured put on this one again remember tomorrow is going to be more about options but for re-entry not chasing because it's up pretty strong today it's up another four percent after a pretty big rally after it's already run a little bit we might want to wait for a bit of a pullback the first flags that we see after a breakout oftentimes might be the more it might be more advantageous for those in other words they have maybe a higher probability of moving back to the upside this is what we're worried about is too much of a pullback but let's see if we can even get anything for selling these options this stock is a 57 stock so options on phm polti homes may not garner enough gain for our for our risk so let's take a look at the bid ask spreads and look at where the stock is trading so the stock's trading right now at 57.
uh we have a low for the day of 56.36 so we can get below that low and still get paid fairly well so a dollar twenty uh we can sell this for a dollar twenty at the 56 dollar strike how many people it depends on the people the people how many of you want to own a stock that's just pulling back now you can go down here and say well i'd rather buy at this old support well it may make it there let's take a look at that that looks that old support is 55 let's see if that seems worth it at 55. 85 cents on a dollar wide or excuse me 85 cents on a 57 stock yeah maybe you know that might be palatable enough but we're gonna go ahead and sell the uh 35 delta and look to re in our yeah look to re-enter uh this put so we're going to sell that 35 delta put remember there's x uh fees that go along with this being willing to start off with a hundred shares if you can't afford 100 shares of 55 stock uh then don't do that and we'll send this off i say 55 stock uh or excuse me a 56 dollar stock because this is where you're on the hook oh i clicked on the wrong one you're on the hook to buy this at 55.55 for a buck so that's 100 shares at 55 dollars or 5 500 there's other ways to get around that we'll talk about that maybe tomorrow so uh let's see if that fills let's move on here is one that is a management trade this is one we own this is one we put on a few weeks ago uh the same time we put on the pulte homes the short term trade we put this on for more of a trend trade very similar in structure we had the when we moved into this one we bought 125 shares right here strong volume there were some other indications in here you can see the relative strength on the breakout relative strength index was strong and we can see that this is outperforming the market if you want to outperform the market buy things that outperform the market here is uh here's the issue it's breaking down we have a 20 period exponential moving average here a 20 period exponential moving average we own 125 shares it's we're looking at this to be a trend trade now some people will say on the trend trade you need to be able to risk what you've made to see if it can go higher right well we have a 50 period moving average down here which it may we just got filled on our option there a 50 period moving average down in here uh which may be in uh you know a place that it may bounce let's take this and move this out to a three-year daily chart through your daily chart and we can see that yeah it really doesn't obey that 50-period moving average so much you're going to find that oftentimes with with stock it does tend to obey the 20 period and exponential moving average until it doesn't an exponential moving average is going to be a little bit better four turns a simple moving average a little bit better sometimes for support in this case when it breaches that 20 period exponential moving average then we have an issue so here what we're going to do is we're going to move our stop up to 3 below today's low and today's low is if we put our cursor right over here today's low right over today's action here uh is 44 24 so we're going to take 44.24 it should be 42 and some change times 0.97 and that excuse me what did they say 4424 times point nine seven three percent below 4291 is going to be our stop so i'm just going to give it a little bit of room because how often have you been dinged out of a trade just to watch it close higher for the day right so we don't just knee-jerk and just sell it we move our stop-loss up get some of that risk off the table and we're going to move this up to 42.91
give it a little bit more room to pull down perhaps and boom and that if we just grab that flag and move it up then that's going to allow us to do that and then we can see here 4290 is going to be replacing the old stop and there you go all right so replacing your stop getting uh getting closer to uh getting uh taking some of that risk off the table you can move it up uh and at the end of the day the other thing i want you to consider on active trading is at the end of the day should price look something like this in other words price moves back up it's back above that 20-period exponential moving average it moves back up do nothing nothing to do we may see this continue to climb we're going to look at some other ones out there that have that have done that right now i want to kind of focus on one that's had earnings recently last week we had earnings on on snap snap was fairly volatile up and down on uh you know on the day after the earnings and then since has pulled back this may be opportunity so what i'm going to do is i'm going to ask you a question what kind of continuation pattern do you see here what kind of continuation pattern do you see here day says hammer time that's right uh terry says what is 97 you calculated from your stop-loss i'm going to answer that question while you peop well everybody decides what kind of pattern they may be seeing here that 97 i should have explained that going a little bit too fast my apologies so when whenever we see a an area get breached a support area or a moving average and you're thinking about