How To Trade Vertical Spreads? | Vertical Spreads Options Trading Strategy Explained

i'm sure you guys remember what this was right this is more about you know what a spread does and what's all about and we are going to just go through this quickly and then actually do some real spreads out there and i'll show we'll go through some some um risky ideas and some some non-risky ideas when it comes to uh spreads let's go let's go to okay so why i love the office so why do we why do we want to do spreads right a spread has a defined risk and reward you know before you go into a play how much your potential profit is going to be and what your max's max loss is going to be um and has lower capital requirements i mean the the biggest spread i've seen is 10 bucks so pretty much a thousand dollars is the max you'll ever need um you know in a play and we're doing 500 so we're trying to keep it even below that uh 500 you could play the teslas you could play the apples you could play the um twitters and and the snapchats and all that um you can't play the amazons those will be a little bit bigger or probably like the um the googles but but you can play most any stock out there with a with an easy credit spread and you have a lower potential for losses so if you if you are very conservative and this chart goes your way you can make a decent amount of money uh quickly but you know beforehand what your max loss is going to be um and time and theta to your advantage so that's why we're called data strike we use data to our advantage meaning if you have a high volatility event coming up like earnings et cetera et cetera and this is where we're starting in january it's earnings earnings uh earnings gold this month um you can do put spreads or even call spreads and if the stock doesn't go it goes the opposite or the market's expecting the theta burn will just eat it all up the volatility will eat it all up and you'll recognize a lot of your profits very very quickly so for example um the volatility for tesla was going high this week because of um you know the new numbers coming out so now the numbers are out and they look pretty decent what's going to happen with tesla is going to come back down now or is it going to blow off go up like 800 and then drop we don't know but that that's what's going to volatility is going to take care of that coming up neo right so we have some we have some january end of january uh credit uh options on leo or neo they came up with amazing numbers this weekend just i think this morning um they're delivered 7 000 cars for the quarter last quarter was 5 000 cars so they they up big time and we're going to see the price of stock go up to the 50s 50 253 tomorrow and then of course at the end of the week they have their event so you could do put spreads there and watch it go up so it's completely completely up to you how you want to play this game and how you want to get up there but you can use that to your advantage especially like cyrus said if you have a technical analysis down and pretty good idea what's going on but even outside of this game we have made a lot of money on credit spreads guys so this is no joke it's a really really good thing to play if you don't have the the stomach or the or the time for date trades um put spreads are are pretty decent guys so we'll we'll focus more on that as well i know we've been focusing on day trades a lot lately but this is also going to be on our on our watch as a matter of fact we got into facebook call spreads um this this last week so um that'll be interesting so in in this position you're buying and you're selling right so you're not you're not just buying an option or selling an option you're doing both nothing naked and you're only going to focus on core positions so you don't want to have like 35 different stocks all on spreads um you're going to have one or two main ones that you want to follow and you'll be you'll be doing that so it's it's a lot less risky but if the trade goes gets away from you you know it can be just as risky as a day trade so you have to be very careful when it comes to that okay so when you do a credit spread whether call or a put you have to answer these three questions right is it going anywhere um is is it is the stock just going flat is it going up is it going down what do you think it's going and then how long until it gets there so for us in the game we have no choice right friday is our hard stop but you can do pre credits press for 30 to 45 days out and get very decent credit along the way if you have a longer term bias on the option you could do a six month credit spread now of course there's a limit of how much money you can make on those so it may not make sense at six months but if you have a if you have a long-term bias on a stock you can make an easy fifty to a hundred percent return in a very short time as long as the stock continues to move up in the direction that you think it's going to go and then of course how fast will it get there with credit spreads it doesn't matter how fast it moves it just has to stay above your price and and you'll make some money now of course we'll get into more detail so those of you who know what debit spreads