November 13, 2019
  • 12:51 pm Teyana Taylor – Issues/Hold On
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  • 11:50 am Jürgen Klopp’s pre-Manchester United press conference | Mane, Lovren, Dalglish
  • 8:52 am Will Muschamp Weekly News Conference — 11/5/19
  • 8:52 am G2 press conference, post DAMWON match – 2019 Worlds quarterfinals


Hello investors and welcome to our
advanced options strategies webcast here today my name is Ken Rose it’s always
great to be here to discuss investing in the stock market so once again we are in
the midst of earnings season you know here in the midst of earnings season we
have a lot of different strategies to choose from which one of those
strategies will tend to fit best with regards to some of the choices that we
have so again investors do want to welcome
you here today just a reminder that you can follow me on twitter at my twitter
handle is at KRose_TDA and on twitter i do do some posts in
relationship to what’s going on in the market and also things that that could
be used with regards to looking it at technicals with regards to stocks and
also in relationship to options as well so what do we want to do today well
we’re in the again we’re in the midst of earnings season we want to look at some
potential candidates and and what I’d like to focus on here today is to be
able to look at the part that that back month volatility plays when we’re
looking at some of the different stretch strategic possibilities with regards to
options in order to accomplish that in relationship to our earnings discussion
today here it spend a little bit of time talking about building an options
trading watchlist talked about identifying stocks with earnings coming
out we’ll take a look at some stocks where earnings are coming up and we’ll
take a look at the back month volatility on those stocks then we’ll compare and
contrast and talk about strategies in relationship to that as part of that
discussion will discuss the market maker move will analyze breakeven points using
the analyze tab then we’ll look at doing some paper trades as well but to begin
with what we want to do is we’ll start off with a review of trades with with
review of trades from last week as well as another previous trade but before we
get too far along let’s go ahead and run through our disclosures wave disclosures
just a reminder that options are not suitable for all investors a special
risk inherent options trading may expose investor potentially rapid and
substantial losses spreads straddles and other multi leg option strategies can
entail substantial transaction cost including multiple Commission’s which
may impact any potential return in order to demonstrate the function of the
platform we need to use actual symbols however to keep in mind that TD
Ameritrade does not make recommendations already term the suitability of any
security or strategy for individual traders an investment decision you make
in your self-directed account is solely your responsibility we do use the paper
money platform in here so do keep in mind that this hat this is for
educational purposes only any successful virtual trading that we may experience
in one time period does not guarantee successful investing of actual
during a later time period as market conditions do change continuously
because a short-lived instruments weekly option positions do require close
monitoring as they can be subject to significant volatility profits can
disappear quickly and can even turn into losses with a very small movement in the
underlying in the underlying asset and always investors keep in mind that all
investing does involve risk including the risk of loss so as part of our
discussion we’re looking at some of these different positions we’ll take a
look at the Greeks and discuss how the Greeks are affecting these things with
regards to earnings and also strategies in relationship to earnings so let’s go
ahead and get underway I’m going to go ahead and pull up the thinkorswim
platform here and unless shift gears here just a little bit I’m going to
clean things up here a little bit and let’s come up here to the monitor tab
first of all let’s go into our Advanced Options account here and we’ll come up
here to monitor and I mean the monitor tab we’ve got we’ve got an old position
here on Wells Fargo this this is kind of a strangling old position that’s been
left over I don’t want to really spend too much time in here because it’s been
some time ago since we entered this trade to the to the best of my memory
and trade that we did blue last week that was an iron Condor over an earnings
announcement that on ax P so let’s just pull up a X P here and see we got going
on so here is our earnings announcement here on ax P we can zoom in on this I’m
just going to decrease the timeframe on our chart here a little bit to 3 months
we can focus on our discussion here particular we’re talking about earnings
we’re usually looking at things more from a short-term perspective around a
long term perspective so right here we had the earnings announcement here looks
like the stock stayed kind of stable then it came over here to move down here
somewhat rapidly to the downside did we let’s just check our drawing sets
here and see it looks like we did save our drawing set here the where we where
we marked out what our breakeven points were doing an iron Condor so this is it
so this is our breakeven points with regards to our iron Condor and you can
see that as we went into expiration here looks like that we were within the
break-even points we would suspect that this from a theoretical perspective
would look to be a profitable trade and looking at it here if we come to the
monitor tab we just want to know where we closed
on that period right there so that’s 1018 so it looks like actually right
