Swing Trading Options Spreads - How To Leg Out of Bad Spreads [4 New Picks] | Swing Trading

Swing Trading Options Spreads - How To Leg Out of Bad Spreads [4 New Picks] | Swing Trading

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Let's. Find some option swing trades hello everyone, it is Wednesday, evening, May 27th. It's, time for our weekly swing. Training video we've had a little bit of excitement today had a little bit of a boring week we had a pre-holiday, set up with, Memorial, Day coming up so, the action, really was. Pretty dull. Thursday. And Friday today. We were actually able to get a couple of our spreads done because we had a market pullback, so as always, let's start with the market get, our bearings and then let's look for some trades you, can see that the 100, day and 200-day, moving averages. Have come into play the, market was able, to ride that 100, day moving average, and then, boom, we spike right above it yesterday. But, the price action was a little, bit lame we saw some selling, today we tried to rally, above, that, level and the early action was very very negative we fell right back below their 200-day, moving average. And that suggested. Some pretty heavy selling pretty, heavy resistance so, let's, zoom into that 5-minute, chart and see what's going on it'll. Really help us and we'll go back to yesterday's, price action because the gap higher was huge and here. You can see monster. Monster, gap higher through, the 100-day, through the 200-day. Above. The 300. Level on the s py but. You could see as the day wore on the. Bid started. To soften one, of the tells us right here when the market couldn't get through this resistance, level and it couldn't make a meaningful, test of that, high of the day that's. When the sellers came in had, a little bit of a bid market. Tried to grind back very, lackluster trading. Very low volume trading, really, wasn't a lot going on typically, there's. A post. Holiday. Hangover. And that's, what we saw later. In the day we, did take out the low of the day and we started to fill in some of this gap right here so we did see some selling, this, morning, the market again, broke.

Out Blue. Through those two major moving averages, blew, through the high of the day from yesterday, but, every, subsequent. Candle. Was red and we, saw some really heavy, selling now, I'm going to tell. You a little bit about the and I'm also going to be covering how to leg out of trades, there, are two different time, horizons that we need to take into consideration are, you, a day trader or you. A swing, trader and that's. Different. For each type of trader so. We. Had this market decline right here and first I'm going to talk about day traders, so if you had some positions, on that were problematic and, Vidia was one of our problems that we had on, you. Would see this pullback here and then, we had the one o.p indicator, which I'm going to overlay, was telling us that the market, was ready to roll over I'm, going to increase, that study, so that we can see it a little bit better and here you can see how the market pulled, back and I mentioned, in the chat room I said listen folks we had some really long red candles, closing, on their low a little, bit of a compression, not, much of a bounce here and then, we immediately get right back to the selling pressure right here with the long red candle. As. Soon as I saw that I knew we were in trouble we had a bearish, cross we, took out the low of the day but. I was telling everyone in the chatroom, I want, to leg out of Nvidia, because it has a lot of relative, weakness but I don't want, to do it until, we take out the market low right here from, yesterday because then if we take out that low I'll know, that we've got more market, downside and that, there's a good likelihood that we'll fill in more of a gap so, when, I saw this red candle, that's, when I bought my short put back on Nvidia. The 340, put and I. Watched, the market come in I watch the stock come in and I. Was able to exit, and leg out of that spread, but because the bid-ask spreads, were so dang wide on NVIDIA, it, was tough for me to buy back my short put an, old huge, bid-ask spread to overcome, so even with this big decline, right here I was, only able to scratch the trade and it didn't last long the sell-off did not last long as soon as we bounced, I saw, this one o.p cross right here I thought, yeah you know what I'm not gonna let this run away from me tried, to do a little bit better than a scratch but that's all I could get out of it but that was fine so. On a day, trading basis, you can leg out of spreads like this but you have to make sure that you have market. Impetus. Working. In your favor and, once we took out the prior day's low and with, these long red candles, I felt that we had a good chance to do that plus, if, I'm going to leg out of a spread I only want to do it early, in the day I don't want to do it late in the day because, then I still have a lot of time, throughout the course of the day to, try and make money on that long put position in this, market, you have to be very, very careful because the, market, is in an uptrend and, we're gonna get back to that in just a second, so that's, how we leg out of trades you, will always on a bullish. Put spread you will always have to buy back your short put first, because. That will leave you naked long, a put which, every, brokerage, firm is fine with that but what they will not allow you to do is they, will not allow you to sell your long put and then, still be, making sure to put unless you've got a boatload of money in the account and you can cover the cover them naked margin, requirement, for a three hundred and forty dollar stock like, on nvidia so, the idea.

