Euro and the Pound | John McnIchol| 10-14-19 | Trading Futures

Euro and the Pound | John McnIchol| 10-14-19 | Trading Futures

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Good. Morning everyone John McNichol here welcome, to another week of Education, here at TD Ameritrade education. And you have joined trading, futures so. Stick around. Once. Again good morning everyone appreciate those you added here live here. Today, as well, as listening to the archived session, john, McNichol with trading. Futures our topic is currency, futures, options, you. Can see my twitter handle on, the screen if you'd like to go ahead and follow me you. Can see it on the screen there, and. Look. At me just one second. Here. Do. Apologize, in advance looks like I do have an issue with, the chat function today so, I may not be able to bring, up any of your questions I'll. See. If I can get that work in while I'm here, but otherwise let's, go ahead and take care of disclosures, and we'll, get right, into it. My. Own presentation, is for education purposes only and not a recommendation or, endorsement, of a particular investment, or investment strategy, past, performance, of any security or strategy, does not guarantee future. Success. Now. In order to demonstrate the functionality platform, we will be used in actual symbols, keeping, in mind TD Ameritrade does not make recommendations. Or determine, the suitability of, any security or strategy for individual, traders any, investment, decision you make in your self-directed account, is solely. Your, responsibility now. While this webcast may discuss technical analysis, other approaches. Include fundamental, analysis, may assert very different views futures. And futures options trading is speculative. And is not suitable for all investors please, read the risk disclosure for. Futures and options that's provided, for you at the bottom of this page and futures. And futures options. Trading services, are provided. By TD Ameritrade. Futures. And Forex LLC, those, trading privileges are, subject, to review and approval not, all clients will qualify. Options. Are not suitable for all investors as, these special risks inherent to options trading may expose investors, and potentially rapid and substantial. Losses carefully. Read the previous body copy of Carrick's, characteristics. And risks, of standardized, options, spread, straddles, and other multi, leg option, strategies, can, entail substantial, transaction, costs, include, multiple commish which, may impact any potential, return also, advanced option strategies often involve greater more complex, risk than single leg option trades and investors, should also consider a contact, and a tax advisor regarding. The tax treatment applicable. To those spreads and other, multi, leg option, transactions. Now. We have a demo account that we're using for our practice, trades looks, like a real account but it is not you have the ability to practice as well with paper money that software, is for educational, purposes and. Successful. Investment of actual, funds at. A later time period, does. Not guarantee success as, market. Conditions change, continuously. And, even. Though we may be reviewing, very different, asset, classes in, futures. That. May differ on some of the movements, in the equities, market that. Asset, allocation, and diversification, does, not eliminate the risks. The risk of experience, in investment. Losses. Alright. Well. There's my background for those you that may be new to us once. Again welcome to trading futures if. Any, of the topics may, be a little above your head there I would certainly encourage you to attend, our getting. Started series Barbara. Armstrong, has a session. Every Tuesday, at. 11. A.m. Eastern Time called, getting started, with futures. And. Give me just one. Moment. Here. Okay. Looks once, again looks like I have an issue with the chat so my, apologies, again if, anyone has any questions unfortunately, won't, be able to answer them since I cannot, see them but.

