Short Verticals | Ken Rose MBA, CMT | 4-21-21 | Options Trading Journal - Earnings Strategies

Short Verticals | Ken Rose MBA, CMT | 4-21-21 | Options Trading Journal - Earnings Strategies

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hello investors and welcome to our session here today so interesting day in the market it looks like we're getting a little bit of a recovery after a couple days through of a pullback we also have a lot of earnings coming out right now i would say we're in the midst of earnings season in these types of market conditions we do have some opportunities with regards to using short verticals so let's go ahead and jump right in and take a look at those opportunities [Music] and again want to welcome buddy here just a reminder you can follow me on twitter my twitter handle is at krosc underscore tda and i post things related to these this area as well as other areas of investing on twitter want to welcome and thank michael keeley for being over there in the chat window great to have michael back after he um i guess you could say he was living life on the wild side and took a little bit of a tumble but great to see him back and healthy here again i also encourage you to follow michael on twitter as well i'm sure he'd be more than handy to send more than happy to send out his twitter handle so you can get some great information from him over there in way of disclosures here today just a reminder that in order to demonstrate the function of the platform we do need we do need to use actual symbols however 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 we do use the paper money software application here this is for educational purposes only you want to keep in mind that any level of success we may have in our paper trading account isn't necessarily indicative of the success you'd have in your actual live trading account as market conditions do change continuously here are the greeks and as we put on some option trades we'll we'll mention these greeks as we're going along here here's a picture of my spell self i specialize in blending both fundamental analysis with technical analysis i love what i do because i've always loved to learn there's always opportunities to learn new things new technology new strategies and the like i also love to teach in this area as well as trade in this area i'm a contributor on the td ameritrade network i'm also a charter market technician and i work with think scripting building indicators triggers and strategies and the like with regards to our agenda here today well i i discussed and introduced a the new trading journal that we now currently have available to us we put on an iron condor last week related to earnings as earnings were just getting underway i just want to go in and just make sure everybody is aware of that trading journal where it is at and then also just go over the process of putting an iron condor into that trading journal because it's a little bit different i'm using the trading journal than what we've done in the past with regards to the spreadsheet we were using the past because we'll be over there in that spreadsheet we'll go ahead and take that opportunity to review our performance to see how we've done then we'll swing back out and we'll look to see for stocks that are coming out with their earnings here the next uh you know after the market or before the market opens tomorrow and we look to put in an additional earnings trade so with that let's go ahead and jump right in and to begin with just wanted for those of you that may not have been here last week let me just show you where that new trading journal is so here we are on the td ameritrade website right i'm going to come over here where it says education i'm going to roll over education and then come down here and click on webcast it's kind of a roundabout way to find something but this is technically where it's at right now perhaps it'll be moved to a more friendly place later on after you come in here to webcast what i would suggest you do because because we're opening up now and our session is currently being taught right now this session on short verticals is the very top and if you'll notice right here there's a link right here that says the trading journal so you just click on that link and you'll download your trading journal however if you're catching this session on an archive and you open up and come to this page this is probably not going to be at the top so the way that you can find this is come up here where it says instructor and click on instructor and you come down here and choose kenrose when you choose kenrose it will show you my upcoming webcast and i teach about four of them so you won't have to scroll down here very far to find short verticals and then when you do find short verticals there will be a link right there you can click on the link and you can download that spreadsheet now once you have the spreadsheet downloaded it's going to look something like this let me just pull it up here's our spreadsheet this is geared specifically for verticals which is a nice thing about it and it will handle both long verticals and short verticals if you decide to enter long verticals on this spreadsheet what i would suggest you do is just to copy it and have a separate page for long verticals in relationship to short verticals i think the the data would be more more more valuable to you notice that last week here's our trade right here here's our earnings trade right here many of you remember we put that trade on blk and i just want to identify how we entered this okay so first of all on the trading journals just to just a quick review for each one of these columns if you're looking for instruction as far as what to put in the column just come up here and on the