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How to Understand Every Option Strategy | Cameron May | 3-25-20 | Multi-Leg Option Strategies


good morning and welcome everyone my
name is Cameron May it’s 9:30 Eastern Standard Time on a Wednesday morning
that means it’s time for multi leg option strategies I’m looking forward to
our discussion today as you see on the title I’m trying to tackle a big
question that I think a lot of options traders encounter when it that when
they’re at the front end of their learning curve when it comes to options
and that is you hear about so many intimidating sounding or fancy sounding
strategies iron condor butterfly vertical spreads and it can feel like a
lot to understand well today we’re going to try to boil it down to the incentive
the essential elements to help someone understand every option strategy it’s
not the name it’s the ingredients that are important so we’re gonna be talking
about that before we do that though I want to say hello to all you varying
veterans I already see a number of familiar names hello there Robert
and our Toro Jay frost there in cool Chicago so we already have Indiana
Chicago Hawaii Florida Seattle I’m sitting here in Salt Lake City had to
drive through a little bit of a snowstorm to get here so I hope
everybody’s enjoying better weather where they’re sitting where they’re
hunkered in hope everybody’s staying healthy in today’s climate take the
right precautions let’s all stay healthy and safe but if you’re watching today’s
webcast were very first time I want to welcome you as well and if you’re
watching on the youtube archive after the fact enjoy the show but be aware
that you’re invited to join us on Wednesday mornings 9:30 Eastern is when
we kick things off and we don’t go beyond 45 minutes so don’t be too late
but let’s get right into it first of all very first thing that we always need to
do is pause to consider the risks associated with our investing so some
important information the following presentations for educational purposes
only options are not suitable for everyone
transaction costs are important factors that should be considered when
evaluating any trade all investing involves risks including risk of loss
and there’s an overview of your options Greeks all right so I have a very simple
agenda for the day I want to talk about how I consider option strategies to be
like the dollar menu at Taco Bell I really do we’re going to talk about
combining the different ingredients for options to create all these different
strategies and then we’re going to apply that to current market conditions we’re
gonna go construct a multi leg option strategy using the basic ingredients
that are universal to all strategies and then we’ll place an example trade
alright just to connect the theory straight to application everybody goes
home with an understanding of how all options strategies are built okay so
what I’d like to do you know I just said options strategies are like the dollar
menu and talk about what in the world do I mean by that well I want to put
yourself I want to I want you to put yourself in in the shoes of the manager
of a of a Taco Bell restaurant all right and you have a brand new teenage
employee and you say okay I don’t know what we want to call him let’s call him
Bryson Bryson make me a taco make me that dollar that dollar a taco from the
menu raisa says I don’t know what a taco is well here’s the explanation you take
a tortilla put some meat in there add some cheese sprinkle on some veggies
taco and he says got it and he can now make a tortilla and you say great now
make me a burrito well I don’t know what a burrito is well Bryson what’d you do
take a tortilla add some meat add some cheese forget the veggies roll it up and
you have a burrito okay I can do that now make me a quesadilla well what that
sounds fancy what’s a quesadilla take your burrito ingredients flatten that
thing out put another tortilla on top and cook it okay I can make a quesadilla
well what about a tostada make it tostada for me I don’t know what a
tostada is all right take the top off the the quesadilla sprinkle on some
veggies you have a tostada Wow so you’re telling me that for all of those things
we have four basic ingredients if that’s what I’m telling you and what I’m
telling you today is that for four options they’re all working with four
basic ingredients all right so let’s go have a look at the potential
ingredients for every notice it says potential ingredients for at for an
options strategy let me switch here potential ingredients for an option
strategy notice that it says potential but this is really for just about this
is really for every option strategy let me ask you veterans help us out here and
we’re starting at the front end of a learning curve but we’re going to
accelerate to the to the end pretty quickly here in the entire universe of
options trading how many types of options are there not option strategies
how many types of options are there there are two there are calls and there
are puts all right and how many things can you can a trader do with a call or a
put well there are two things that they can do they can buy or sell calls or
puts that’s it two different types of options two
different things you can do them so really the potential ingredients for any
option strategy and I remember what a revelation this was for me when I was
first learning about options Wow so you’re telling me I can buy calls I
can sell calls I can buy puts or I can sell puts and that’s it so you’re
telling me in an iron condor all I’m doing is buying or selling calls or puts