That's Okay let's, go ahead and get right into our topic. So. What we're going to learn today is some of the characteristics. Of various, currency. Options, we're. Going to discuss the, impact and where, we can find economic. And government reports have on the, dollar euro and the British, Pound will. Go ahead and apply what, we understand. About these, futures, options by applying a defined, risk option, spread while. We are discussing, potential. Entry exit and trade, management techniques and as, always we'll determine appropriate, position. Risk and position, sizing. Now. Here's a kind of an overview, on the comparisons. Between. Trading. Options, on futures futures. Versus, options, on equities, the, main takeaway, here is, you. Know if you're already, have been trading. Options. On equities, it's not a big leap, moving. Over to. Trading. On, futures. Options, as. Futures. Options provide some diversification in, other asset, classes a. Little. More capital, efficiency, as. Far as applying, things based off of a risk based model, versus. Regulation. T on the equities we. Have twenty-four, hours a day six. Days a week on many of these contracts, and options, for. Those of you that. May, have smaller accounts or very active, traders there's no pattern day trading rule however. We do need to understand as we talk that. A settlement. In, an option, may. Result in an underlying. Futures. Contract, and that risk may, be larger. Just like being assigned a stock the risk would be stock ownership in. The case of being assigned in the futures contract it. Would be having. To. Guarantee. The performance, of that bond and maintaining. The margin, required, for, that underlying, future. Now one, can go ahead and close out that future position just as you can and equity. Position. Now. Here's, some of our contract. Specs got. A couple of slides here for, the. Specs for the Euro as well. As for the British Pound these are actually two of the more common. -. The more common. Equity. Or I should say - - the more common, futures. Contracts, that are optional, and. A. Lot of our focus has been looking, at, options. On more widely traded contracts, now there are plenty of currencies, that are available, out there to trade but. Our emphasis here will be on the euro and the British. Pound, now. As. You look at the different specs. We. Have a multiplier. Which, is one thing, to understand, on each of our futures contracts, you know what is the multiplier, on the euro it is a hundred, and twenty five thousand, and. Translates. Also into the leverage, which, each tick. Which, is a fraction, of a cent is. $12.50. So, for. Instance a penny move in the euro can be a significant. Dollar move. On this contract, as, well. As the increments. That. Are available. On, the, option. When. They're priced below a certain, amount. Looking. At the trade in times almost 24/7. And. One. Thing to consider with, each. Of these, different contracts, is when, they settle. During, the day it's not necessarily, going to be the same time as equities, in, this case Adelie settlement, range. For the. Euro futures, forward. Slash 6e is going, to be just. Coming up to the top of the hour at. 2:00 p.m. Central, Time, now. End of trading. Terminates. On the second Friday at. 2:00 p.m. Central, Time immediately, preceding, the third, Wednesday of the contract, month and.

We're. Certainly after June 9th the. Termination. Time actually, begins. In the afternoon. Correction. We. Used to be in the afternoon now it occurs in the morning, now. Settlement. Option, exercise results, in the position, in the, underlying futures. Contract. Now. I'm gonna go ahead and show you the, spec for the. British Pound and also, shares some exciting, information on, a new, feature on the. Thinkorswim platform so. Forward slash 6e, is for the euro and if. We go ahead and look at forward slash 6b, this, is the British. Pound. Now. This could be certainly, an interesting, time to learn. About. Futures. On in. The case of. The. British Pound as well as the Euro certainly, a lot of things going on as far as with brexit, and as. With anything you'd want to practice. What. You're doing before you, decide to trade, real money with it but it could be a great learning experience to, see the impact of, brexit. And various. Economic. News events, that, may be occurring, over the next several weeks so. As we go ahead and look at the British Pound. No. Sir multiplier, is different, it is sixty. Two thousand, five hundred. With. The tick size being, about six dollars and twenty five cents. Looking. At the settlement ranges. End of trading and its, settlement very similar to the euro as well, now. At this point I'm gonna go and bring up the thinkorswim platform. And. If. We got some time towards the end we'll take a look at some of the index futures there, one. Way of staying tuned on what's. Happening in the markets, and. Particularly. On some of the indices and also, learn about some technical analysis, is via. Twitter, as. I. Shared my handle. At the beginning there, you. Can follow. Me on again at, J. McNichol underscore, TD a probably. Learn a little bit about myself, between. What I do in the military as, well as what. We're looking at here at TD Ameritrade you, can see what I ate last night after. A long weekend, of military training. Protein style burger there but. Hey we also got charts up there on it as well we. Talked about small caps later. In the week, as. An example and the S&P did some very similar you, know we we saw kind of a rally up, to, resistance. And, kind. Of backed off of that typically. When you have a strong day like we did on Friday the. Tendency is to. See prices possibly. Back, off a little bit and you, know as we're looking, at the ESPY futures as we'll go and look at some of the currencies.