are um this is pretty much why um we do credit spreads instead of debit spreads and it's pretty much the theta right so theta burn we use it for us what theta burn means is every day that option is that you're holding an option it loses value it's like it's like the game of hot potato right uh as it's going on it's getting hot and you got to pass it on or it's going to at the end of the on friday it's going to be worth zero and the theta would have it it's going to eat up all of your option price so the longer you hold it the less the option is worth and because you're selling an option um you want that to happen because you you sold someone in an option and the longer their the price is moving in your direction the more profit you're making every single day until you get to expiration and we'll talk about that um assignment risk is there with credit spreads if the price goes above your puts right so you got to be very careful if it's testing it um sometimes it'll make sense to just cut a lot cut cut your losses and move on but we'll talk more in depth about that so the uh for those of you who trade options um you know call is to go up and puts to go down right but in the spread world it's the opposite because you're selling more than you're buying right so because you're selling the put you're telling someone hey if it goes down i'll buy the stock from you at this price and because you're expecting the stock to go up so you're going to sell a put and then you're going to buy a put if you think the stock is going to go down then you're going to sell someone the upside and you're going to buy the upside as well so yeah oh is there a question okay so if if if you think it's going to go down then of course you'll sell the call and buy the call because it's going to go down and whoever you sold a call to is going to be work would be worthless and you'll make some money it's a lot of information to go through but we'll do some live examples and you you'll probably get an idea of what we're talking about here and then of course it's a great time i'll post a link to the master of spreadsheet where we have youtube videos out there already that we've created on what a credit spread is what a call how to do a put spread call spread all that we'll have links for you there so you can always refresh your memory on how to do it we have it done in robinhood but if you have tasty if you have you know thinker swim e-tray whatever you have let us know we use all the platforms even weeble we could do it in weibo as well and we'll definitely um get you guys videos on that as well if you guys need a refresher so uh iron counters a little bit more more advanced we'll skip that one um so this is why theta is so important right so when you and this is why we're keeping that at a weak minimum or week maximum is the biggest data decay time period if you're selling an option within 30 days and the stock doesn't really move much or moves you know in the direction you want it to move you're going to recognize a lot of profit very very quickly because aft at the 30 day mark if the stock is just going flat the option is decaying really really quickly as a matter of fact the decaying starts about the 120 mark but you will see that first um big step at the 60 day 90 day mark and then 60 day and you can see that big drop off at 30 days and when we're doing one week we're like right here guys that means if it moves in your direction even a little bit profit is going to be yours for taking so yes the profit will come fast but that means the profit potential will be lower too so don't expect to make 100 returns um but you can easily get like you know so i was saying 10 to 15 percent easy per week if you play the right stocks in the right moments and we'll talk about some that are coming up that that i may be looking at okay so before we move on for some live examples any questions on what spreads are um so one more thing for spreads you will need level three um robert node access so robinhood level three i think think or swim level three margin margin level three um so make sure you have those enabled um on your account to play the game at least but spreads you will need margin level three on any platform okay okay and i think we have videos with this presentation on youtube as well that we can definitely share any questions so far before we go to a live example perfect okay so i'll open it yeah sure go for it for an option tree that you just give me a second yeah um if you were to do an option trade where you think it's going to remain in the same consolidation pay range what type of spread would you kind of use there uh so that's the iron condor so yeah we'll talk about it i was gonna kind of skip it because it was more advanced but did you brought up we'll talk about it um and so this iron condor is you're doing the um the put spreads and the cost spreads at the same time so this is a strategy we use during earnings time periods a lot of times where you know earnings we're expecting a range to be this and this and z usually puts out the earnings and it has the levels on there um what the market is expecting but you could do uh one call on top and one put at the bottom and as long