There Would be hey still like nvidia, when, I get this big market, sell-off in this bounce I'm gonna sell my long put that I'm gonna stay naked short that, put as the, stock in the market rebound, I'll be able to eventually buy that short put back at a much lower price you, cannot leg out that way you, always have to leg out by, buying back your short position first, and then, hanging on to the log but. You already know that because, we've liked out a to call spreads successfully. In the last week we've, had to buy back our win spread we, were able to do that for a small profit and in the last week we're able to buy back our sha. K bearish. Call spread we're able to leg out of that and also make money on a losing trade so it, can be done but, it's different for a swing trader and I'm going to make, that distinction, right now so, just make sure that if you're doing it on a day trading basis, that, you have to have. Relative. Weakness in the stock and let's take a look at that video right now let's. Take a look at that relative, weakness here. You've got the open down. Down, down, selling. Super, super hard even if we go into the daily chart we, kind of sense that we might have a problem yesterday, when we had this bearish engulfing pattern and, we closed right here on that, 3:40, level this morning, it seemed like the whole world, fell apart on the stock especially. In the first five minutes of trading and so, as the. Stock was coming in we'll put up the SP Y overlay, you, can see how the. Market found support in here and rallied but the stock really didn't and that was, a clue that it was going to be headed for some trouble so, as the market started to break down in here we had some, follow-through, with the stock and then, once, it formed that low it took off so. This. Is what you have to do line. Up the market with, the stock you can leg out I. Typically. Will, try and sell the, long put for what I paid for the short put and so, basically, I get to keep the I received. When I initially put the spread on that, would be profitable if you, can't get that just try and scratch the trade and sell. The long put for. The, same price as you paid for the short put -, the credit received and then you'll be able to scratch the trade but I do not carry. This position. Overnight. If. My intent is to leg, out of it intraday, then. That's, what I'm going to do with it so from, a swing trading standpoint, it's a little bit different, because you're taking a much longer-term perspective and, you're, looking at this stock on an, end-of-day basis, for the most part so let's go in and let's take a look at what's happening on a daily basis, with the market so that I can kind. Of drive this point home so. I'm going to take off the overlay, and I'm going to put up the SP Y and you. Can see I've drawn an upward sloping trendline here connecting, that low and the, low here as long, as we have this upward sloping trendline we, have to be long to market even, though I think the markets a little bit overextended. Right now I think that there's. A lot, of optimism, I think that as we get closer to q2 earnings, a month month and a half from now that, some of the air is gonna get let out of the balloon I think we're setting ourselves up, for some disappointment, every. CEO has, said hey q2, is going to be much worse than q1 so. We, may get some earnings warnings, I also, think that the recovery, may be a little bit more sluggish, than everyone, expects, right now but, I got to tell you there's a lot of optimism, out there everyone, seems, eager.

To, Get their lives back to normal so there could be a lot of pent-up demand consumer. Spending could be very robust, you've, got governments looking to add stimulus. Japan. Announced. A 1.1, trillion dollar stimulus plan, Europe. About 800, euros. 800. Billion euros, the, u.s. we're talking about another stimulus plan, so. The. Central banks are printing money like mad they're getting engaged in all sorts of quantitative, easing, we've, got government's, also engaging, in fiscal stimulus, you have asset managers, not wanting to be in fixed income with, 0% interest rates that can't even keep pace with, inflation so. There. Generating negative real returns in the fixed income market all of that is forcing, people into, equities. Right now so, with this safety net from, governments. And central, banks, supporting. The market supporting, the economy. They. They, want to be log and they will air on that, side so that's what's fueling the current rally we've got a couple of tails underbody right here so if you are going to leg out as a swing trader of a, spread. First. And foremost, as always, market, first market. First market. First so. We, have a market, that is trending higher so. The spreads that you would need to be very very cautious, on as a swing trader would, be any kind of bearish call spread that you've sold out of the money and when. Would be a great example and. Shaq. Would be a great example and. You can see how the stock was starting to run up and it, was starting to break, this downward sloping, trendline it, was starting to challenge resistance. Casino. Stocks are very hot so, it, was appropriate for us with the market breakout, and with it testing, the upper end of the range to leg out of that spread and we do that again, by buying the, short call. Back and then. Ideally. We're, gonna try and get out that same day and. We're gonna try and sell the, long call for the same price as we paid for the short call. But. If we can't it's. Okay to, hold that position overnight. Well, why is that because. We have a market, tailwind, and the market is trying to move higher and higher and that's exactly what we had to do was check so, last. Week Wednesday, night I had mentioned to you I said there's. The video came out on May, 20th I said, right, now we, are going to like out of this is there any danger no we still have the 100 day moving, average, to lean on we, still have horizontal resistance. On the stock to lean on but. I want to get out while the goings good I did, not, expect. The market to test, that. Upper, end of the trading range and to, try and challenge the, 100, day and 200-day, moving average. I didn't, expect that I thought, that resistance, was going to be in place so, once I saw that, this was going to be happening, and the market was able to hold gains I knew, that we needed to adjust this position, so, we, had an order out to buy the. Sh. A K, calls. Back our short, calls and those. Were the $55. Calls and we had in order to buy those back for two dollars and forty, cents well the next day we, were getting fills at two forty two thirty, five to thirty and I'd, mentioned, whatever you sold whatever you paid for those calls try and sell the out-of-the-money calls.