Currently. Currently that price action is a little more of an, inside. Day kind of a hoorah me now. That consolidation, is just, at least a brief pause to. See where, the market wants to go if they, want to pick up a little more steam and pop, to retest, those highs or, if, this resistance, is settling, in and prices. May continue. To fade down and trade. Lower not. Necessarily, be a downtrend, but you. Know just basic, technical analysis, you, know will it pull back and form a high or low and. So a couple of things to consider as we, go into the week here, but. We, looked at some, contract, specs for, both the, on. Our slide for both the. British Pound as well, as the euro a new, feature that we have on the T thinkorswim, platform if. We go ahead and bring, up a future. Contract. Which. We currently have, /es. And. If. You go to the analyze tab and. Select. The fundamentals. Tab you. Can see a new feature where. We have the some, of the contract specs, product. Identifier, it's multiplier, tick. Value minimum. Tick how. It settles, and if. It is optional, on to thinkorswim platform, so. We. Can go ahead and plug in forward, slash 6e. For. The. Euro. And. There's some of the same specs, that we showed you on the slide and, we can see that it is optional. Comparatively. You. Know other currencies, there out there such the Japanese, yen. Forward. Slash 6j. If I, click, on that. Well. Looks like it is optional now so we may start talking, a little more about the. End some of these contracts, may, not have been optional, or. They may not have be as liquid. And. You. Go down and look at other options, now. Let's. See if it. Want. To go ahead and just try something real quick. So, it allows me to do it here. Going. Right click and. Looks. Like we're have more widely available, currencies. That are available for trading as well as, always. The. Thing to consider is you know look at liquidity, difference, between the bid and the ask so. We may be highlighting. Some additional. Contracts, going. Forward here so. With. That, 4/6. Be. For. The British Pound and there. Are the specs right there you, can also see some of the forward, contracts, not just the front month the, one that is highlighted is the active, contract, and you. Can see how many days expiration. Likewise. When we go ahead and look at the options for. Any of these just. Like on the equity options we can see the number of days to, expiration, and that can come into consideration. On the defined, wrist spread that, will take a look at all right so we looked at some of the contract, specs let's.

Look At some, of the news. That. May impact, and. We. Can look at the economic, calendar some. Economic, reports to consider, very. Similar, to, how, we address, the US, economy, the currency, points, towards the strength, of the weakness, of the, economy, that that currency, is tied to so, main. Considerations. Economic. Strength. Interest. Rates and inflation. So. Some, of the things we'll look at for economic, strength the. Economic employment situation. GDP, industrial. Production retail. Sales some, of these are actually coming out this week on the US economy we. May see that also occur on. The. Euro. And the United. Kingdom. Durable. Goods purchasing. Managers index, now. Since. Currencies, they are interrelated. They're. The. Looking. At the dollar versus, the euro or the, dollar versus, the pound. So, it's. Not just what's happening in that economy, but, also, economies. Relative, to that. Currency. So. What. Happens in the u.s. if. There's some weakness there in the US may point to possibly, some strength in, the British Pound and vice-versa. Same, thing with the euro, the. Tendency on the euro, when. It comes to equities. Is, if equities. Are fairly, strong kind, of more of a risk on attitude. The, euro has a tendency, of being stronger, notwithstanding. Any, other information. In. The case of the dollar the dollar has a tendency of getting stronger. When, equities. Are a little, weaker now you could have situations. When you can have strong, equities, as well as a strong dollar and we've, been seeing that, lately, compared. To the rest of the world being, relatively, weak. Interest. Rates, Federal. Open Market Committee, for, the u.s. the. ECB announcements, for the euro and the Bank of England announcements, for the pound and, then. Likewise not. Only us but other countries may also provide. Information on, inflation. Such, as a consumer price index and a, producer, price, index so. As far as bringing up some of this information go. Into the thinkorswim platform and. We. Go to the market. Watch tab. And. We'll. Go ahead and bring up. In. The, drop-down I already have it marked but you'll notice on the left-hand side. There's. A checkbox for various, events if, we want to focus on economic. Events we can select a condo day events and. Once. There we, can go ahead and look at the calendar, now a couple of things to take note is.