as it stays between these two lines you'll make profit on both if it drops below then you make profit on one and you lose the other one so you pretty much have your max loss um and the other other thing happens excuse me as well where if it breaks one it moves higher then you'll lose on one side but your collateral stays the same so you'll have max loss if it breaks up or breaks down but if as long as it stays here um you'll make you'll make money and is that considered a foreign yes yes uh one two three four yeah now um uh for the game it counts it counts like like a regular spread because these are technically two spreads just combined and because the collateral is not anything more um you use the same collateral i mean because you could only lose one way right so um the collateral up here will be the same as down here and you won't really be out two times you'll just lose the exact cattle you had so iron condor you can complete your iron condo for all of your plays for the week and still come out on top um it's just that it gets some it gets really nerving when it tests both sides and it gets kind of scary at that point but i mean we'll do an example of iron condor as well okay and let me bring in yeah yeah yeah this is the same thing which i have showed you right on youtube you were telling me i will show this on sunday that how i played the apl like this yep yeah so so we have those apple put spreads right yep because apple put spreads this is exactly what we're doing yep will you please share that example again so we can understand yeah yeah sure sure actually let me show this and i'll show the apple one as well you're right no problem um actually let's talk about apple right now i was gonna pick tesla but let's look at apple um so apple's chart and we're looking at apple right here is coming up now um and again if you're if you're doing these spreads i would recommend the daily over anything else um okay so right now and let me make sure i have my thing here so we currently have i think it's a 138 uh [Music] apple 138 139 and then i have some other ones as well okay yeah so right now we have january 29th 138 139 so 138 and we have 139 so our current play that we have for apple says it'll pay out money to us if apple closes above this 139 level by the 29th of january so right now of course it hit it and came back down but we are expecting a move up into earnings and actually move up higher than 139 140 into possibly probably the low 140s um in anticipation of really great great earnings so that's the play we have we also have one for 134 133 which is pretty much 144 right over here so it's the second play that we have open now what we're expecting with apple like i said we're expecting to move up here a bounce off the moving average and then move up so we're expected to close above 139 so in this play itself and i'll show you what we're down right here this is that play that we have for 139 138 we received 165 dollar credit no average 55 155 dollars yeah 55 credit and our max loss is 100 so pretty much what this says and we'll do an example with tesla as well we chose the 139 and 138 so we sold the 139 and we bought the 138 the difference between the two is one dollar right so when you have a one dollar difference each contract is 100 shares so it's a 100 max you can lose on this place 100 so 100 and then we got a credit of 55 cents so you take out your credit you get that immediately so now your max out of pocket loss is 45 bucks so on this play if apple goes above uh 139 then i make 55 if it doesn't then i'll lose 45 that's over a 100 percent return on this play alone so if i only had 100 if i had 100 bucks to spend i could buy two of these and still be okay and if i if it goes the way i wanted to go i'll make 200 bucks so in this case instead of buying apple shares right 432 bucks i just paid 45 bucks and if it goes over 139 i make 55. so that is a 50 uh yeah 55 divided by 45. that's 122 return on on my small investment i only have three of them small investment of um 50 or 45 bucks each so that's pretty much what we did so we we spent uh 45 times three we spent 135 bucks and our potential profit is right over here 165. and we'll talk about a little bit more on how to buy these and all that stuff so um that that's pretty much the gist of this one it's like i said it's a really really good way to make higher returns with a very low um uh initial initial cost but again if you get too aggressive um then it's going to burn you it'll burn you hard and then you lose a lot more so it gets it's very easy to um uh to to get caught up in it and and kind of lose lose the true essence of what you're trying to do um tesla is a really good example of something that you can you can a really safe bet on and still come out with a decent amount of profit okay so we'll do a live one on tesla right now and again if you guys want to do this on think or swim i'll show you guys on that as well if you guys care for it um so tesla and let me show you what we did so far so here's tesla we're going to click on uh trade tesla options and we're going to click on the put side right so put buy and sell we're going to do both buy and sell now in looking at the chart for tesla you know i think it's a conservative amount to expect 600 bucks i mean it's it's safe to think that hey maybe if tesla comes back down it'll stay over 600 bucks or if you want to get a little more aggressive and go hey by the end of the week i think he's going to close at 7.50 so you can do both ways this will be safer way of course but this you'll make more profit on the upside and we'll do both so six let's say let's say our bet is 600 bucks that tesla is going to stay above 600. all it has to do is stay above 600 that's it nothing more nothing less um and we'll do the 600 range which is coming right down here so this is the way i like to think about you know when doing this type of spread right so we're going to buy the cheaper of the two so 600 is 213. 