yep that’s what I’m telling you you’re telling me in a long call diagonal all
I’m doing is buying calls or puts that’s right you’re telling me that in a in a
in whatever fancy name strategy you can come up with and I encounter a new one
every once every every now and again somebody else say hey Cameron have you
heard about this new option strategy and it’s called whatever and they throw out
some cool scent cool sounding name I don’t care about the name I don’t care
whether it’s called a quesadilla or an enchilada or or a tostada I just want to
know what are the ingredients and that tells me everything I need to know about
that straight strategy so when a trader buys a call
what is that well that gives them the right to buy a stock right or an ETF but
we’re going to talk about stocks today if we sell a call we have an obligation
to sell the stock if we buy a put we have the right to sell a stock and if we
sell a put we have an obligation to buy a stock if you struggle with any of
these concepts I’m gonna make a recommendation right now because I’m not
gonna spend a whole lot more time on this part of the discussion I just
wanted to break everything down to the essential the vital elements of a
strategy but if you struggle with what these mean the right to buy a stock the
right to sell a stock I would definitely suggest after today’s webcast you go
check out barb Armstrong’s webcast that happens on
Friday mornings it’s called getting started with options starts at 11:00
o’clock Eastern Standard Time you can attend that live or if you go to
the archive for this discussion go seven or eight minutes in and I’ll put a link
right up in the upper right-hand corner to one of Barb’s recent webcasts for
getting started with options all right but these really are the essential
elements now you veterans you tell me how many of you had this same
realization the light bulb went off and you said oh wait a second this is not
nearly as complicated as I thought it was when I hear some intimidating
sounding name all I have to know is okay well are you buying a call
are you selling a call are you buying a put or a selling a put what combination
of those four things are we doing and we can break it down from there you I don’t
I don’t have to I have to have no prior experience with a strategy to understand
the potential for reward the potential for risk where I make my money where I
lose my money where I break even on a trade all of that is summarized if I
just understand the ingredients of the trade all right so that’s gonna set the
stage for today’s discussion I really wanted to just spell that out I know
that for a lot of you you’re saying yep Cameron I do that well I think it’s
worth eight minutes to reassure every everyone else in the potential
audience from here forward that they can understand options pretty quickly if
they can if they can really understand those four elements and they can
discipline themselves to take a strategy break it apart into its legs this is
called a multi leg option strategy class all we have to do is understand the
different legs all right Terrance yes perfect barb has a great
graphic for understanding options he actually does a great job teaching
getting started with options all right so let’s get on with it let’s go ahead
and take this summary let’s build something using the ingredients for a
multi leg option strategy but of course let’s take a look at what’s happening
with the S&P 500 first let’s see what’s going on with the markets if you weren’t
paying attention yesterday if you didn’t follow what happened with the markets I
know that it can be tempting to Cheil our eyes from what’s going on in our 401
KS right now but what was historically unique about yesterday as brutal as
these last three or four weeks have been for the Bulls in the audience what
happened yesterday well yesterday was the largest 1 point up move in Dow
history it’s not true for the S&P but in Dow history biggest upswing ever it
might be actually for the for the SP want to double check that but at least
for the Dow largest the largest upswing and the point in the in terms of point
move it was this it was the largest percentage upswing since 1933 Wow ok so
that’s pretty big yeah William there you go highest up
move in percentage terms up eleven point two three percent or something like that
yesterday and today it looks like that optimism is continuing now that said is
this a guarantee that this is the start of a new uptrend for the the markets
that’s going to continue obviously we don’t have that information yet the
markets are going to do what the markets are going to do
we don’t have sway over that but let’s look at thing from a technical vantage
point if we look at the at the pullback that we’ve experienced we hit a peak
right here 33 93 about a month ago pulled down to a low right there and
then experienced a pretty sharp a rally covering about half that distance back
up and then we sold off again came down to a low here rallied to a peak this
time only going up about a third then we sold off to a new low
rallied up about a third again to a new peak and finally we’ve sold off to a
what is this our fourth consecutive well it’s our third lower low going back to
this first one but we’re seeing a series on a very short-term basis but pretty
significant in terms of of distance traveled lower highs and lower lows well
what’s going on right now we’ve rallied have we yet achieved a higher high well
if we’re if we are defining this as the previous high and sorry for the terrible
arrow but you get my point we’re not there yet
so for a technician who applies what’s called the Dow theory of trends maybe we