Look. At the times. Looking. At the times, of the events. Now. Today is Columbus, Day so. A lot of banks are closed, and that, may. Impact some. Of the trading. On some of the futures there but equities are, open today, looking. At for, instance Tuesday, you. See there's a CPI. Report. Coming out at 12, a.m. on on, my chart here now. Unfortunately, it doesn't tell you what. Country. That is to get, a feel for that you'd have to go ahead and actually click, on that report. So. For instance if I go ahead and, double. Click on that, CPI, it. Should. Bring up a. Background. On that report, measurement. Of the average price of goods and services that's, a gear for inflation if you scroll down on that it. Should tell you what it's looking at in this, case went a little too fast looks. Like this would be for, the, euro, Oh nope, this is for France. Let's. See as a member of a European, Union that, would be for France so what happens in France can have an impact on the euro, since. Frances. Part of the European Union so, get engaged for inflation tomorrow. On France. Labor. Market, reports. Go. And double click on that you. Can also go ahead and double click on the list below. And. Some. Of these may be clustered, to. The same group here looks. Like the, labor report, we've coming out of the Bank of England so we got CPI. For France a Bank, of England labor report, both. Of these can have an impact on, the. Performance, of, the British Pound as, well as the euro and then, go in later in the week typically. If you're seeing reports. Coming out in, the wee hours of the morning these. Are probably going to be tied to the. Euro and/or, the British Pound so. A lot of CPI PPI, is coming out the week for that zone once, again if you go ahead and select double. Click on it you. Should be able to see specifically, you. Know what, country it. Is and. CPI. For England, is coming, out tomorrow as well, if. You scroll down. Kind. Of get in our time zones in, the morning you, can see some, of the reports, coming, out here. And on, Monday, we, got a CPI. Coming. Out of China, a, lot. Of times around this time you may see reports, coming out for the. US or for North America, so, some information coming out on on China there and then. Going into the rest of the week you, can see what, other events are coming out all. Right now let's, see if we take a look at the charts, and see if we can go ahead and construct some here I'm. Going to go ahead and bring up the charts. And. Once again if you had joined us late. We. Seem to have an issue with, the chat so. Unfortunately. I can't see your salutations. Your. Questions, or comments, there so we're just rolling, right. Along here. Which. Would basically be very similar to the experience, if you're listening, to the archived session, all, right I'm gonna go ahead and plug in forward, slash 6e. And. This. Is the Euro, on. A daily chart, has. Been more on a, more. Of a downtrend. So. From a technical perspective, some. Traders may be looking. For a. Bearish. Bounce, and. Looking. For prices to roll over. However, you, know some traders if, they're more optimistic. On. The markets, or in the eurozone they, may be looking for a breakout of the potential, reversal now. One. Can also look at. The. Dollar. Index. Futures, /dx. Now. This is available to. Traders. However you. Would have to. Request. It and I. Believe pay the exchange. Fees for it whereas the other. Fees are covered on. The future side now. Here's. The dollar and. Notice. And almost looks inverse to, what we were seeing on the Euro more. Of an uptrend and. Kind. Of more of a sideways. As far as recently. That. Depend on how it's drawn up possibly. Beginning, to break down now, if the dollar continues. To fall the. Euro may end up being stronger, that be more of a bullish play so. Kind. Of on a bit of a cusp, here and that. Would be very similar to what we've been experiencing, with the market, kind. Of a bit more range bound. Close. To the highs but. We've seen some sell offs back and forth and. This. Is really a matter of you know what your perception of the market going forward is. If. We go and bring up forward, slash, 6b. For, the British Pound and. Bring. This out a little bit here. You. Know the British Pound up this is intraday let's go ahead and which. We can see intraday on an hourly chart there. Had been some more optimism. On a. You. Know a good, exit, or a good brexit, there. There. Was some talk that, you. Know may have been backing off last night but.