597 is cheaper so i'm buying the cheaper and i'm selling the more expensive one now in thinkorswim is a lot easier they already have it mapped out for you and you have to click on one button and you're done um robinhood it takes a little bit of work to do so here you received 11 credits so this is of course 100 shares so 11 credit and your spread is 600 and 597.50 so um yeah let me get that up there okay um so you have a 11 difference so 600 minus 597.50 your max loss is 250 and then you received a credit for 11 bucks so now the max you can lose on this play if you buy one contract is 239 dollars you get you make 11 bucks if it goes if it stays above 600 you make 11 dollars if it goes below 600 you lose 237 or 239 that's a five percent return so if you want to play very very safe conservative um you can say that hey if if as long as tesla stays above 600 i'll make five percent on friday and you can call it a day at that and and that'll be fine if you want to get a little more aggressive and be like hey you know what i think it's gonna be above 750 by friday so you could buy the 750 options and i'll show you those and with a challenge like this i'll be honest with you that may be a better way to go because i guess i don't want to give away my my my strategy but that may be the bullish way to go um so now you're going to of course you sell the more expensive one so you're going to sell this one and you're going to buy the cheaper one which is uh right below it 745. so now you notice it's a five dollar difference between the two so now uh the five dollar difference is five hundred dollars and you're going to get a credit of 388 dollars so minus 388. so now on this trade the max i can lose is 112. so if it goes if it if it does not close above 750 by friday the max i can lose is 112 but if it does i can make 388 dollars that's a pretty good lost two win ratio as a matter of fact 388 divided by 112 that's a 346 return on your tesla play as long as it stays above 750 by the end of friday so you know you could do very safe and get five percent or take a little bit more a lot of risk and hey if you lose you lose 112 but if you win that's 388 coming your way on a stock that's known to jump you know 50 60 bucks overnight sometimes so um we have that or if you say you know what i just want to stay 50 50. i i don't really want to bet on anything too much um i just think tesla is going to stay right now is that 704 i just think it's going to stay above 700 bucks no matter what happens and i'll just call it at that and you can do that too so you can buy the lower one and you can sell the 700 and now you're getting 118 credit which will give you so 250 is your max loss minus 118. so now if it stays above 700 you make 118 and if it doesn't well you only lose the 132. so you're you're pretty much right there uh for both of them when it comes to this thing so that in that case it'll be 118 divided about 132. 89 return 89 return as long as it stays above uh your 700 range by this friday the expression is the 8th of january by this friday so you could see there's a lot of things you could do with spreads that you can't really do with anything else and this is why it's such a really a great way to kind of do this and make pretty decent profit um and again right so this is now profit is good but i don't want you to load up you know a thousand of these right so that that's where the greed kicks in and you kind of get hurt but even in this one if your max losses you know one uh 138 or max loss is 132 and in our game you know you could do up to 500 bucks so you can 500 divided by 138 you could do three of these contracts so if you just do three of these contracts at 700 right and you you massage your 500 allowance for this first trade and you make 118 times three you're already up 354 bucks and your first week you start off with 500 bucks so next week you get 850 and you keep on going after that so that's the amazing that's the beauty about spreads if you get it right if you get it wrong of course you can lose a lot of money um i have a request to show on thinkorswim perfect yeah i'll do that right now um think or swim is awesome uh because it it does that for you so the first thing this is the desktop version and you can click on now the mobile version is available too but it's it's not as user friendly but it's there um so of course if you're on the desktop you'll click on you know tsla and you'll see