haven’t yet reversed course on from this technical vantage point on the trend now
doesn’t mean that this won’t be the start of a new opportunity but for right
now let’s say that a trader is looking at current market conditions and they’ve
decided that they’re gonna stick with a bearish outlook until maybe more
definitive technical information as it had sound fair and let me just double
check I want to read all these chats that are coming in I definitely
appreciate the participation I like the sidebar interaction as long as it’s on
topic and long as it’s not a distraction I think that’s fantastic
okay all right so even Ricardo’s mentioning a
strategy called an octopus has a whole bunch of
different legs well even with that if you’ve never heard of that you could
probably just break it down using these not just probably but I’m confident that
you could you could break it down into its essential elements and then start to
understand the potential for reward and the potential for risk but for today’s
example with the markets rallying up let’s just suppose that we’re we’re
about to soften a bit and go down again I’m not hoping that happens let’s just
say that we’re that that appears to be technically what we’re assuming is gonna
happen okay so that might inform an options trader regarding the sorts of
strategies they’re starting to select maybe they’re leaning a little bit more
bearish let’s go see what’s going on with the pricing of options overall is
it more of a buyers market or more of a seller’s market and you can see that the
volatility chart the VIX has spiked up not I don’t believe this was its highest
point ever but it was right up there close to the highest ever this is this
means that options traders are trading at prices only rarely seen very high
prices on options premiums for most stocks on most strikes now that said
what’s been happening with the general pricing of options over the course of
last week and a half seems like we’ve been peeling back and
boy that volatility actually spiked down fairly low at yesterday’s low point you
can see volatility had had fallen by more than half
but generally been we’ve been working our way down so if volatility is high
but falling is that more of a buyers market or more of a seller’s market
lotta traders might consider this to be or at least some traders might consider
this to be a seller’s market generally when the when the price of anything is
high but starting to fall that could be a good time to sell if you’re looking to
sell a home for example if the prices that hit a peak we’re thinking about
moving in anyway prices are starting to fall maybe maybe now’s the time maybe
now is the time to take out to maximize the equity in the house or whatever
right you the concept generally as volatilities go
so typically go demand for options and so typically go price for the price of
options so for today what we’ll be doing is and since it’s the first time I’m
teaching this webcast I think I’m gonna start small and then build from there
let’s just build a basic Multi leg bearish selling strategy all right but
we’re going to do that within the context of this outline that we’ve just
provided over here okay so if we want to do a bearish strategy
that leaves us with a couple of choices we can buy puts or we can sell calls but
we just look to the VIX and we determined it looks like it might be
more of a seller’s market so yeah looks like more of a seller’s market
so let’s let’s look at maybe a selling a call as a strategy okay
let me bring up Apple and Apple you might notice is largely mimicking the
technical behavior of the sp500 it’s not exactly and bear with me while my mouse
is a little bit sticky that’s okay but we hit a peak here sold off to a low
rallied up to a peak sold off to a new low and now we’ve rallied up again now
it might be premature for me to say that we’ve hit a peak I don’t know where the
peak is ultimately going to be on Apple however I do think it’s technically
interesting that when we look at this distance that we travel downward we’ve
covered about half that distance on the rebound on Apple already I think a
technician wouldn’t have to stretch much to envision that maybe as we bounce up
this could be the start of a new downswing the proportions seem to be
about technically correct it’s not a guarantee it never is but when there’s a
strong move in one where at one direction one technical assumption is
that we should move back up against that move about 1/3 to about 1/2 and that’s
about where we are right now so that’s our technical setup
or a bearish trade on Apple now we’ve already said kind of a seller’s market
so maybe what we’ll do is look to sell a call but as I discussed last week in one
of my webcasts there are certainly risks associated with selling in a highly
volatile market there’s a there’s a greater potential for reward which is
theoretically nice but stronger risk but let’s flash over here to our trade tab
and let’s start to build a strategy I think what I’ll do let’s go out here to
the 17th of April that’s the that’s the third Friday expiration for April now if
you’ve been following me my in my other webcast you’ll know why I selected the
third Friday it’s not for entirely random reasons why didn’t I choose these
weeklies well there’s there’s nothing inherently wrong necessarily with
trading weekly some some traders prefer trading weeklies but I will say that the
pricing of weekly options can be potentially less favorable for that for
the trader then let’s say a traditional monthly expiration weekly options only