Looks Like on the hourly a little bit of a bounce there now, if we look at the daily chart you, know coming up on some resistance, just, like any other instrument. Broken. Support, has. A tendency, of act and as new resistance, that. Were that's what we're seeing right there. So. Some traders may if. They're more pessimistic. On. The brexit they may look for you, know a bearish, spread, expecting. That prices, would not go, much higher than. They. Are right. Now. Let's. Go ahead and. What. We'll do so. If, we can do two examples before, we'll wrap, up for the day. We'll, go ahead and do. I'll. Do an example of a. A. Bear. Call spread. On, the, Euro where. The expectation, is that prices, may stay. Below, a certain price level let's. See if we can go ahead and map, this out. So. I'm gonna go ahead and go to a trade tab we'll. Go and look at the trade grid under options, and you will select an expiration. Consistent. What may be taught in our, options. Course. By. Going to education, and if. You're very new and haven't explored options. Education. And the, options, tab. There. Is the trading options, course a lot, of techniques that we're talking about right now I can, be learned in that trading options course. You. Can also join me on Wednesdays, at 3, p.m. Eastern, Time for, trading verticals. Which. Is an example that we're going to look at right, here, we. Can go and select a number of days in the future here. Typically. On the selling side you know traders may be looking to sell. You. Know 20. To 50 days out, there's. Pros and cons for that. For. A selling. Strategy, may. Have quicker depreciation. As far as time, closer. Up but. If price, does. Not move favorably, I one. Does not have time possibly. Recover from that, let's. For our example we'll go out to December. We're. Going to look at some of the Greeks and. Just. As we teach in the trading, options course we'll. Look for a delta. That. Is out, of the money traders. May be looking somewhere in that 30. To 40 range there, which puts, you a couple, of strikes out. Let's. Say I look at the. 112. Strike. Which is at a 29, Delta. And. We. Can go ahead and sell, this now if we were to sell this option this would be a, naked. Option. Now. If I just hit the confirm and send notice when we look at the max and loss it is infinite, the. Matt some profit is to credit received, now. What we want to do is make this a, example. Of a define, risk tree define, the loss and to, do that all we simply. Need to do is. Not. Just sell. This. Option. But. Also to buy, a cheaper. Option against. It and, you. Know we may just go out to the next cheaper, strike. Since. I went ahead and click the sell. Already. For the, one option to. Combine options. I can hold down on the control. Key and. Hit. By. For. The other option, and that just. Went ahead and created a spread now, notice we have a, credit. Of point, zero zero. One, one five. Okay. That, is not even a penny, and, you'd. Think that doesn't seem like a lot but, remember. You, got the multiplier, one. Hundred and twenty five thousand. Times, that credit, so. You can do the math with your calculator but if you click on to confirm and send you. Can see that translates, into a hundred, and forty three dollars and, seventy five cents, and notice, the loss is now. Defined, at four. Hundred and eighty one dollars and twenty, five cents now the. Maximum. Gain is certainly, less than the maximum loss, but. That also translates, into the probability of the, trade higher probability. Typically. Would have less reward. Utilizing. The Delta of 30, the. Probabilities. Currently. Stand. That the. Probabilities, of price being, below, or, correction, being above. 112. Would. Be one. 112. A buck, twelve, would. Be a. Probability. Of it being above, that level would only be 30% therefore. Probability. Of 70% that. The option would expire worthless that's, a desired outcome. Now. We can determine the return on risk by taking that maximum, profit divided by the maximum loss so. If, we take. We'll. Go ahead and take the. Calculator. And. That. Would be once again. 137. 50 divided by 48, is 750. So. I'm gonna bring that up a little bit. 147. Point 5 divided. By 3. A. 7.5. Equals. That. Would be a return on risk. Correction. That was 487. Little. Dyslexic, there. I'll. Just go ahead and do 137. Divided. By. 487. That's. A return on risk of about, 28%. Some. Traders may be looking for a minimum, percentage. That's. A little under 30%. So. If we went ahead and position, size this to a maximum, loss we. Can go and confirm and send and look, at the maximum loss for, 93, and, divide. That in, to. The percentage, that we're willing to lose on the tray so with, our practice account, our. Net liquidating, value is, three hundred sixty-five thousand. Just, shy about three hundred and. Sixty-six. If. We went ahead and. Let's. Say took a. Half. A percent, let's. Say about eighteen hundred would, be about a half a percent. We. Can take that for 87, well and that. Was just an oops trade. It's. Confirmed, and said not Sensen got to be careful with that mouse kind, of that little double-click I had, a little flinch there so, instantly.