column heading just click on the column heading you'll get this little box that will describe how you put in the information the column that's going to be for each one of these columns here okay the first item right here is going to be the width so that's going to be the width of the spreads now this is an earnings trade okay so keep in mind on an earnings trade we're doing two short verticals we're doing these iron condors where we have a short put vertical and a short call vertical but we're only going to enter them on one line here because the reality is if we if we break them up it doesn't make it it's not quite true with regards to the risk-reward relationship of these things because when you do an earnings trade and you've got up here let's just say for example let's say the price of stock is currently trading at a hundred dollars and you decide to do an increase trades up here maybe you sell a 105 call and you buy a 110 call and then maybe down here you sell a 90 put and you buy an 80 put and perhaps for those two transactions we get a two dollar and 50 cent credit okay that's going to be that's going to be a credit here and a credit down here and those two credits add up to 2.50 well what we want to keep in mind on this situation is we can only lose on one side of this you know the price if we under the worst case scenario the price is either going to be up here blowing all the way through the calls or come down here and blow all the way through the puts so our risk on the trade whoops i've got that's 110 1 5 this should actually be 85 let me change that to an 85 just so that we're five dollars wide so the risk on this trade because we can only lose on one side of this the maximum loss the theoretical maximum loss is going to be the distance between the strike prices either on either side and usually you'll set these up for the same distance so it's five bucks right it's five bucks here and it's five bucks here but because we can only lose on one side we just use we write that you can see better we just use five dollars so to get our maximum loss we take the distance between the strike prices we subtract our credit okay and that gives us a maximum loss then of two dollars and fifty cents so here's our max gain and here's our max loss when we enter these as one line we can we can keep this integrity in relationship to the trade if we break them up as two different short verticals then we don't have this same situation that we're looking at where our our gain in relationship to our risk is substantially higher than if we just break it up into into two different short verticals we're going to put in our iron condors here when we do them we're going to do them as one trade so right here on blk the distance between the strike prices was five dollars the credit that we got was a dollar sixty the number of verticals was six okay and this is a key here the transaction cost because this spreadsheet is built for verticals when we put in our transaction cost of 65 cents that's for each leg of a vertical and a vertical vertical has two legs so if we're doing an iron condor this is really the only adjustment you need to make just whatever your transaction cost is per contract just double it and then you'll be accounting for the four legs of an iron condor versus just two legs of a vertical okay when you come up here and click on transaction cost again you'll get a box here there will be an update to this spreadsheet when it is updated it'll be updated in a way so that rather than entering all your trades individually again you can just copy and paste in your entire column so you can just put in all that all that stuff and move move through it rapidly but we'll update this a little bit to include the definition and the explanation with regards to iron condors so in this trade then we had a maximum gain then if you look at all those credits a maximum game of 844 a maximum loss of 2000 a potential return a 41.8 percent so how did we do on the trade then on blk well we check that out we come over here and pull up think or swim and let's come over here to the monitor tab here's our trade right here on blk so we entered the trade and it looks like on the call side we sold the 820 and we bought the 825 on the put side we sold the 780 and we bought the 75. so the price needs to be where on this trade in order for us to capture the maximum gain let me just throw this out to all of you here's our two fir here's our two short verticals on the short call side 820 825 on the short put side 780 785 where does the price need to be in order for us to capture this maximum gain right here of a dollar fifty share or in other words 150 dollars a contract and my mouse is getting a little sticky here come on sticky mouse i hope it lives well i hope it doesn't die on us here okay so where did where where does that need to be well there's a little bit of a delay between the time i answer the question it rolls up there in the chat window okay but i see fayez got it fez has got it david's got it 780 to 820 that's absolutely correct this was a short-term trade when we entered the trade it was just like we're doing today we entered it on a wednesday and these options were going to expire on the following friday so let's see what we have here with the chart on blk here this was these options expire on the 16th of april okay here's blk looks like our entry was right here then it came up here on the 15th right there's the earnings announcement gapped way up came all the way down this is the 16th it closed on the 16th at 8 11 45 is that below the calls at 820 it is is it above the put at 780s it is so on this trade we capture our maximum gain that doesn't always occur okay but on this trade we we welcome that occurring and if we come back over here then