exiting it's what a in a trend trade a trend trade a longer term trade what some people may do is they may look at the low of that day and then go three percent below the low of that day so we can just calculate what three percent would be or we can use instead of a hundred percent we can multiply the low of the day times point nine seven or ninety seven percent and that's gonna in this case put us down at forty two dollars okay forty two dollars and ninety one cents that's what that is head and shoulders uh triangle so this is um exactly there is some great stuff in here the head and shoulders uh pattern is also when you move into the right side of the head and shoulders you get a triangle right and so we get the sell-off we get the left shoulder which at that point doesn't look much different than anything else and then we get a rally back up and then we get the head as it drifts down and then it rallies back up and then it falls back down now this is at an area of uh inflection on snap an area of inflection the reason i say that is it's pushing back above the 50-day moving average and above its 50-period simple moving average now that's that's price that's what price is doing and that's what price is doing when we compare it to those particular moving averages remember moving averages are going to lag somewhat that's why we take price first but then we look at the volume and this move today on strong volume the the jump to the upside the hammer to the upside on earnings was pretty strong volume as well pulled back on you know volume pretty strong volume yesterday but it's going to be less than the volume than we that we see today so we're seeing uh a a drift lower and so what i'm doing here is we want to make a case for for being bullish perhaps we see a drift lower as price drifts sideways to down and as price was heading up we saw volume increase and as price starts to break to the upside we're seeing volume or looking like it's breaking to the upside we're seeing volume increase okay so let's take a look at the other issue we have here and that is the head and shoulders formation if you will on relative strength snap has been like many of the big glamour names if you will that were so strong last year have pulled back since since the beginning of february this is found some possibly some accumulation in here and the reason i say that is nobody is willing to sell everybody was stopped selling over in this area in here and it looks like perhaps no one there's nothing's 100 it could be some buying coming in here so when we look at this relative strength we see that same kind of pattern so if this starts to break to the upside we see relative strength move back above there we may be seeing price move above that resistance area when that occurs what you want to look for is price 2 or the rsi which is still from a long-term perspective still in that time uh that that momentum time series momentum that we talk about often uh in our friday class which just means that when we have this kind of momentum and the rsi just does not want to get over uh oversold over over a a year's time then that often says that there could be another six months or so of upside so what we're going to do here is we're going to look to buy just a small amount of stock on this we're going to do this on the uh on the short term and we're just going to put this on to see if it can break above here now you could do this as well by buying a call and having defined risk because this could gap down uh tomorrow for all we know right so we need to decide a couple of things here snaps trading at 61.50 we can come in here and put snap in pop that up if you're going to buy an option you're up against time time is not your friend if you're going to buy stock then stock is not a big issue if you could if you had a uh a 10 000 a dollar limit of how many shares you wanted to buy just a real quick easy position size uh you could look at this and say well i could get in here at 61.45 if it breaks below this uptrend line here say if it breaks down and gets to 57 you may want to exit out so if we get in at 61.50 and exit out at 57 61.5
is our entry and get out at 57 that gives us a 4.50 loss trade loss if we said well i'm willing to own 10 000 uh or or buy 10 000 worth of stock in this it's a very simple calculation of saying ten thousand and we're going to divide that by 6150 and that means we can buy 162 shares going in now on a short-term trade that may be exactly what we want to do if you're uncertain because of the fact that it's not above this risk point here above this resistance area we don't want to buy it resistance where do we want to buy coming off of support and that's what's happening right now it's coming off the support but we don't necessarily want to buy a full amount we might add to that position if it can break out or you can use an option but if you're going to buy an option you're going to buy an option you want to go out in time so we can fend off that time decay and we can come out here and we can look at say an in the money option at at the 60 strike price and pay 600 dollars for it or and have that total just use that as our total risk you could go out of the money and pay 450 for it and have that as our total risk or you could buy half a position right now 80 shares uh and uh with 4.50 loss as your stop just depends this is how you're gonna this is how sometimes uh people figure things out and so that's gonna be a 360 dollar loss okay so now remember stop losses are not certain uh and it what is in theory is certain uh the uh if we only buy one option that we can only lose four hundred and forty dollars if we buy this out of the money option if you buy this in the money option you can your and only buy one in theory you can only lose 655 dollars i say theory because bid ask spreads there's a lot of things that can get in our way and end up with a larger loss so 360 dollar risk at a stop that could double