Went At it did one contract, there now, if I want I can go ahead and go back to the. Monitor. Tab take. A look at our filled order. So. Our net price was. That. For action, point. Zero zero one one if. I go and right-click I, can. Create a duplicate order and. Let's. Say for our example. Since. It's around 487. Three. Of them would put us under 1500. So I'll go ahead and I'll just do two more and we'll. Go ahead and click send. So. The expectation, for this. Trade, is between now and December. That. The euro would. Stay, below. That, one twelve mark now. That would be a bit more pessimistic. If. One was more optimistic they. May be looking at a put, spread, anticipating. That prices, may trade higher so, if you're more possibly. More bullish on the equities market going, into the end of the year the, Euro may have a tendency of trading. Higher. Now. To contrast. That I'll bring up the the. Pound, board. / six B and. Let's. Say I'll do the inverse on this. An. Expectation. That the pound may actually break, higher and. Let's. Look at an example of a put spread, now. Once again if your join late, fortunately, cannot see the chat I instinctively want to look over there and see where if we have any questions we're, just having an issue with the chat here this morning but. What I'm gonna do is I'm gonna go to the trade tab and, we're. Gonna go ahead and. Look. At the put side. And. We'll look for a strike that's a little more out of the money. Well. Look, around that 30 deltas, let's. Look at the 123's. And a, half. We'll. Go ahead and. So. Now another thing you do too is you can right click on the position the option. That you're selling and select. Sell. Vertical. And by default that'll. Go right to the next. Strike. Some. Traders may extend out the spread, to see if they can get a, greater. Credit, I went, the wrong way on that. Or. That may not have gone the right way just with. The price, in there to be 120, 250. There and see. If they can get a larger. Credit. Which. May translate, in the less contract, so with this example, looks like we're, able to go a little bit wider and. Get. A similar credit now what they can do is combine the. Return. On risk and wow, I I. Must. Have a little. Tick here this morning, because. You. And, bring that out. Gonna. Cancel that order there well position size at first. And. Here. We go so, let's go back on, a trade tab there so, I was a saying we can go ahead and right-click and. Do. Sell. Vertical. Let's. Go out a little bit wider, on this one. So. That would be looking at. 120. 250 so, that's about a one-point, wide there remember, there is a multiplier, there. If. I hit the confirm. And send just, once not twice. We. Can see our maximum profit and the, maximum loss, maximum. Profit defined by divided, by the maximum loss would be the. Return, on risk so. Let's say we do 180, 1/4. 43. That. Would be bad a, 40%. Return, on risk if I did that correctly which. There's, a good chance I may not have let's go and double-check that math 181. /. 443. There. You go okay, so. It looks like a greater, return on risk now we've positioned size this to a maximum, loss let's say we'll do three. We. Can probably do four contracts, on this one, based. Off the size of the account, I believe we said about half a percent was about 1,800. This. Time you can practice on your own account. So. There's a maximum loss which would be 1775. Maximum. Profit of 725. With. The short strike being at 120, 350, I'll, go and I'll send this through. We'll. See if that fills. The. Expectation. Is that the price stays, below or. Stays above. 120. 350, which isn't, quite at that low. So. Even. Though that there may be a relatively. High probability, of expiring out, of the money there. Could be certainly. A probability, of it touching, that price you. Can bring that information here, as well on your.

Option. Table. There. Is a drop down for layout and. You. Can look at things. Such as probabilities. And. We. Were looking at the. 123. And a half. So. There's a probability, of expiring, out of money around, 68%, but, you can also click on the drop down there, is a probability. Of touching. And that's. Something that some traders don't. Realize. The. Probability, of touching is. Relatively. High as well, so. Something, to keep in mind and that, is kind of reflective, on the chart so we'll go ahead and we'll see how this plays, out today, or. Over the course of next few weeks would. Encouraged to practice, what you learn here today as well, picking, you. Know one of these contracts. And do, a define. Risk, spread and we did one example on the the. Euro in the case of a bear, call spread or. A short call spread expecting. Price to stay below a certain, price level and then, we did an example on the British pound a bull. Put, spread or, a short put spread expecting. That the prices would stay above. A certain, price and we'll, see how they play out. Let's. Go ahead and. Finish. Up with our, slides. Here today on, some of the considerations, for currency futures options now, as you can see if. You're, already trading, options, on equities, you, can use these same strategies for options on futures after. All in options an option and regardless of the underlying asset, regardless, in the underlying asset, you. Want to review the economic calendar, kind. Of stay in tune on the economic, news on the, US as well as those, foreign government reports, and events, related to each currency, now. Most widely, traded options, on futures are, european-style, and can, only be exercised. Or assigned at. Expiration. So. That. Certainly can be a good thing for. Those of you that are concerned about early, assignment, contract. Specifications. Very for products it's important to know these specifications. Before getting involved you can learn more at TD Ameritrade futures. And the. CME, Group and as, I showed with you let's, bring that up one more time for those you that may join late a great, tool I just found about this this morning again, is if. You have a futures contract on, the screen, you. Just go to analyze, tab and that'll bring up some of those contract, specs as well. As you can see the. Current. Contract as well as the forward. Futures. As well keep. Mind the active, contract, is going to be highlighted, they'll say active, and you, can also for the underline future see what the underlying, margin. Is so, if you, are assigned.