the grid come up and i'll just i won't go that i'll just do like 12 so save some space and let me close them all out and of course you're going to do january 8th but you want to make sure you have the vertical turned on so usually the default is single single we use just for the regular put regular call you know our our day trades uh the vertical is the uh the spread option then you open up your january 8th and you're gonna look on the put side so if you think it's going to go up you're gonna look on the put side if you think it's going to go down you're gonna look at the cost side and again this is only um this is only for the spreads regular day trades if it's going down you're buying a put if it's going up you're gonna buy a call so just for the spreads you're going to up his puts and and other ones call so we did that 700 697 and here's your your um what's up what's up sorry about that oh no problem um so you can easily click on now this doesn't give you the right price because only gave me 65 or that one had the other one but that's fine we could we can go and go this route right here um you're going to do a bid and a bit is because you're selling the option right so you're going to click on bid it'll come up right over here and of course my default default one good last time i didn't do that and i'm just going to do i'm going to do limit so here's your 117 right i think robin hood had 118 on there so here's 117 in credit you're going to receive and your max loss is going to be um you know 250 bucks and if i click on confirm and send it's going to tell me right over here right your max loss 133 your max profit 117. so if it if tesla goes stays above 700 you're going to make 117 dollars if it closes below 700 you know most you can lose is 133. so that's the game you're playing here and of course at any time you can close out early and make less profit or take less of a loss if it's going against you but at on friday right at expiration this is going to be your your your you can't make more than 117. there's no way you can make more and you cannot lose more than 133. but you could see how easy it was on thinkorswim to set this up you just click on hey what spread do you want uh i want this one now when you get a little bit more advanced you can change uh if you want to do you know 700 or not 700 you want to do 695 and 700 you could do it that way as well and and get different credits that way but the default strike for your spread is already settled for you where all you got to do is just click on bid and review confirm and bam it it goes through um like even this one's a pretty pretty good one right i mean as long as it stays above 700 your profit is going to be 227 if it goes below you lose 273. almost or one to one 50 chance and you call it and then since you have a 50 chance you know this is where char charting comes into play this is where you know like i was saying earlier um your your put spreads your call spreads all that stuff come into play um knowing the technical angle knowing what the momentum is showing like right now this looks bullish to me i think it's gonna go my personal goal is 775 before any other drop because of the good news that we saw and the chart was already kind of setting up that way as long as this turns green i think we can see the move up happen so um you better believe tesla will be part of my strategy for the game next week also another one right so neo is also we have leap options on neo guys right so we have leap options for uh sorry we can't call them leap they're until the end of january but we're expecting it to be in the 55 to 60 dollar range at least by in the next two weeks so you could buy some nice put spreads right at 45 bucks or as long as it stays above 45 by this friday you'll make money and the fact that it's already at 48 you could still get away with a decent amount and still make decent profit and let me show you that so on neo if it wants to cooperate so of course neo trade options uh puts and 44. we're going to do 45. so you're going to buy the cheaper one and then i'm going to sell the more expensive one so this is already more of a thirty percent play right here so this is gonna give me a thirty dollar credit and my spread is one dollar right so that means oops so that means and let me get out of this clicked on it by accident um i'm gonna have a hundred dollar difference because it's one dollar and then i'm getting back 30 bucks so minus 30. so here my max loss on neo will be 70 and my max gain will be 30. so if it stays above 45 now it doesn't have to go to 100 it could just stay at 46 the whole time and you'll make the exact same amount of money you would have made if it goes to 45 or if it goes to 65 that's the good thing and the bad thing about a put spread is you can't make more than 30 bucks that's your limit but the bad part is or the good part is you can't lose more than 70 that's your limit on the downturn where if you would have just bought a naked call it would cost you about 100 bucks just for one naked call so 30 profit over 70 max loss you're looking at a 43 return um on a very i think reasonable uh spread for neo for this friday that neo stays above 45 dollars on friday