For. The same price and I believe those are the 57, 50s and so, we were able to sell those right, on the open Tuesday. Morning boom we're out so we successfully. Leg doubt of that spread so, as a swing trader you want to make sure that you're watching these technical, levels and you're watching what's going on in the market I typically. Don't like flip-flopping. On a position, because I've gone instantly. From being neutral. To slightly bearish, on a stock - all of a sudden. Now. I'm bullish and I'm bullish in a big way because, I'm long premium, so I really don't want to be that exposed, for, very long and the, only thing that can get me to flip like that is as I mentioned a, change, in the market conditions, and the, second thing would be the stock moving, through technical resistance and, once, that stock moves through technical resistance, like this what, happens, is our trade. Was predicated, on this, 100, day moving average, holding and that is. What was going to increase, our probability, of success, remember. We sold it back in here when the stock was starting to roll over it, had broken the upward sloping trendline, it, was recrawl, ative to the market, all sorts, of reasons for us to take this trade but. We felt that if the stock did rally that, this resistance, would hold and that the SP y major. Moving averages, would hold as, soon as they gave way one. Of our, primary. Reasons, for doing the trade was, gone we, we had to adjust so, because we have that market tailwind, and because the stock is starting to grind higher we. Could safely buy, back that short call we, still had plenty of time left on the trade so, time. Decay was not going to be an issue right away so we're able to hold it for an extra day or two and eventually. Leg out of that spread and now, that, the stock has broken through this major resistance, level it will continue, to run higher could. You leg out of the trade and hang, on to, your long, sh, a calls, yes, you could but as I mentioned earlier I don't like flip-flopping. On a stock there were reasons, that I thought sha. K would struggle, I think, the restaurant, industry. Is going to have. A very, prolonged. Reopening. And I, think they're gonna have a tough time making money until. They can have full occupancy and. Full. Seating, so, I would, not want to hang on to this and let it run there are a lot of laggards, that are starting to catch a bid right now so. When, I have a chance to scratch or make money on what, I think is a poor trade or a losing, trade I never. Pass up that opportunity I. Can, find better Long's right now than, sha. K so, that's, why I would close it down as a swing. Trader let's, take a look at NVIDIA and that. Was a trade, that I put out Sunday, night and I sent a video out so, what would you do as a swing trader on NVIDIA well, again our premise, on Nvidia was, that, we need to exit, that trade if. The, stock, closes. Below, that, 3:40, level that was our premise. For the whole trade if. You go back and watch the video from Sunday night I had mentioned to you I thought the market would continue to be strong, I thought, the stock would be strong. I felt, that this would stay intact it did, not but. As a swing, trader your. Time horizon is much longer so, you let, this intraday. Noise run, its course and you, evaluate, based, on the, closing, price within, the last 10 minutes of trading if. You to watch the last 10 minutes of trading on Nvidia you would have gone. Yuck, oh boy. That thing was in trouble but. Everything's. Fine and so, many times you'll, see a stock, intraday. Drop, below one of those major moving averages, that we're leaning at and bounced right back and.