if it gap down or do you want to pay 600 and have a sure loss at the 60 strike uh if if it if it blows through and goes uh goes out worthless that's up to you in this case just for just to keep things different we're going to buy 80 shares of this we're going to come up here going to right click we're going to buy custom with oco bracket nope not oco bracket sorry we're going to add to this position once it gets to a certain area we're going to right click we're going to buy custom with stop remember stops are not guaranteed and we're going to buy just 80 shares remember we could buy 160 shares of this so we're going to buy 80. and i'm going to click on this firecracker thing right here if you click on this it's a great arrow in it learned that from james uh we can click on that firecracker and that should boom make this the same down here so we've got 80 shares buying 80 shares selling of snap we want to buy it we're just going to go ahead and buy it right now but we're going to have a stop that is at 57. 57.0 that gets us below what it gets below gets us below this trend this trend line if it's down there something's wrong right it shouldn't be down there if it's down there and this head and shoulders inverse head and shoulders continuation pattern breaks down this could be a good bullish or bearish trade going forward with the failed pattern so keep those two things in mind going forward so we're just going to buy some stock with this one pop back down here make sure we've got everything in alignment we need these to be we don't need the limit order to be good to cancel we need the day order uh to change for our stop loss till to good till cancel so let's go ahead and click on confirm and send double check double check so we're going to buy now we've got our stop loss stop if this said limit you're going to get taken out right away so we want that to be stopped stop loss at 57 good till cancel and then we will send that off and now we own some snap let's move forward take a look at another one this is one i tweeted about this one uh several weeks ago as the uh as these this is a very interesting thing we have going on right now you know getting back out there into nature polaris uh we look at uh brunswick doing well you look at yeti let's see what yeti is doing you need to have coolers and things so you can see this area is fairly strong right but on first glance today first glance today what's happening this thing sold down when it sold down it gapped down and this is where the psychology of the market comes into play it gapped down below this 20-period exponential moving average now nothing says that it's going to be there at the end of the day but when we think about these gaps to the downside and gaps to the upside and where they are this is in this it broke out it pulled back it rallied up it drifted sideways and then it gapped down this morning gapped down and ran and buyers came in when we look at price action that's going to make you scratch your head right why because that looks like with today's volume action we've got buying volume uptick volume right right here versus yesterday's downtick volume now uh as of uh an hour ago this was on track and it still is to outperform the uh 50-day moving average of the volume which means it'll be it will outperform yesterday's volume i also built a uh a search that says it looks for things that's that will look back in time i'm going to i'll show you this on friday because we're going to talk about exits and things on friday but it's going to look back in time and it's going to say hey are we having at this this period of time in the day are we exceeding the typical volume that we might be looking at over the last 20 days and it so far it is you can see that right now it's looks like it's going to outperform the volume over the last 20 days and we are breaking back above the 20 period exponential moving average so here you could take a you know you could take a stab at buying some shares you could you could uh get leverage by buying a call option if you wish lots of different things to do so let's put a uh trade on with pii and what we'll do here is come over here to the trade tab and make some decisions now for if you're really good at defining direction and defining time and and being really good at it just capturing those those thrusts those up thrust moves then you might buy a short amount of time with options if not buy more time with options the issue with this one is we're out here at 143 days now a lot of people say well wouldn't you buy a shorter term don't get cost itis don't get caustitis unless you're really good at picking swings really good at swing trading and you you can go for that shorter amount of time or if you are going to go for that shorter amount of time get rid of the time decay where is the time decay the most the time decay the most is in the at the money options right the at the money options so if you're going to go short amount of time and you're pretty darn good at picking direction then get rid of some of that time decay by going into the money going a little bit into the money but at that point cost is kicks in again and you're going to have to pay up for those options right so depending on your risk depending on your risk level lots of different things you can do what we're going to do here in the in the interest of time because we are getting down to the wire here is uh we'll look at back to the charts if it breaks below the 50-day moving average which is at 130 362 and we'll go through that three percent calculation again so if price is at 130 if if this moving average right now is at 133 uh and some change we'll just make it 133 for ease of calculation so you understand what's going on uh we start off let's just start off with a hundred if you have a hundred dollar stock a hundred dollar area that you say if it breaks below that one hundred dollars by three percent i want out so how much is three percent of one hundred dollars times three percent is going to equal what three dollars or you'll get out at 97. okay just so happens that turns out to 97. what we're going