exist for a few weeks literally notice the longest dated weekly option only has
37 days on that contract okay so if you have 37 days on the longest one that
means that there’s only been a there’s only about a month from the from right
now until that thing expires for that contract to attract an audience for
people to start trading it to further for people to even for traders to even
notice that it exists much less place a trade on it whereas maybe some of these
won’t these other contracts look at this one if we go out to look at the most
extreme we have June of 2022 that has 814 days to gather some momentum to
attract an audience and to get a lot of trading volume happening and as that
trading volume picks up what typically happens with the with the pricing of the
option meaning the spread between the bid and
the ask price typically higher liquidity higher volume leads to narrower spreads
which is theoretically a more favorable environment for trading of options we
don’t have to make up quite as much ground from the time we place that trade
so that’s why you’ll see me in most of my presentations I’ll probably go with a
monthly option versus a weekly option again not at all meant to disparage
weekly options or those who choose to trade them there can certainly be
reasons for that let me read through the chats again there we go William I think
you and I are on the same wavelength this morning yeah but let’s build this
trade alright so we’re gonna sell a call I’ve already discussed that and if you’d
like to see a discussion of the precise logic for why we might choose one strike
price versus another make sure that you check out my webcast on Thursday
mornings it’s called selecting an option strategy all right but I’m just gonna go
to the calls and how about for today’s discussion let’s look at a higher
probability trade and what we’ll notice if I look at like let’s say a 30 Delta
option that means that there’s only about a 30% chance that option will
expire in the money what we prefer with this trade is that it expired out of the
money so there’s about a 70% chance that it does exactly we’re hoping for if we
put the trade on and just let it work to it toward expiration about a 70%
probability here but what I’m noticing here is that I’m able to go look where
the stock is right now two hundred fifty two dollars two hundred fifty three
dollars because of the highly volatile market moves that we’re seeing on Apple
and other stocks I’m able to take this thing right now 22 or 23 dollars out of
the money away from the current price of the stock now under normal market
conditions I probably couldn’t do that and get anywhere near a 30 Delta
couldn’t get anywhere near a 70% probability of success while going that
far well at least I couldn’t get that large of a credit go that far out of the
money and still that 30 Delta okay so that’s one of the
potential advantages of selling options in a high-volatility environment what’s
the risk well even though we’re 23 dollars away at 20 yeah about 23 dollars
at the moment if we go look at the chart let’s see we decided that was that at
275 I believe that’s right 275 let’s draw that in here about right
there if we were to sell that call so the stock is trading right here and you
know this distance under normal circumstances if we were looking at that
distance back here you know like let’s say that we had done a put spread at
the same time and we sold way down here that would look like it was just way
away from the current price it looks like it might have taken it might have
taken a dedicated move amounting to three or four weeks just to get down to
that that strike well in this case with the way the stock is moving how many
days might it take if if the strength continues how many days might it take to
get up to that it could be there in two or three days right might be there in
one day if we get another day like yesterday not expecting to because we’ve
only had one of those since 1933 but that just sort of gives it come some
context but that’s our short call so here’s what we’re doing we’re thinking
of selling a call so for our example trade today let’s spell this out and
today we’re going to be doing a bear call spread also known as a short call
vertical if you struggle with that at all you definitely want to go check out
Barb’s webcasts that I recommend it but it begins with selling a call and we’re
gonna sell the 17th of April this is the 2020 call and this is the 275 strike and what’s that trading for right now
about 620 $6.20 you can see the current and it just moved on me and course it’s
going to the way that Apple is moving and it looked like Apple was fading a
bit so you’re probably gonna see these numbers shrink a bit but yeah trading
around six dollars and 20 cents so that is the first leg of this spread and if
we’re doing this if this is your first introduction to a bear call spread or a
long short put our short call vertical or whatever title we want to apply to it
don’t get confused by titles just look at the elements what are we doing we’re
selling a call okay that’s an obligation to sell the stock I have to be aware of
that in this case we have an obligation to sell shares of Apple for two hundred
and seventy-five dollars well who cares while it’s trading at 250 and love to
sell it at 275 fine if I have a $250 stock and somebody comes along and tries
to steal it away from me for 275 bucks well then congratulations enjoy you’re
over pie stock right so what are the pros and the cons of that strategy well
right now we’ve collected at $6 and 20 cent credit for this obligation to tell
itself or 275 long as the stock is below 275 it would theoretically be to the