You You know you scramble. You just you try and get out of the trade and then at the end of the day when the dust settles you go wow. That, was, a waste of time because, that, intraday, noise shook. Me out of the position, I really, didn't need to do much with it I would have been perfectly fine if I would have just sat on it so. If. You're a swing trader try. And stick with the position, and try and stick with that initial, technical support, level that you've identified and. If, that, is breached, then. You definitely need to get out of the position if the, market conditions, have changed you. Can get out of the position a little bit earlier but in the case of the S&P 500 we. Would have needed have needed. To have seen a. Substantial. Sell-off. And a, likely. Close, below, that 100, day moving average, now that would get me to close. Out some of my other bullish, put spreads if I see that happen, a breach. Below this upward sloping trendline that, could actually get me short at this, stage of the game I don't see that happening right now I see, a lot of enthusiasm I see a lot of excitement, optimism. A lot. Of money floating around that's. Going to try and get the economy kick-started. So, I don't, see that happening but I think we've got to be very very cautious moving. Forward I had, to spend some time on how to leg out a bullish put spreads I don't like to do it very often and let's, take the case of Nvidia, let's, put that up one more time instead. Of legging out of a spread and taking out a lot of extra, risk. If. You're a swing trader and we. Closed below. 340. On Nvidia. Just. Buy, it back, start. Bidding for the spread figure, out where you can buy it back with. The bid-ask spreads, are super wide just, try and find something in the middle try. And order cancel. It play, sit a little higher cancel, it place it a little higher until you finally find where, they're willing to trade. With you so. Close it down as a spread, and then you won't have a lot of additional risk exposure, because when you're legging out things. Can get very, very ugly, nvidia, today if you, overstayed, your welcome and, you were legging out and you bought back your short put in here, you. Had your head handed to you in fact i had a loss today a mat, was one that i licked out of and. We. Had this drop, in the stock we had the market rallying, like mad the stock was below a major moving average will go to the daily chart and you can see the 200-day, moving average, right there the, stock was below the 200-day, moving average, and it wasn't coming off the, deck and i'll, show you that right. Here so, i felt, pretty safe about staying short. That stock while I was doing my daily video, and there, you can see the overlay, of the market look what the S&P did look, at the rally that it made all, through, here and the, stock did absolutely nothing. And, it was still below that 200-day, moving average. So. I took comfort in that and I thought it's still very very weak relative, to the market, no, problem, I'll get my recording, done and then I'll adjust the position, while. I was doing the recording, today whoosh, well. When I got done recording I had I, had to take a loss because I knew that the stock had started to rebound the market look very very strong so legging. Out in this particular, case it cost me if I would have just shut the trade down it, wouldn't the damage would not have been nearly, as great so. Those. Are the finer points of legging. Out of bullish put spreads if you're a swing trader just, watch that level that you initially put the spread, on for, watch that technical, support, as, long as that support, holds, throughout, the course of the day. You're. In fine shape if that, support, is breached then. Try and exit, the, spread as a, spread and don't, leg, out and again, I'm going to reiterate, this point one, more time because it's so important, now the exception, to that what. Be let's, say that it was Nvidia that was the problem child and let's, say that Nvidia continued. To sell-off and it. Was, down on its low and, we. Had the. Market, pulling. Back and continuing. To pull back below. This 100, day moving average, so if we had a complete, reversal, long, red candle, closing. Below the 100 day moving average, and we had Nvidia, closing. On it slower the day and everything. Looked like it was rolling over, then. You could try and leg out of Nvidia and hold. An overnight position, with your long, puts, on Nvidia but one. Little blip, below, support. Here or below support here, is not enough for me to turn bearish, this market is a full, head of steam right now and it, would have taken much, more than that if we had a down. Day. Today closing, below the 100 day moving average, then, another long red candle, closing, on its low something.

Similar To this, that. Starts to get problematic. Then, you could consider it because market, conditions, are changing, and the, stock is changing, let's, talk very briefly about, what we're seeing in the overall market I'm, gonna put up the s py and then I'm going to do an overlay, so you can see I have, not hit enter yet and I'm. Gonna enter key QQ, down, in the bottom because we're gonna do an overlay, here. You can see the tech stocks have run really. Really hard, and that's, the gray. Line as the QQQ. Tech. Stocks have far. Outperformed. The S&P 500, well. Right now we're, getting a little bit of out performance, in the SP why because a lot of the laggards, are starting to catch up and here, you can see how, the QQQ. Pulled, back and was actually relatively, flat when, the SP 500 was, moving higher why. Is that it's. Because tech, stocks right now are getting a little fluffy they. Have, run really, hard the, valuations. Are getting a bit stretched and you've. Got people taking, profits, in a lot of those tech stocks and they're, rotating that money into. Some of the laggards. And so, some of the stocks that were seeing rally right now, our. Sh, a K Boeing's, been a little bit strong recently, you can see how it's rallying, this is a weak stock airlines, are gonna be dead. For a long long. Time and new plane orders are down but, this is what we call the dogs are barking when you start seeing these laggards, rally, like this that tells you that the, rally, is starting to get a bit stretched, hotel. Stocks. Department. Stores Macy's, look. At that it's starting, to catch a bit in here I'm going, to actually take off the QQQ. So, that it doesn't get in our way here but, you can see that's a nice break out through horizontal, resistance, fantastic. Nice, long green candles, closing, on their high gap, higher here, is, it time to buy, if. You're a trader a day, trader you, can take advantage of a move like this as a swing, trader I wouldn't, because I feel that the retail industry and, some of these retailers, have been closed for two months it's going to be brutal for them to try and get reopened, and, we still don't know how. Anxious consumers. Are gonna be to go back in a mall and to go shopping, don't, know that yet I'm a little skeptical, I think that a lot, of the online sales, are, gonna take a bite out of the brick-and-mortar companies. Because people have just now gotten, really, accustomed, to buying everything online so. I think that the, likes of a Macy's. And Kohl's and all the other department, stores boy, I don't want to be long no stocks at all even though technically, this, looks like a nice little bounce in here perhaps a little short covering bounce up to the hundred day moving average, so. The dogs are definitely barking. Right now and we're.