to do here is we're going to say we're one out at 3 below 133. so we're going to take that 133 times point nine seven or three percent less than a hundred percent and that's going to give us our area to get out so we're going to say 133 times and always know where your risk is first times point nine seven ninety seven percent and that says 129 exit out at 129 and that means it has a pretty good ways to fall before we know we're wrong and willing to admit we're wrong if you're willing to admit you're wrong you're probably a very good chance you may live to continue to invest so 129 129 dollars we'll buy it right now but how much right well it's not really breaking out it is meeting a lot of our uh the scenarios that we talk about we've got a strong price move today intraday we've got up trending relative strength we've got very strong momentum as you can see here polaris never i mean i shouldn't say never really struggling to get below 50 percent for quite a while so that's showing us um the momentum in this is pretty strong right and so the all those types of things may put you know the probabilities in our favor but again nothing's 100 that's why we say this is where i'm going to say we're wrong okay so uh getting out at 127. so if we have uh a ten thousand dollar amount of money that we're willing to put into this trade and we get it at 144 we're going to divide 10 000 by 144 and that says we can buy 69 shares but since it's just now starting to try to recapture the upside we're going to only buy 40 shares we'll buy a little over half of this trade so what we'll do here and we'll put our stop in at 27 127. i'm going to right click i'm going to come down in here to buy custom with stop put in 40 shares don't be ashamed of only buying 40 shares that's just silly okay it's all about risk management we're just managing the risk and if we get strong upside that small loss that we have in here uh is is that we may take is is going to be over time is going to be hopefully only a risk of one where we make a gain of two hopefully three on average so we're going to come in here we're going to buy this right now with a stop at 127. now if we put the stop in at 127 on this stock we need to have this good till cancel why because if we don't put it good to cancel that stop loss will go away today uh you know what i need to unclick the link here so we're going to buy it 144 that makes more sense right 127 otherwise we're going to be trying to buy it at a place lower than where it is hit enter good till cancel buying it right now 40 shares and we'll hit confirm and send boom we are in and we shall see what occurs down the road billy billy this is one we bought uh last week uh for those on on friday and the friday webcast we bought this one base base very similarly but using different uh different indicators uh but we have that relative strength starting to roll to the upside so again management what do we need to do here we put our we bought let's see here we bought it friday and it's fractionally higher so we really don't want to move our stop loss just yet but it's doing what we imagined it will do anything can happen by the end of the day or tomorrow but what do we see here we see stronger relative strength we see stronger rsi volume of the days leaving some to be desired we'll see what happens at the end of the day but when we put this on we had strong volume we had increasing relative strength we had increasing rsi and now we have uh and we talked about this friday the turn of the 20 period exponential moving average now we're above that 50. the danger here
is that 50 is still moving down so watch this one move your stop loss up uh if you own something like this in uh to you know obviously so you don't give up give up too terribly much all right so what did we do here well we looked at price we looked at volume we looked at relative strength we looked at rsi we had some re-entries we re-entered with a little bit of caution with short puts we manage some trades by raising our after the gap down on earnings raising our uh our stop losses up higher and we put on some new trades again using options and using stock so lots of different things you can do find out what works best for you and that will will help you in the long run coming up next coming up next we have connie hill in technically technically speaking trading stocks and options so for those that are new stick around join connie uh and then michael fairborne later on in the day with long options and then uh cameron with generating income in your portfolio if you like what you saw today give us a smash down below on the on the youtube uh and please please subscribe so you find out find all the good information that we have in all of the webcasts now remember the archives they're being worked on right now we should have those back up and running tomorrow so you can watch all the great recordings from last week as well as any new recordings going forward if you think somebody can benefit from this please be nice share it with them everybody's different if just because you're sharing something you think is really good doesn't doesn't water it down share this with people and i want to thank everybody for being here thanks james for being in there uh in there answering those questions it was a treat to have james in here today we don't get together that much anymo anymore unfortunately but with that everything we're doing here is for educational purposes only and if there's a survey please fill out that survey put those comments in we read those comments we try to get better and help you out with those comments uh you are responsible for the decisions you make in your trades this is educational purposes only i'm pat mclally we'll see you we'll see you tomorrow [Music]