we can see our gain over here if we come over here there's our exit of 416 so we made we made a 41.8 return and we were in the trade for two days now what does that tell us when we make a 41.8 return and we're in the trade for two days what does that tell us let me just throw that question out for everybody what exactly is is that is that saying to us when something like that occurs well one thing that's telling us is that these are highly speculative and highly aggressive trades that's what it tells us okay it doesn't tell us hey let's go do a whole lot of these it says okay that one worked out but these are highly speculative and highly aggressive trades okay now with regards to our performance all right we just want to let's swing back over here to think or swim for just a second then we'll come back over here and i'm going to come up here to monitor and i'm going to collapse this we want to go in and look to see how we're currently doing in our activity and position so we currently have two short verticals that are open in previous sessions we have mos and we have mrvl and it looks like mos is in pretty good shape we have nine days left in the trade our this is a short put vertical our short strike price is at 31 the price of stock is currently trading at 33.37

and it's moving nicely for us we're up here at a profitability level of about eleven hundred dollars we do have an order here to take us out of the trade that order there is going to take us out of the trade if we can get out somewhere in the area of 85 to 90 percent of our maximum gain so for example on this if we caught a credit of say 23 24 cents if we can close this out at two or three cents we're happy to do that marvel here has been a little bit of a rocky road you know actually mos has been a little bit of a rocky road as well some of you may remember last week or actually it was two weeks ago i believe this trade was in some difficulty we had a choice to take our maximum loss to make a change of polarity or just to buy more time and looking at the chart we opted to just buy more time so we rolled it forward and rolling it forward actually to pick up another six i think it's another six cents of a credit now that so far it looks like that strategy is working out for us but we'll still see what will occur because we still have until the end of next week to see how this stock continues to perform marvel here on the other hand it has struggled i've i've seen this position go up to a point where we're where we're close to break even and go down to a point we're currently lost this is basically the lowest i've seen the loss here in several days which is basically telling me that this stocks had a nice has had a nice move for it's also telling me that my mouse is is getting is is a little bit arthritic right here it's not really moving too well for me let me see if i can move my yeah let's i'll try to move my thing here yeah that's a little bit better so this is our loss currently you can see that we've had a good day here we only have two days left here so the key consideration right now is how comfortable do we feel that on friday at close we're going to be above 46 50. we had a nice day here at 92 cents we're currently that's only putting us at 46.76 now let's look at the chart for marvel come up here and do an assessment here marvel mrvl so you can kind of see here this this line right here this is our breakeven line we were way below it earlier today and now we're rising above it now in here we've sort of told ourselves we didn't want to walk a tightrope on trades like this would actually feel better about taking maybe a little bit of a loss or coming close to breaking even rather than incurring a maximum loss and so you know just staying with that and overall i believe that's had a positive impact for us it looks like our loss is up to 50 right now we have two days in the trade i'm going to go ahead and play the part of the investor that's saying okay we are bouncing i'll take one more look at it we're bouncing and moving up um do we want to be a little bit more aggressive or do we want to just take advantage of a nice little bounce day to the upside here because we have two days um um i'm just kicking this around a little bit in my mind why don't we throw it out for a vote here okay i'm gonna i'm gonna put this in all of your hands all right i'm gonna shift the burden to all of you this is your chance okay this is here's this is where we're at i i already have an order in here and i believe this order's in here to take us out out at eighty-five percent of our max gain we have let's look at three choices okay and just go ahead and chat these in and i'll do the best that i can to to get a to get a rough estimate of where we're at one would be um let it run okay so if you're thinking about let it run just just chat in lr lr means hey ken let it run let's see what happens we position size based on a max loss we're okay with that so we can choose let it run the other one is going to be exit now and take a nominal loss if you want to do exit now take a nominal loss just chat in ext okay okay then the other one the third choice is put in a trade to get out at a break-even point okay break-even point all right so i've got i'm just going to come over here and look i like this one from roy that's great okay get out let her run let her run take a small loss before maybe a big loss that sounds to me like an exit we got some exits l r l r exit okay l-r-l-r-l-r okay so you know if they say they say we we tend to be a little bit more aggressive with other people's money okay but overall i'm seeing let it run so i'm going to go ahead and and let it run here and we'll see how it turns out i'm going to make a note here that this was attendee's choice that absolves