at 3 3 15 pm so um you don't have to you know go through like a million stocks to find the good ones we already know i mean we go through them almost every day of you know what's popping what's looking good like alibaba is a good one that you can do it doesn't really matter like we looked at tesla right and we're looking at 250 spreads so you can play tesla with only 250 bucks in your bank account it's a 700 stock um and there's some like snap right um where they have 50 like actually even neo does right here if you look at neo so this oh let's look at this one this will be a really good one for you and hopefully you don't do it before i do on monday but we'll see um we're going to buy and we're going to sell so pretty much it ended the day on friday at 49 dollars so basically we're going to keep it right at 49 bucks and it's a 50 difference so this is going to be a good one for us so this one says the difference is 50 cents which is 100 shares so it's 50 difference and you're getting paid 28 for this so -28 the max you can lose on this play is 22 dollars that's all you can lose if you were to buy a naked car guys it's in the 100 200 range 300 range but just one contract you do this play you can the max you can lose is 22 dollars so if you can make 28 and lose 22 that's 127 percent return as long as neo stays above 49 by this friday if we are expecting neo to go to 50 55 60 65 this is a pretty reasonable bet to make um for this friday now if you just have a hundred bucks why not why wouldn't you do this you go in thinking hey if it's 100 bucks i lose 100 bucks no matter what i can buy four of these and still be okay but if it does go in your favor right 28 uh so if you do 100 divided by 22 you'll have say four options 28 times four you'll close out the week with 112 bucks you'll make 112 bucks and then max you can lose is 100. so it's a pretty good way of kind of trading if you have a pretty good idea of where the stock is going to go um and again i'm using january just for this week's uh next week's game but you can you could pick whatever date you want so you could do hey um you know december no this is january uh we could do december 2022 and it'll be the same thing right so even if you go that far out um your profit potential may not be any different than what you would have done there but if you want to do a longer term spread go for it it's there may not be the best way to do it because you know theta is not there for you theta is nothing but when you look at january 8th you look at this theta guys and remember we talked about theta earlier in the presentation it's sitting at 17 that means every day that you're selling this option you're going to make 17 cents or 17 dollars of your profit every single day so as a five day thing every single day you'll make something it'll get higher and higher if the stock stays above your 49 and of course the higher it gets the theta gets higher or lower and lower but if it gets higher up here since it's out of the money oh 17 looks like it's staying in that range oh okay but as as this stock starts to move higher and higher you'll recognize more and more of that profit um that we talked about now it has to remember this this 28 you will only make this amount on friday at 3 p.m you cannot make 28 dollars before then before then you'll make less right so you can sell it early and make 15 you could start early make 20 dollars but the full amount the twenty eight dollars can only be recognized on friday at three p.m um and actually some of these commodities go up to 315 so be careful about that um is when they'll when they'll go through so just be aware of that um when looking for maximum profit um these are the kind of plays that if you know neo is sitting at 55 bucks you just let it go and it'll expire by itself it'll close out by itself and then over the weekend you'll get your profit in your in your account and you can um you know do whatever you got to do with that afterwards so you know um now if you want to do the opposites we've done opposites here as well like for example if you think um so the one that i'm looking at for tomorrow for a day trade right is baidu right so baidu i think has moved up so much and then there's so much drama going on right now with chinese companies etc etc i'm expecting a little bit of pullback tomorrow for baidu so if you don't want to do the day trade right you could do a weekly call spread and you could do it for 240. if you do for 240 as long as baidu stays below 240 you'll make profit on friday and let's let's do a little sample of that one uh baidu and of course while that's loading baidu and pdd both are looking pretty good for some call spreads tomorrow guys just a heads up um okay bye to january 8th oh and we saw we said 240. so let's see how much profit 240 will make us um 240s all the way up here so instead of the put side go to the call side and you're always going to buy the cheaper so this one's a cheaper one i'll buy that one and then you're always going to sell the more expensive which is 240. and so you're going to make 19 and your risk is 250 because that's the spread so if i was to do where's my crushed calculator 250 minus 19. your max loss on this