At. The. End of expiration for the option you, can see how much money, you'd have to put up typically. As far as on the exits. Is. Considering. Once. One has reached a. Potential. Gain a certain. Percentage, is to, close it out so. With our example. If. We, go ahead and take a look at both the, the. Call let's. So we got the year looks like the pound did not fill, as yet. Let's see if I can. Looks. Like there's a pretty large spread, between these options, so there is a chance that it may not fill some, traders may come. Down a little bit between. The natural and the mid and attempt. To get it filled now, that would reduce the return on risk. For. Instance it did get sold at that point. But. To determine. The. Potential. Game you. Can go ahead and, take. A look at what your credit is and. Determine. A percentage, of that so, if we went ahead and sold in. This case you know point, zero zero two six if. The. Value, of that position drops, down to point zero zero one three that would be fifty percent we. Can potentially buy it back and lock in that game now, some traders on credit spreads may be looking for a. Percentage. A, higher, percentage, of that may be 75, to 80 percent, so. If I go ahead and do, that we can take let's. Say point. Zero, zero two. Six. Times. Let's. Say point 20 that'd. Be 20 percent, look. See. It may not work there let's try one more time point zero, zero two six. Times. Point, two. All. Right let's. Try it another way. If. I take point. Zero. Zero. Two. Six. Times. The multiplier, which. Is sixty. Two thousand, five hundred for. The British Pound. That. Would be the the. Credit, there, now. If I go ahead and, multiply. That, by point. Two. Or. Let's, say I do that differently there. 162. That. Would be the maximum gain let's, say we multiply that by 0.8. That. Would be $129. So if you see your P&L, get. To that level then. One may look to go ahead and close that out now, that is per contract. In. Our example, we have four contracts. So I would times that by four and. That. Would be the potential, dollar, game, that. One may be targeting, and you, can view that by. On your monitor tab and. Seeing. That on. Your. Positions, here, for, instance the, spread. That we did on soybean futures. Were. Up five hundred and fifty dollars, I believe. That's actually pretty close to. Our. Max gain here if I right click and. Create. A closed in order, notice. It's pretty much worthless so we're, at a maximum, gain on this, short, vertical that we did I believe. About, a month ago and. The. Expiration, is. Eleven days out. Now. A lot, of things can happen over, eleven days as far as trade so. Let's say we go ahead and try and close this out now. Probably. Not going to be able to close it for zero. But let's see if I can trade. It for a, tick, there, like. Confirm and send and. Let's. See if we can go ahead and close this out for, about twenty-five bucks plus. Commission's, Commission's are still applicable to, futures, and. We'll. Hit send. And I'll. See if I can get that filled. All. Right well. Hopefully you learned something new today folks, this is what we learned a bit about characteristics. Of various currency. Options the. Impact of economic. And, government reports have on the dollar euro and British pound that's, one thing I would like for you to do over, the next week or two as we go in the end of October is, look. At the economic, reports, for, the US UK, and, the, eurozone and see. The impact, on those. Currencies, you, can look at /d. X Y for the dollar forward-slash. 6e, for, the euro forward, slash 6b. For, the British Pound we. Went ahead and we applied to find risk, option spreads both, doing the bear call again on the euro and the, bull, put on the pound we. Identified some of those potential entries, and exit and trade, management, techniques. Trade. Management technique is and once again defining. A percentage, return. We've. Been on average looking for examples, of around 70. To 80 percent of that maximum gain on the credit spreads, 50. Percent as an example on some of the debit spreads and then. Determine. It appropriate, risk and position size and that's what we do with each and every one of those trades we, identified, the defined risk and we position, sized accordingly. So. Thank you so much for being with us here today folks and I do apologize, for those you that are live with us on the. Chat, I will, see if we can get that taken care of for the next, session which, is my good friend. Cameron. May is going to be coming up with getting. Started, with technical, analysis, and charting and essentials, and. So. If you're new to charting or you just want to brush up on a few things that we'll be starting at the top of the hour so, thanks for starting to week off right with.

TD Ameritrade education, hopefully I'll see you on Twitter and remember. Folks in order, to demonstrate the functionality of the platform, we had to use actual symbols, keeping. In mind TD Ameritrade does not make recommendations. Or determine, the suitability of, any security or strategy, through, the use of our tools any investment, decision you make and your, self-directed account is solely. Your, responsibility. So, John McNichols signing off have, a great day folks bye now. You.

2019-10-19 04:43

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