traders advantage if that contract were ever assigned only if the stock rises
above 275 are we now set at a disadvantage so this this tells us you
know if the stock is worth 300 bucks we don’t want to sell it for 275 if it’s
worth 250 we’re fine with sell it at 275 so as long as the stock is below 275
we’re good if we understand that we understand the first leg of this trade
now if the stock does rally there is theoretically unlimited risk potential
here what if it’s worth 300 bucks we have to sell it at $25 loss that’s not
good what if it’s worth 350 we have to sell
at a $75 loss that’s not good what it was worth 400 we have to
at $125 loss that’s not good so the higher the stock goes the more risk
there is in this trade so how about we try to define the risk on this trick so
to cap that risk we’re gonna buy at the same time we sell the 17th of April 2020
275 call we’re going to go up the chain here it’s actually down the chain but up
in price to a less expensive option one that’s a little bit further out of the
money how about we do the 285 call we’re gonna buy the 285 call that looks like
it’s trading between 380 and 390 unfortunately it’s probably actually now
the price has moved actually in our favor to some extent yeah not really
anyway prices are moving right now looks like that’s trading right now for about
390 there we go so we’re taking out of the 620 that we’re receiving we’re
spending 3 dollars and 90 cents to buy this other call option well now we need
to go up and examine if we buy a call all right
oh now we have the right to buy this stock so we have the right to buy it for
285 but we’re obligated to sell it for 275 do we really want to buy for 285 and
to sell for 275 no we don’t want these these contracts actually exercised we
don’t want assignment we actually would like these to just expire worthless the
purpose of the 285 call is to put a cap on our loss potential here if the stock
now rallies and again I feel like I’m exaggerating here but if we go to our
charts could we be up there at $325 before this April expiration it doesn’t
look impossible anymore right it’s it’s highly improbable but it’s not
impossible but we’re putting a cap if the stock decides to rally which we’re
not actually hoping for in this trade but if it does we know that hey if we
have to sell the shares for two for 275 we know and get our hands on shares
contractually we have the right to buy shares for 285 and so we’ve limited our
risk to ten dollars all right and as a matter
of fact our risk isn’t even ten dollars let’s let’s now map this all out if we
received 620 for selling one contract and paid 390 for buying the other one
what is the net cost of this trick oh pardon me the net credit on this trade
which is also equal to the maximum gain on this trade that credit is going to be
two dollars and 30 cents now as I do these in my head please call me out if I
make a mistake with my math every once in a while it’s possible I’m trying to
teach and do math at the same time shouldn’t be too difficult but sometimes
I can mess it up in any case I think you can see where that number came from
right two dollars and thirty cents and that credit between those two
transactions under what conditions at expiration do we need to keep the two
dollars and thirty cents and realize the gain where do we need to be at
expiration well we’ve just talked through how we don’t want the stock to
go up we’d prefer that it stayed below 275 so this is realized if we are below
$275 at expiration okay what about the
maximum loss on the trade well we know that if the stock rallies if we’re
looking up here we and we are analyzing the two elements of our transaction we
have an obligation to sell the stock for 275 but we have the right to buy it for
285 and if the stock is if the contracts are in the money at expiration that’s
what’s going to happen now there can be rare exceptions to that it’s not an
absolute rule but yeah we better plan on both contracts being exercised
assignment happening at expiration if if the stock is above 285 if I say it this
way if the if the stock is worth 300 bucks
comes 17th of April do you think someone who has the right to buy it from us for
275 is going to do it of course they are you know general rule of thumb if you
have the right to buy a stock for 300 bucks and it’s only worth 275 we might
want to do that right well if we have the right if we have the choice then to
buy the shares on the open market for 300 bucks
we’ll buy the shares according to our contractual right for 285 which one are
we gonna do well we’re gonna buy for 285 so we buy for 285 we’re obligated to
sell for 275 and we have that maximum loss of $10 however we do have that two
dollars and 30 cents that was a receipt received as a credit so what’s the
actual maximum loss $7 70 cents that’s the maximum loss potential of the trade
now under what conditions would that maximum loss be realized well only if
the stock is above 285 as we just discussed so let’s put that in here
above 285 at expiration so I think you’re starting to see why this carries
the title a bear call spread we used calls to make it there is a spread
between the two prices of 275 and 285 and it’s bearish because hey we make our
money if the stock is below a certain level we lose our money if the stock is
above a certain level so we want it to go we want stock price to go down all
right now all of this all of this logic flows entirely from just understanding
these two ingredients we didn’t even make a fancy quesadilla here this is a
pretty simple one right we had two ingredients so this is like when you’re