place 231 the max profit is of course 19. it's an eight percent return for baidu as long as baidu oops not naidu baidu uh stays below 240 which is all the way up here so that's not a bad play as well as long as of course we see the signs tomorrow of it coming back down et cetera et cetera but you know we talked about a lot last week um splunk is one of them right where bear shawn splunk coming down to about 160. uh we're bearish on dollar tree right um coming back down to at least a 10103 104 level as it starts to get weaker and weaker and this gap needs to get filled we're looking at facebook it's going to come back down and retest this level down here at 264. so we have some bearish ones that we're looking for where you can easily do some credit spreads or call spreads on the top of these levels and write them down as well so you have to go look for a brand new stock um we just talked about neo we just talked about tesla um apple once this one tries to turn back around um you can get into those on apple coming down here so um there's going to be a lot of them and if you just you just look at a handful of them and just trade those for the rest of the year for the rest of the game and you can come out on top especially when we have so um especially when we have uh you know earnings coming up and news and stuff like that so this could be a really really good way to kind of supplement your portfolio um as we go on for the year so and again uh same thing on the thinkorswim side right we did the put spreads here the cost measures the opposite side right so instead of doing bid on the puts you'll do bids on the call side and as long as it stays below you know 700 you may make profit on this side too so it's the same thing just click a button and it'll come up for you right though right over there i mean they make it so much easier on think or swim on the desktop of course mobile is just too much too much going on at the same time but i love the mobile app for everything else you guys can see i already have the order set up for splunk to sell um when it gets down to um seven when it gets up to seven bucks so um and of course you'll see that here as well um pretty much when it comes back down to this line at 150 it'll sell my options at that point they'll be worth about 150 percent hopefully um oh yeah good question of qs so qs i had on my short watch for like the last three four days and i just never pulled the trigger um i should have um and you'll see you'll see it here um such a beautiful drop on qs guys it was just i mean it was on our scanner if you guys remember over here short and then it just dropped so fast um i mean we made money in other places but it was just such a beautiful job you could have made some nice call spreads i think it's come down too fast we'll see some bouncing off the 20 moving average 20 moving averages is is very um it is usually a good rebound zone for stocks are falling at falling down fast so you'll see in the past here right when it when it comes down to 20 it kind of hangs in there for a little bit before dropping some more so um expect it to kind of come back down and retest the 20 probably bounce up a little bit and if that 20 fails um because you also have support here at the 75 76 star level once that fails um then we're back in the 50s and this whole run up was pretty much for nothing as long as the rsi is above 50 and the macd is still above zero we have a pretty good chance we'll bounce up here and you you can see that i think with snow you'll be able to see that a little bit better so remember with snow it came down and then bounces between the 20 and the 10 right once that fails then you get the next moving average and when that fails like it did this friday um you know the next support level for for snow is pretty much right here in in the 242 zone um but man that's a it's a pretty big fall from grace and this was another one if you guys remember we bought we had some 420 call spreads on this one so when it started dropping we made a decent amount of money um as it became as it became to as it began to fall but right now there's a pretty decent there's a pretty good support of that 250 which i think this is where this is headed next and this will be um one of the ones that i watch for tomorrow my only thing is that the rsi's oversold so much and the magnet is right at the zero line it may do a quick bounce up before the before the to further drop so just keep an eye on that bounce back um that usually happens um you know even with even with something like baba right it came back up we said we needed to hold the 230 line for more than one day and it came back up and now it's coming back down guys so we can see it kind of come back down and re-test 220 before everything's said and done the problem with baba is it may just be a gap down like it did over here instead of a gradual move down like we wanted to do um so but this is also available for us tomorrow for a nice nice put as well or if you want to play the game of cost present put spreads you could buy some nice you know call spreads right at 260. you know make four five percent if you want and watch it go down um that's going to be completely up to you