# Short Put Verticals & Buy Writes | Trading a Smaller Account Show Video

is that worthwhile i mean the stock's already at 29.64 it only has to go up by 34 cents for us to be called out how much does this stock move in an average day a dollar 20. yeah and somebody's saying this is a flag pattern absolutely so if we come out here and we say okay let's do the math so if we right click and we buy because we're buying the stock and we're covering it with a call right out of the gate so 2847 is the price we'd pay to get in what's the most we can make well we'd be called out at 30.

and so if we do the math and we say okay well the most we can make on this trade is thirty dollars if we're called out and that's the hope or i hate to use hope hope is a four letter word when it comes to trading the expectation is that we would be called out so what could we make a dollar 53 or when we take the multiplier into account 153 dollars so if i take a dollar 53 and i'm just going to use my calculator here and divide that by our price to get in of 2847 that turns out to be a return potentially of 5.3 7 or 5.4 is the potential return for how long for 21 days so if you're saying hey a 5.4 return in 21 days for a stock that has to go up how much 39 cents um would that be acceptable and so some might say well why are you only going up to the 30 why aren't we doing the 31 well we could we absolutely could but if if you want the odds to be higher you've got a 47 chance and your bid ask spread is quite tight here now it's only 10 cents apart here and you know instead of making a dollar 17 you'd make 96 but then you you know you'd make an extra 50 cents you know so if we look at this and we say okay we're going to go with this strategy now how much are we risking we're risking over two thousand dollars two thousand eight hundred and forty nine dollars to be exact does that mean our requirements for this class so if we look at this and we say okay well if we if we say the 30-day moving average has been acting as support so how about we put a stop in at 28 28.23 if it goes two or three percent below that we want out so if i said okay 2823 times 0.97 so if it goes 3 below that 30-day moving average that's 27.38

what was this recent low 26.67 so if it comes back to here we would be out so 2738 so if i come to the trade tab how much am i risking i'm risking less than 100 and so you might say well you know what maybe i'd rather put my stop below this recent low to give it every chance to work and so if we looked at that low 26.67 and we went three percent below that so 26 67 times 0.97

that would be 25.86 and if we come to our trade tab you know that's still you know under 300. so that would be acceptable now if if we sell the stock and we get stopped out we also want to make sure we bought back this call that we sold and if we get stopped out on this this call would be less it would be worth less so we'd have made money on the call and it would help ease the pain of what we've lost on the stock does that make sense but in this way we are defining our risk so again first trigger sequence we're going to right click create an opposite order and because we don't know exactly what the value of the call will be we're going to make this a market order good till cancelled and we're going to come to our sprocket beside best and say hey if this stock goes at or below 25.86

let's shut this position down and you'll see it says here this price of the security is equal less than or equal to 25.86 yes and you know what we we have often done in this class slightly out of the money or we put it at closer to an all-time high but i just wanted to give you an example because i want when it comes to the break even this i think that this is quite interesting our break even oh it's saying not applicable well that's interesting or our break even on this if we're paying 28.56 okay it's already trading at 29.79 so you know if at the end of this time it's still at 29.79 in fact