me of any responsibility all right okay so we'll go ahead and do a let it run here and we'll see where we go okay now peter's saying get out and re-enter another one here alfred is roll it you know we're in a situation similar to this on mos and we rolled it and it actually and and that actually worked out well for us with regards to mos i'm i kind of like that so um let's let's just check to see if we roll this out a week can we get a credit if we can roll this out a week and get some kind of a credit just to give it time to maybe bounce here and move let's just double check that i'm going to come up here to monitor and let's see on marvel here we'll do a right click and let's choose create rolling order right here oh you know what yeah i was actually looking at this earlier this week and i noticed this you know what we can't roll it exactly because you go out to the next expiration even the next and the next and the next they don't have 50 cent increments okay so let's stay with let it run and we'll see how that uh we'll see how that works out for first we're only talking about we're only talking about today and tomorrow basically well wait a minute we're tuesday we're actually talking about two more days which does mean we could have a little bit of leeway i'm going to let it run here today then then we'll see what to do um tomorrow i'll i may reconsider but for today we'll go ahead and we'll just let that we'll just let that run all right okay so that's that's how our current positions are doing let's swing back here because we're all already looking at our spreadsheet just review our performance so on our trades we've been we've been playing the part of the investor that is generally looking for a probability of success of about 70 percent this is on a regular vertical not an earnings trade probability of success about 70 percent a return on risk of about one percent about one percent for each day in the trade and we've been going out on average about 21 days i think i think you i think you i think you would all agree with that so we're looking at a return of about 21 percent when renting these trades earnings trades are in there okay and earnings trades are going to be more aggressive this is generally speaking with regards to the to the regular puts okay so 70 probably now earnings trade should actually drive this probability down because when you think about an earnings trade you're capping you're saying you're paying you're saying the stocks stay in this range right here if you're looking at a regular vertical you're just saying go up here as far as you want or go down here as far as you want if we're doing a short call for doing a short put so earnings trade should actually dampen our success ratio in relationship to the 70 percent it should however it could have the possibility of enhancing our return here with regards to 20 percent so with those parameters we kind of see how we're doing so total trades we've done 43 now some of you are maybe scratching it and say wait a minute ken last week we had 50 something in in converting over to this new spreadsheet i took previous iron condors i just made those one trades okay our winning percentage is actually um something something to recognize you know we're currently at 86 percent so we're currently outperforming the theoretical probabilities of success somewhere in the neighborhood of about 10 to 16 percent because sometimes we do go with probabilities that are greater than 70. so our percent of winning trade is 86 percent of percent of losing trades is almost 14 percent now on verticals investors on verticals the relationship of reward to risk can make losing trades devastating so this is part of it the 14 but what we want to see is what it what impact is that having to do on our sort of our the part of the investor we're playing that's looking for about a 21 return while our average return on risk is sitting here at 28.16

so that would suggest okay that even though these are losing trades they're probably not a whole lot of those that are max losses because we have made some adjustments on losing trades we've still incurred a loss but not necessarily the max loss okay so those those numbers so far are looking favorable if we continue to come on here this average day in the trade you'll notice our average time in the trade is is sitting here at 14 days now part of that is because of earnings trades we're actually in a standard short vertical trade we're usually in those trades some in the neighborhood of 20 to 30 days but on the earnings trades we're in these trades for like a couple days you know very they they are extremely short-term by nature okay so that's our that's an overview of our performance and how things are currently going here we'll continue to maintain this just a reminder when we put trades on in here they're not recommendations or anything like that okay these are all paper trades and what we're looking at here in our paper trading account is not what you should expect to experience in your live trading account because market conditions change constantly and there are many other factors as well okay so let's see if we can find something else here to trade then and to do that we'll come over here here's our watch list and for those of you that are new or pot should possibly be catching this as an archived recording let me just see what i can do here um let's see i actually don't want that i'm going to take that off my screen and see and let's take this off where i'm going to say well let me just cancel that what i'm actually looking for here is a document here it is right here okay so i'm going to send this to you over in the chat window and then for those of you that are catching us on an archive recording i'll give you something to search