Gonna Try and find some stocks that. We can. Park. In that haven't. Run up super, high where. We've still got some decent option premiums, that we can sell so. Expect. A little bit of weakness in tech as we. See a rotation, out of tech and into, some of the cyclical, stocks and again I'm not going. To be going into cyclical, stocks this weekend, I think. That I've got some really nice plays picked up. And what, we're going to do is we're going to go into the. There. We go we're, gonna go into this chart right here and we're gonna take a look at all of our open positions and, see what's going on so. I had mentioned to you that we were able to successfully leg. Out of the sha. K position, and there, you can see we were short. To 55 calls we were actually short to 57, 50 calls we did that for a 50 cent credit we liked out of it it's closed it was a small winner for us but, really, nice because now we've got a trade that would have been in danger, dbx. We. Were I done, this video I believe on a Sunday night we. Were short the may 20 to 21. Foot and long, the 20/50 puts for a 10 cent credit that, expired, last week that was a nice one, and we. Also had this on vex spread. That expired, as well for a 20 cent credit so we had three, trades that went our way we, had a couple of traits that were going to cancel we. Did not get filled on the Twitter trait, from last week and they, were trying to sell. The, 2750. Put by the 27, put for a dime credit, couldn't, get it done VLO. Rallied. Weren't able to get that done selling a 56, foot buying. The, 55, foot for a 20 cent credit so we weren't able to get that so when, you log in to the staged order screen you, will not see these, trades, so. Let's go to some of our open positions right now and I'm. Going to hit two of them right away because, this one rng, expires. May, 29th. That's in two days and let's. Take a look at our G that. Has been a problem child with. Monstrously. Why bid-ask. Spreads, on these options folks, I'm not going to do that to you again okay. We were locked into this position we couldn't elect out of this if we tried the, options. Had a three dollar wide bid-ask spread, so legging. Out not, even a consideration I, did not expect, to see this type of weakness, in the stock but, anything that's run hard is getting, hit. Pretty hard right, now this. Was a nice test, for the stock today it. Sold off and it rallied all the way back you can see it closed at 2:52, we. Needed to get up to 255. I think, that's easy and I love this, bullish, hammer today and I love the rebound, in the stock look, at how persistent, that, buying pressure was were, they close. Above. The, prior days close so, I think that this kind of price action throughout. The, close, of the day is. Going to help the stock tomorrow, I think we're gonna see some follow-through. Buying on this one tomorrow so I think we're gonna be in good shape, we're not gonna close ring down RNG. It is what it is whatever happens, happens, with this position and so, we're just gonna let it run its course I will, say that, we, put this on for, a 50, cent credit, and. If. You're nervous about it and you have an opportunity to buy the 55, put in for 50 cents you can do that I'm. Not going to do that for the sake. Of the track record I think the stock is gonna have a full head of steam I think, it's got an easy three or four bucks in it over, the course of the next couple days so we're gonna stay the course on this one and let's. See it let's take a look at another one that we've got on LV Gio. And. I'll. Bring this screen back into play here, this. One expires, on June. 19. So we've got lots of time. We sold the 50 put bought, the 45, put let's, take a look at that stock and, here you can see it got hit pretty hard today, but it rallied back nicely and closed unchanged. We'll go into that daily, chart and, here you can see that it filled the gap today. That. Filled in that gap so, I think the stock is gonna find support, here right, at their $50, level and that, was the premise behind the trade so. If you got all freaked out today as a swing trader and you looked at the stock intraday and you went uh-oh, it's, down below $48. I'd better close this thing down by. The end of the day you're probably thinking ah dang, it I should have been able to stick with this well. The, market rallied, into the close - so, if. You two looked at the market early in the day you, could have thought well this is it this is the top we've just broken below, the 200-day, moving average. We've broken below, the prior de l'eau we've broken the hundred day moving average. Everything's. Very very fluid. Right now so you just have to wait till the dust settles and see how things closed that's. Why we use stops. On a closing, basis, but, the fact that this gap has been filled and the stock found support here I think it's going to continue to grind higher and we'll be just fine so.