it's going to be interesting with neo though with all that you know tension going on with chinese stocks and neo reporting really good numbers um i think the good news will outweigh the bad and we'll probably move up our our we have contracts for the 29th of january i think those will be really nice tomorrow we're already up 30 percent i think we should hit the uh 65 to 70 percent tomorrow and then um and if you have put spreads on them as well like we did make sure you take you take some profit off the table and and go about that but um this is really enticing for for a game at least at least for a game i know there was talk about um intel moving up a couple of days ago um and then dropping down of course this to me guys and let's talk about this one really quickly um this trend line looks pretty good um if you can break this trend line on the way up then we can see a both uh bull run continue right now what i'm seeing is the macd is closing higher and higher every time it's closing it's now about to close above zero that's the first time in a long time so this drop right here right even though the drop was lower the max d crossed higher drop was a little bit higher and macd is now about to cross right at zero or right above zero and we all know what happens when it crosses above zero we can really expect this to kind of move on up and higher of course we have this resistance line but if you can kind of overlook it with a magdie about to be above zero rsi is now above 50. i'm thinking guys that this is going to make a run at least to this line at 51 bucks um either for some you could so this is so this is a really good example of if you want to get a little more aggressive you can buy some put spreads right at the money at 50 bucks and if it goes up for the rest of the week there's your profit or even some naked calls for the for the rest of the week um going back up you know probably like 48 or whatever so a really good example of a minimum you know touching this line right over here and taking some profit when it does so and if it breaks above that's even better right before earnings we know tech stocks like to go up right before earnings at least about two weeks before so there's your there's one quick trade that you can probably do tomorrow on the call side if you don't want to do any puts okay um yeah this trend line just looks really strong it's a good sign especially with a break but you you notice right everytime it comes back down it goes right back to a trend so trend is right there but it's gonna hopefully just power through and if it powers through then you know your next stop is 55 then you have 60 and then you have 65 so um those of you who remember this drop right here on earnings really hurt us last time around when we played uh intel or was it here one of these two earnings really killed us i think it was this one um but yeah it could be time for some revenge trading okay okay so we we are uh past our past our time here we're at 10 17. so on discord guys i've already posted videos um on the watch list for our watch list um this coming week if there's something in here that that you want me to do a video on let me know just put it here on the watch list and i'll do a video tonight that way you'll have a a look at it for tomorrow i'll put intel here that we discussed i think i already have neo uh neo should already be here netflix guys looks like another bullish one for netflix for the next 20 bucks coming up um and of course we talked about baidu we talked about pins dollar trees splunk apple so we talked about a lot of these already today but the videos are already there and i posted them this past weekend so you guys should have access to them to look over and if there's anything more you want me to add i'll add it down here for you guys if you guys are curious about a stock or whatever so let me know let me know in this group right here so i can do it um i'll probably start doing the videos later on tonight so you have probably an hour to get your request in and we can go from there i know there'll be a lot more questions on the competition etc etc keep those coming um this should be active for you soon um the master of the spreads and you put your questions there and we'll answer it right away and then um we can go from there as well and you know if we need to kind of adjust as we go on we could definitely adjust as we go on as well it's not going to be hard or fast any any questions before we call it a night guys so with that being said thank you for joining guys i will see you guys tomorrow at noon thank you

Channel: Theta Strike

Views: 465

Rating: 5 out of 5

Keywords: iron condor, profits, spreads, put spreads, call spreads, option strategies, options explanation, what are options, investments, invest, how to trade stocks, Robinhood options, stock market, options, reinvest, wall street, vertical spreads options, selling vertical spreads, long vertical spreads, options trading, options trading strategy, vertical spreads example, vertical spreads trade examples, options trading for beginners, option trading strategies, buying vertical spreads

Id: RWfY9bw79WM

Length: 50min 0sec (3000 seconds)

Published: Wed Jan 06 2021