for because i often get this question hey ken can you send me that watch list you've got and i'm i'm not able to do that there's a legal reason for it i don't understand the legalities of it but i'm not able to like send you a link for this watch list however what i can do is i can send you a link in the chat window to the session which was a recent session to a recent session that we did and all we did was build that watch list we went through it step by step on how to build that watch list so i've sent that to you over in the chat window so if you're looking at this watch this okay i'd like to get that watch list look at the link in the chat window and following our session or some time later on go to that youtube video and that's that's this session but it's totally devoted to building this watch list okay those of you that are catching this on the archive recording you can go to youtube and you can search for ken rose and then following ken rose option traders with an apostrophe s watch list and that should bring it up for you very quickly that way as well again that's going to be a youtube video that will show you how you build it basically this watch list is made up of a selection of stocks that tend to have good liquidity for options trading tend to have a distance between the strike prices of 50 cents to a dollar also a spattering of stocks that are widely followed in the news for example the fang stocks and also stocks that you just like that you tend to follow on a regular basis so those will all be candidates for this watch list over here i've got a custom column right here which is earnings okay we talked about this last week looks i'll have some time to share this to share the link with you in here as well as if you like to follow me on twitter that's a nice way to have access to updates when i do updates but we should it looks like we're going to have time to go ahead and share that link this just a a custom column that let's come back over there and take a look see that this is just a custom column that rather than go through all the stocks in our watch list here or if you're looking at the s p 500 you can use the same thing you bring this custom pump this brings those stocks are coming out with earnings after the market tonight before the market tomorrow and then going out one two three four going out 10 days in earnings season this is a nice way to get to stocks relatively quickly okay now looking at these stocks i'm kind of looking at a couple things here one is i'm looking at the last price usually if the price is less than 30 dollars it's going to be difficult um to get enough premium to make an earnings trade worth it so we'll scratch off that one we'll also scratch off this one it doesn't mean absolutely you'd say hey let's not do it it just means it does tend to get a little bit difficult then the other thing we'll be looking for when we pull up the the option chain here is we're going to be looking for liquidity and strike prices you know what's what's the flexibility with regards to the strike prices and what's the liquidity so i'm going to come up here to the trade page and we'll leave this as strikes 13 and would i don't think we need anything let's look at las vegas sands right here see we got here we got dollar increments that's not too bad and it looks like these options are quoted in penny increments so the strikes are in dollar increments and those options recorded penny increments that's not too bad that's that's kind of what we're looking for now there's other ones here as well this one here is two dollars and fifty cents that'd be a possibility then we have t we have ael we have unp we have vlo our our purpose here is not necessarily to find the best one i'll leave that up to all of you okay the purpose here is just to show you a process we'll go ahead and we'll use lvs here today but i'm not saying this is the best one because you know for individual traders we may be looking for different types of things all right we'll use lvs and we'll go through the process we usually do here on an earnings announcement and we'll just we'll take that but i'd like to encourage all of you to bring up a watch to bring up a watch list of stocks you could use the s p 500 any watch list you like identify stocks that are coming up with their earnings shortly usually on a trade like this it's beneficial if you do it within one or two days of the earnings announcement then go through this process of doing two short verticals around and i do mean around that earnings announcement we're going to do it around the market maker move okay so before i leave this right here that i'm going to click right here let me just see if i can i want to grab that link here while we're over here by the way don't worry about doing any of this stuff this is just so that i can share this link with you okay okay so i'm going to send another link over the chat window this link is going to be for that earnings column now if you follow me on twitter you already have it okay so don't worry too much about it if not or if you're sure you don't have it then go ahead and pick up this link out of the chat when by the way let me just give you some a little bit of a heads up with regards to these links these links are not guaranteed with regards to accuracy or time they're also not recommendation recommendations so if you want to use them fine if you don't want to use them you don't find them useful that's totally fine that is totally fine as well i encourage you to pull them up and see which thing keep in mind though again that they're not they're not guaranteed to be accurate or perfect or anything like that those of you that are catching this on an archive recording let's come over to our chart here for lvs here's our chart and i'm going