Let's Take a look at a couple of other trades, we actually got filled on these today, byn. D and FB. We got filled today I had mentioned to you last week that we're gonna keep all the orders open until. The video tonight well, we got filled on these two so let's take a look at what kind of shape we're in on those I think, we got some really nice fills and, this. Is a good tactic, to use in this market right now you can see this horizontal. Resistance. Right here at 1:30 that was breached I would like to see byn D get back above that price but, we are all the way down here, on the, June 5 108. Put and, we're leaning on that 200-day. Moving average. And we're. Long the 107-foot, and we did that for a 20 cent credit so this, trade is actually in very very nice shape I love the fact that we've got the 200-day, moving average, protecting, us there I like, the fact that the stock was able to bounce off of its low today and, excuse. That and. So. I love. The, price action here I think we got in at a really good price and I'm, gonna put a Facebook, and. Facebook. We've, got the. June, 5 to, 15, put to 1250. Put so, right here we're leaning on that 2:15, breakout. Right in there and you can see how the stock never, quite got down to that level and it. Started, to rally and we've got a nice close. Very, near the high a bullish. Hammer. Right. Up in there and above, that breakout. So, I think we've got a really nice trade on in facebook, as well so. Got, two nice trades that we were able to get into and we've, also got a number of other traits. That we're going to be looking at today and I'm going to show you those and we'll go knock through those one, by one so, these top four are new. Trades excuse, me. Walmart. Nvidia. Netflix. P XD wait, a minute what's, Nvidia doing in here we already have an Nvidia spread on yeah, we do but I'm pretty sure that's gonna expire worthless I'm quite confident, in it and I, like the stock a lot so we're, gonna try and take another bite out of that Apple so. I've got Facebook. Up right now let's take a look at Walmart and let's, take a look at why I like it and. If I go into the stock er, I should, be able to bring up the. Most recent, earnings. Report. Well. In any event the earnings, same-store. Sales were, up 10% I believe, Walmart. Cleaned, up during, the coronavirus. They, were deemed essential they, sell food people, were going in there they weren't just buying food they were buying everything, that we're buying clothing. You. Name it house where goods, everything. So Walmart, benefited. In a major way and they. Also did, an incredible. Amount of online, sales well you can see. One. Two, three four. Tests. Of the, support level right here you've got two major moujik moving averages, coming into play with, the 200-day. Moving average. At 118, so. I'm. Sorry about that I've got something crazy happening, with my computer but we'll be able to work through it every time I use this recording, software, it seems like I've got issues but let's go, in and take a look at the trade that we want to do so, on Walmart, we want to sell the June 12, 118. Puts and we want to buy the June 12. 117. Puts so.

You Can see we're safely, below that. Horizontal, support, and that major moving average, at the 200-day, moving average. And, we're, going to go into the June 12 expiration. And we're, going to take a look. And we're gonna click, on the. 118. Puts. And. We're gonna click on the 117. Puts and because. We've got a dollar between, the strike prices we're, going to be trying to get going, to try and get a 20, cent credit for this and you can see that that spread, it's, actually a negative 9 cent bid. Offered. At 66, cents at. 20, cents, we're pretty bid, side meaning, I think we've got a decent chance to get that filled and if we're able to that's gonna represent a. 25%. Return in, about two and a half weeks so let's go through the trade again we're, selling, below this 200-day, moving average. We're selling the 118, put and, we're buying to 117. Put and we're, doing that for a credit of 20, cents, so. Let's move on to the next trade let's go into the staged order screen we'll take a look at that next. On the list is Nvidia, there, we're gonna be trying to sell we're. Going to be trying to sell the June 19. 300-foot. And by. The 295. Put because, they're two and a half dollars between the strike prices we're gonna try and get a 50 cent credit you. Can see that it's offered that spread is offered at 55 cents, so. Let's. Go into trade. And we're. Going to enter Nvidia. And. We're going to go into the June 19th. Expiration. Cycle and we're, going right down to the 300, put. So. We're going to sell the, 300, foot and we're going to buy the. 290, 750, put and we're going to be doing that for a 50 cent credit well, why do we like this trade let's, put the stock up let's take a look at why we like it. Nvidia. Had an incredible, earnings announcement, right here really. Really strong growth, they're involved in so many things with cameras, right now automated. Driving is just one of them so, the demand for graphics, chips is very very high we've, been selling puts on and vid since the market crash and there's, how much the stock dropped during the market crash it barely went down and even, while the market was recovering, it was making a new all-time high so, this stock has an incredible, amount of strength and if we start taking a look at where we might find support. On it you can see this $300. Strike price right in here that's right at that horizontal support. Level so, you've got resistance, breakout. Support. I like. That $300. Price level I also like the fact that the stock moves a little bit so if we get a little bit of a washout, and the. Stock pulls back we'll, have a chance to get this spread done by. The way all the spreads that I'm covering tonight are gonna be live until. The. Video next, Wednesday. If we, need to adjust and, the market throws, us a curveball and, we fall below the major moving averages, then, I will send an email alert and, we'll cancel those orders and we'll. Wait for, next Wednesday to try. And find some other opportunities. But unless you get an email, we're. Gonna stay the course with these trades so, again. We're trying to sell the Nvidia, 300. Dollar put and we're buying the 290, 750, put and we're doing that for a 50, cent credit. So. Let's take a look at our next trade. We'll. Go into the staged order screen and here. You can see Netflix. We're. Going to. Sell. The, June 12 390. Put and we're going to buy the June 12, 385. Put there's, $5, between the strike prices so we're gonna try and get a dollar credit, for that you, can see the spread is 45, cents bid offered, it a dollar 35, so, we've got a chance to get this filled and let's. Put the stock up let's, take a look at it then, we'll go through the order entry.