lazy at home and you and you heat up a frying pan and you put a tortilla there
sprinkle some cheese on it put another tortilla there two ingredients
all this one has so if you understand those ingredients you understand the
trade I’m gonna go ahead and place this trade so I’m gonna go to 275 here’s a
quick way to place the order and you can see these prices have moved on us again
that’s okay but a quick way to place a multi leg option strategy because there
are a number of different ways that we can do it and it can feel fairly
complicated especially when we come up with you know we want to sell this when
we want to buy that and let’s say that we’re doing you know a couple over here
and a couple over there and couple down here and a couple over there here’s a
quick way that we can do that on thinkorswim just start clicking what
you’ll do go to the bid price for a contract that you intend to sell and we
intend to sell the 275 and click on that bid price and that’s one leg of the
strategy of the order now I’m gonna go to the next contract I’m gonna go to the
ask price when I want to buy that contract and I’m gonna hold down the
control key there’s the key to doing it this way hold down the control key and
click on the ask price and you see how that just piled the one order on top of
the other now we have we’re selling the 275 we’re buying the 285 and the system
already knows this is a vertical I didn’t have to tell it it’s a vertical
it already knows that looks like our credit has moved on us a little bit we
were we were calculating about 230 looks like the mid is now at about 220
we might even need to back off on that maybe down to 215 to try to raise the
probability of getting a quick fill here on the order obviously any time we
submit a limit order there’s a risk that the order might not fill but I’m gonna
go ahead and click confirm and send recognizing if we’re doing a trade let’s
say that we’re able to collect 215 that would leave seven dollars and 85 cents
of risk per share if we were to do ten contracts or a thousand shares
that’d be seven thousand eight hundred fifty dollars okay maybe I want to take
that down how about we dial that down to maybe just six contracts and I’m gonna
click confirm and send it’s gonna be about a forty seven hundred dollar trade
about a 1290 dollar maximum profit there are there are transaction fees to
consider here so just bear that in mind but I’m gonna go ahead and click send
and we’ve sold it okay we got two dollars and 20 cents so instead of
having a – 30 – 30 credit we got a – 20 credit so 10 – 220 now is
gonna leave seven dollars and 80 cents of risk potential alright but we know
where we make our money where we lose our money the final thing that we have
to cover is what if were neither below 275 or below – wait are above 285 at
expiration we say we have our maximum gain if we’re below 275 that’s here we
have our maximum loss if we’re above 285 here well what about this distance
between the two max loss up here max gain down there there must be not quite
maximum loss if we’re coming up just shy of 285 not quite maximum gain if we’re
just if we’re not quite down to 275 at expiration so we get a mix all right so
we’ve done it we’ve actually set out everything that I intended to do today I
just wanted to explain how the however option strategy really is like the
dollar menu it’s just some basic ingredients that are just being mixed
and remixed and if you ever get confused by the title of the entree focus on the
ingredients what’s in the recipe that’s it alright everybody I hope you enjoyed
that presentation go check out Barb’s webcast getting started with options if
you struggled with any of this I’m gonna take a little bit of a breather and
since this is my first time teaching this webcast let me see what we have on
the menu next okay we have coming up ah probability based strategies Mike
Villette teaching next so that’ll be coming up shortly everybody going to
enjoy that you know Mike does a fantastic job
I want to thank I think it’s been helping us out and Chad thank you Ben
very much appreciated everybody I’m Terrence I’m sorry if I
made you hungry that wasn’t my intent my intent was a make you informed but as I
set you loose we have to remember we did use real examples in today’s discussions
not a recommendation or endorsement of those securities with all those
strategies if this is your first exposure to vertical spreads – – in this
case a bear call spread if you’ve never done this before go into your paper
money see if you can put on a bear call spread on a stock that you think is
about to sell off but break it down as you do that as you as you sell the one
call and you put in the in the order to buy the other call see if you can break
it out into the two ingredients understand where they each work out what
the obligation is what the risk is if you can walk yourself through that logic
you’re gonna understand just about any strategy that somebody can throw at you
all right anybody thanks for joining me today I’ll be here again next Wednesday
I’m looking forward to it I actually have webcast scheduled every day of the
week next one for me coming up will be tomorrow morning the same this the same
time it’s selecting an option strategy on Friday morning same time we’ll talk
about managing an options portfolio so you can join me in any of those webcasts
or just circle back next Wednesday but hey whenever I see you again until that
moment arrives I want to wish you the very best of luck happy investing bye
bye

About Ralph Robinson

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