to bring that link up over here on our chart as well and i'm going to make it a little bit bigger let's see so you can see it so those who catch this archive recording this is linked by the way you only need the last seven digits right here that's all you need if you want to cut if you want to use the whole link you can but you really only need the last seven digits and those last seven digits are six uppercase q lowercase i uppercase u lowercase s six and then lowercase g when you have the link on the thinkorswim platform just come up here to where it says setup click on setup open shared item paste the link in here when you click on preview a little box will come up that says name you want to enter your name and then when you import it you'll have it available to you when you're looking to add a customized column over here okay but now we're over here on lvs and remember i said that we want to set up an iron condor around the earnings announcement and we want to set that earnings and that we want to set it up around this market maker move as we discussed last time the market maker move is a proprietary analytic that's available to you through thinkorswim that attempts it's not perfect it attempts to forecast where the price of the security will be as a result of an upcoming event in this case the earnings announcement so this is suggesting is as of wednesday and this this could change on thursday it could change on friday that's why a lot of investors if they can do a trade like this they'll wait till the day before one of the nice things about doing a little bit before the day before like in other words and doing it on a wednesday versus on doing it friday before the market closes there's a tendency for the slippage on the underlying options to widen out as you get closer and closer to the expiration but you can see here we're looking at our short call verticals we want to be above 63.78 so i'm just going to jot down here the short call we we're looking at selling on the call side we're looking at selling at 64 or higher okay and on the put side we're down here at 57.44 so on the put side we're looking to sell on the puts i'm looking to sell at 57 or lower and that way we'll have a short call vertical up here we'll have a short put vertical down here we can only lose on one side or the other so we can add the two credits together subtract it from the distance between the strike prices and we'll have our max loss from that we can calculate our return on risk what do we know about these trades very speculative and very aggressive even with the market maker move here we i've seen many times where stocks just blow out of this market maker move so do keep that in mind it's it's there as a tool okay but over time when you're using you kind of get a feel for how much helmet the level of confidence you feel would be appropriate for it okay so let's see we can do here can i do something right here from the um uh i could probably do it from right here but i'm going to go over here and come up i'm going to come over here to the trade tab up here for lvs and we only need two days right now if we wanted to go out further if we wanted to go out nine days we could that would give us a little bit of wiggle room in case the trade goes against us you know an iron condor of this nature the more uneasy you're feeling about the earnings announcement the more you should go out and give it a little bit more time because if it does go way against you and you've got nine days you can do some things like roll the one that's the one that the one on the side that's got blown out you could look to roll it to buy some more time you could look at a change of polarity if you got nine more days there's some different things you can do okay but we'll go ahead and play the part of the investor that is going to be aggressive here and is looking for a quick fix okay a quick fix all right so let's see we can do here with regards to return so on the put side we wanted to be at 57 or lower so here's our put of 57 we'll go ahead and we'll start off with a dollar wide and so i'm going to start with the puts i'm going to do a right click here on the bid price i'm going to come down here to sell they're already a dollar wide so i'm good with staying with that over here i'm going to go um dollar white and i'm going to come up here and choose iron condor that's our puts now the calls we wanted to be at 64 or higher when you first set this up it's going to it's going to put in something across the chain from you with regards to the call so you'll need to adjust the call side so on the call side i'm going to change this to selling the 64 and buying the 65. so i'm getting 29 cents i'm getting 28 29 cents here how's that going to relate with regards to return let's come back over here and see we've got so 29 that means our max loss is probably going to be somewhere in the neighborhood about 72. let's let's say