And. Here's. Netflix, hey. Pete what the heck look. At this the stacks been selling off we've got kind of a double top forming, in here what, are we doing. A bullish, put spread on this thing for it doesn't look that strong well. Here's what I like about it I love this horizontal. Resistance. Right here I love, this breakout, in here I like the fact that we have one two. Tests. Of support, even, above, where, we're looking to sell this put. Spread and. The. 390, strike comes into play right there at that horizontal resistance. Which is support, right now so. I really like, this I think this is a nice, solid trade, if the, market happens to pull back if there's a resurgence, in, coronavirus. Netflix. Is gonna weather the storm here's another one where you see a little tiny pullback, with the market crash and then as soon as the market starts to recover a little bit it, zooms, to a new all-time high earnings. Were very very good so, I feel very confident. That Netflix, is going to be able to hold this, nice support, level even, if the market gets into trouble so. We'll. Bring up the. Trade. Screen here, and. We're gonna go to the June 12th, expiration. And we're, gonna look at that 390, put. And. There's. The 390, put we're gonna be selling that and we're, gonna be buying the 385. Put, so sell. The Netflix, June 12 390. Put by. The. June 385. Put, and we're gonna be doing this for, one dollar credit, I think. We might get filled on this right away you. Can see that the spread is 45, cent bid. Offered. It $1 35, so. We'll probably need a little bit of help from the stock and maybe with the big market run-up that we had today near the close maybe. The market pulls back just to touch tomorrow and we. Should be able to get this credit spread done we. Have to put up $4 for this in margin. The, $5, between the strike prices let's the credit received is $4, and if, we take a look at the $1 credit and divide it by the 4 dollars in margin that we have to put up that represents, a 25%. Return so, fits, all of the parameters I like, the fact that we're able to get nice and far out of the money so, we saw the 390. Put you can see here were $30, out of the money on that, 10%, of the stock price so, I like, that I think Netflix is a nice safe, little, play for us I'm going to go into staged orders and let's take a look at the last trade P. XD. This is an energy, stock this is an energy, producer, like. P XD i've been long that from the mid 50's. During. The market decline i'm still long that stock and the. Reason that i like it is they've got tremendous oil, reserves, and I believe that as soon as the economy starts to recover they're. Gonna be opening their wells back up there, are a low-cost. Producer in, the Permian, Basin and, they've, got another thing working in their favor and that is that the pipelines, are in place so, over the course of the last few years they've, had lots, of oil that they wanted to produce but there was a glut, because. They couldn't get it to market, well now all those pipelines, are in place so they're gonna be cranking, up as soon as the economies, start to heat up oil demand, is going to go up producers. Are gonna start supplying again and they will be one of the first to, recover so I like this and we're. Gonna be looking, at the stock here and we're, going to let. Me put the stock up first and then I'll show you the strategy. That we're going to be using. I've got an upward, sloping, trendline that I've drawn here and it comes in right around that 84. $85. Strike. Level and so, that's what we're going to be using we're gonna try and stick with the June expiration, and, you. Can see how the stock has started to fill in some, of this gap here it's been a very gradual, grind higher because a lot of the oil producers. For, crying out loud we had negative oil prices, or the first time I've ever seen in my trading history so.

The, Industry, is pretty. Hard hit but, this is commodity. Based. Company. And commodity. Prices will. Start, to go up once. The economy starts to recover and. PXD. Being a low-cost producer that's. Why I really, like it so, we're gonna try and leverage this, upward sloping, trendline right here and we're, going to sell it out of the money bullish, foot spread and, we're gonna go into the June 12th, expiration, notice, that I'm trying to stay inside, that, two-week windows there's two weeks in two days I want, to keep these short-term because, I want to take advantage of that time decay and I want to give myself an opportunity to, reevaluate the, market reevaluate, the stock every. Two weeks when these options, roll off and it also allows, us to keep working our capital, and working. Our capital, if I've got four, weeks little expiration, sure I can, distance myself from the price, but. I'm, going to accumulate, 16. Positions. At one time instead of. Being able to contain that to maybe six, or eight different positions. So, we're that we're constantly rolling, into different, stocks and taking advantage of different opportunities I'd much. Prefer to. Do that so, we're, going to be selling, the, 85, put, and. We're. Going to be buying the $84. Put, whoops. Excuse, me we're on strike price there's the $84, put and, you. Can see that it's 30 cent credit but actually, it's not that's, a negative 30 cents so. It's negative 30 cents bid offered, at 55, if we can get 20 cents for this I'm quite. Happy with it the stock is about $10 out of the money I see, this $85. Support, level as holding, and I, think that energy stocks are gradually, going to start seeing the bid come back to them so, I think this is a nice safe, play the stock is not too far out of the gate and I. Don't believe that we're gonna see a huge, sell-off. In energy. Stocks here if. Anything I think that we're gonna see some buying taking. Place in the energy sector, asset. Managers, hedge funds, private equity, are, going to be looking to buy. Some, of these companies who, are really struggling, some of the producers and you'll have some of the larger energy producers. Also looking. To buy them there was even talk at one point that the government might look at buying some of these small energy, producers. For strategic. Oil reserve, reasons. So I like, P XD I think it's gonna do really well I like it long term as the stock so, it's, got some short-term, issues, that it has to get, through but you can see that the grind higher has, been very steady and the stock is not super. Super, volatile. So, again, on P, XD we're going to be selling, the June 12 85, puts and. We're going to be buying the, June 12 84. Puts and we're gonna be doing that for a 20, cent credit, and all, of these you can see in the staged orders and so. You can route them instantly. To your broker just. Click Submit and. The. Top four will, be your new, trades for this week so. We'll do a quick market. Recap and, we'll. Call it a day I'm gonna put up the s py and, I'll show you some of the things that I'm watching for we've, got a couple, of bullish hammers, in here we're closing above the 200-day, moving average. We've closed really, really, strong we, closed above. 300. Easily, and so, now, I want, the market to continue to, close above, 300. The more time it spends above 300, the more likely we are to see the next leg higher so, we don't want to dip back below it we want it to stay right in here for another week or so and then I think we've got a chance to add to, those gains but, I am a little suspicious, the, higher we go the more suspicious of the market, because I think that really good, news is starting, to get built in and I don't know that, it's all gonna pan out I'm still, I still feel that there could be some hiccups.

And Some nervous jitters along, the way so. As long as this 200-day, moving average, holds as long as the 100-day moving average, holds we also have that as a horizontal, resistance. Level lots, and lots, and lots of, support here, and as, this. Starts. To extend out by next week you'll, also have this upward sloping, trendline come into play so that will simply add another, level. Of support, as well you, have to stay long the market but, I think that you still want to distance yourself from the action by selling out-of-the-money bullish, put spreads, option. Implied volatilities. Are still elevated so. Selling. Strategies. Make, sense and you can see the VXX, is at 33, right here and then that's where it was before the market crash down. Around the 12 dollar level, so, these, premiums, still have a ways to go to, come in before, we can consider buying strategies. That's. It for this week if you're, watching this video on youtube I release. It to, the public on Saturday, I record. It on Wednesday night so that members have two days to try and get into these positions, but, you have the advantage by watching it on YouTube of going back and seeing, how each one of these picks fared and that'll, give you an idea of the. Performance so, if you are watching it on YouTube please. Make sure to subscribe to my channel and turn on your notifications, so that you never miss these videos, I post, videos every day they always have lots of actionable, trades in them and a ton of Education, I've given you a lot to think about today how. To like out of bullish, put spreads how, to like out of spreads. Credit, spreads in general, and what, you need to be watching for if you're a day trader or, if, you're a swing trader because it's very very different time horizons that you're working with I hope that these lessons will help you improve your trading thanks. So much have, a good night, we'll see you in the morning. Thank, you for watching this YouTube video I'm Pete stole sirs and I'm going to keep the trade ideas coming along with lots of Education, so make sure that subscribe to the channel and please turn on your notifications. So that you never miss another trade if you like the content please give, it a thumbs up I've loaded.

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2020-06-03 04:44

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