we captured 28 of this so if we take 28 divide that by 72 look at return of about 38 percent over two days so are we going to be okay with that we we do have we have four transaction costs in here and a 30 credit i'll be honest that seems a little bit skimpage to me just a little bit skimpish okay okay so um i'm kind of i'm kind of kicking this around on my line so this is a 60 stock i wonder if we went up in price a little bit we're not we're not necessarily looking for the best thing here but maybe if we go up in price a little bit why don't we come over here and try and try unp i don't know if unp is going to be better for unp's going to be better than vlo or something that just seems a little skimpage to me though let's see what we get here with unp we've gone through the theoretics of it so we should just be able to come over here check out the chart here's our market maker move so we want to be at 229 we want to be at 230 to the upside to the downside we want to be at 218. i don't know if we'll even have liquidity we may be going back to the other one but let's see a unp here we'll come over here and what have we got here with regards to 218 here's two 1750. that liquidity isn't too bad these are two and a half dollars wide so it's going to be a little bit different but let's check it out to right click here i'm going to choose sell iron condor okay there's our put side our call side we want to be at 2 30 so we're going to sell 230 right here sale 230 we're going to buy 230 250 because these are two and a half wide 230 250 right there getting a 93 let's let's say we let's say we end up with a 90 with a with a 90 credit in order to get filled well if we're to 90 credit we're two and a half dollars wide then our risk is going to be what two and a half minus 90. this is going to be 160. so if i take 90 divided by 160 gives me a 56 return we'll play the party investor that's feeling a little bit better about this okay just because of the um just just because of the because of the taking into consideration transaction costs getting significantly higher credit i'm not saying this is the best way to go if you feel more comfortable with the with lvs there's there's nothing inherently wrong with that as well we're just playing a part of the investor here that like a little bit more of a credit in relationship to the transaction cost so what was our max loss on this then our max loss was what let's see we're at 250 and let's say we come down to 90 to get filled our max loss is going to be again 160. let's say because it's an earnings trade we're a little bit scared we're a little bit sleet we're a little bit um nervous about it so we don't want to risk more than a thousand bucks so if we take a thousand dollars here divide that by our theoretical max loss we could lose more than that looking at six contracts okay we come down here we go one two three four five six and there we go i think we're ready to launch we'll try to get 94 i don't know that we will but we'll give it a shot here let's go ahead and do a confirm short verticals here we go so we filled okay so we'll see what happens now uh another thing you know by the way investors just want to know this this is meant to be short verticals it's not meant to be iron condors over earnings but there's about a two to three week period that occurs about every three or four months see all these earnings announcements there's just so many of them going on it just they just engulf almost all almost all the potential stocks so we usually do two of these i'll try to get away from it next time though because we do want to settle back down on just regular short verticals okay but we usually do one one or two of these during each earnings season just to see how they work out okay all right investors so how do we do here today i just want to want to i i haven't had a chance for you to zero in and look over there in the chat window but it looks to me like you guys have kept michael very busy so appreciate michael michael again for helping us out here today let's come back over here so what did we do well we talked about journaling an iron condor we also went reviewed show you where you can find the um the journal the trading journal that also has it also has section for stocks as well as sections for stocks as well as as well as options as well as the short verticals okay we reviewed our performance as part of learning how to make some adjust adjustments with regards to journaling iron condors we did a reassessment we looked for some other stocks with regards to earnings and we came up and we decided to go with unp i think that's union pacific choo choo choo okay and we'll see how we'll see how that settles out again i'd like to encourage all of you to basically go through the same process i'm not recommending any stocks or anything else it's more of a process you saw you had a lot of choices we didn't necessarily find the best one in fact we probably didn't in fact we almost certainly didn't because we all have a little bit of a different attitude with regards to some of the idiosyncrasies of this strategy so i encourage you all to find out something and go ahead and paper trade it if nothing else okay all right well with that then let's go ahead and wrap things up here then and uh also a reminder hey you can follow me on twitter at krosc underscore tda you can follow michael keeley on twitter as well that's that's m that's at m keely underscore tda if you like to live life on the wild side you definitely want to follow michael because he does wild things when i say that i'm talking about skiing i'm talking about mountain climbing i'm talking about all those types of things i wish i would have done more of 40 years ago and michael's doing them today so you'll get you'll get a lot of great insights and interesting pictures along the way with regards to that all right investors so again just a reminder that in order to demonstrate the functionality platform we need to use actual symbols however 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 responsibility thanks again everybody for joining us here for our short vertical session i hope you have a fantastic rest of your week best of success you're investing and just a reminder you know the vaccines out there i've got i've got both of my shots actually took a little bit of a vacation it was wonderful but let's be careful let's continue to be cautious and get completely on the other side of the whole kobe thing as happy and healthy investors bye everybody hope to see you next time thanks again [Music] you you

2021-04-25 04:33

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