right here was the weekend so here we have Monday Tuesday Wednesday and
Thursday right here so yeah so primarily looking at this time period right here
and it looks like we closed on the expiration date because those options
did expire on that Friday it looks like we closed at 116 76 so I’m just going to
make a note here 116 dollars and 76 was our clothes will come up here and see if
we can find our trade will go into account statement and let’s pull up a
axp right here here’s axp so we can see from the chart that the underlying
security moved down in relationship to that earnings announcement but still
well within our lines right here for our for our iron Condor these are breakeven
lines so you know the further we can come inside these the more likely we’re
going to be in that max gain area coming back over here the monitor tab what we
really want to look at is we want to look at our short our short put because
we went down you know an iron Condor is just basically two two short verticals
and over an earnings announcement they’re too short verticals done over a
relatively short period of time so we primarily want to see cuz we’re n to the
downside you want to see if we closed above the strike price of the this short
strike price we’re short put vertical we’re sitting here at 116 dollars so
that’s we were at and we close it 116 76 so we did close above that which means
that we don’t see any other transactions here so that’s telling us that basically
this we let this one expire and we captured our maximum gain here of 46
cents a share 46 dollars a contract it looks like we did 12 of those contracts
so if we take our 46 here and we multiply that by 12
looks like we looks like on this particular trade we picked up $552 B for
transaction cost so we always want to keep in mind there are there are
transaction costs to take into consideration when we’re looking at this
now another trade that we have in here that we’ve we’ve kind of nursed along
for some time here is SPX right here this is I believe this is just a simple
diagonal on the on the SPX index options and what
if we wanted to exit out of it today now now on this simple diagonal let’s just
close our left hand panel right here because we want to look at is we want to
look at the short strike price here and the thing to keep in mind is that as
prices fluctuate when you when you’re in a diagonal trade when the price moves up
to your short strike price that tends to be an ideal time to either roll or
possibly get out of the trade and our short strike price is 301 o we’re
currently trading at three zero zero eight that’s very close and we we have
had several rolls on this position already so this may be an opportune time
just to exit the position because we’re only looking at 22 days alpha out on
this side if we wanted to roll again then would be in a situation where maybe
we break through the 3/10 and then it starts hurting us on that side of it so
really we’re really tight today where it were where we’re about as close as you
can come to an ideal position to possibly exit the trade we’re reviewing
the trade here a little bit let’s see where we’re at when come back up here to
the monitor tab and actually I’m going to go into the account statement here
for SPX yeah we’ll just follow this trade along a little bit and let’s see
SPX so here was our original trade that we did back in September of nice up
timber 19th there’s original sell and notice notice
we sold the 310 then we rolled the 310 we rolled the 310 we rolled the 310 one
of the one of the nice things about a double diagonal is as long as the price
stays within a certain zone you do have multiple opportunities to kind of put
things off and maybe pick up some credits as you’re getting closer and
closer to the expiration then you’re a little bit more focused on on on getting
coming very close to that sweet spot and looking to take an exit in relationship
to that so we can see here let’s just make a little tally over here looks like
we first entered in with a debit here of 26 10 so let’s put that debit in here 26
10 then we rolled right here when we rolled right here we got a 90 cent
credit what does that tell us that’s not
very much for credit at all so that’s telling us is at this point the price
had moved away from our short strike price of 3010 and so we weren’t in a
really good place to get a strong credit there but we wanted to basically buy
ourselves a little bit more time and give the price time to revert back and
go into a more favorable area and when you’re doing that that also creates some
additional risk as the price may move further against you and just exasperate
things further we went ahead and rolled and then on that roll right there it
looks like we picked up 90 cents again these numbers are outside of transaction
costs we want to keep that in mind then we took another roll again roll this
roll this 3.10 now in this time we got a credit of 9 dollars and 10 cents
what does that tell us ok this time the underlying price the underlying security
had moved towards that short strike price of 310 so when we’re looking at
rolling it now we’ve lost a lot of time value off the front period but we also
have a lot of a lot of significant time value on the on the back period so we’re
able to get a bigger credit and that was a credit of 910 so let’s go ahead and
put this credit in here of nine dollars and ten cents and then we started to run
out a little time there and we rolled it again here we captured a credit of 10
dollars and 10 cents again same type of a situation probably if it’s priced at
underlying security was hovering around or it moved closely to our short strike
price here of 3010 let’s go ahead and put that one in there so that gave us a
credit of 10 what was that that’s 10 10 so right now we’re we at then it’ll do a
little bit of math here so we started off with 26 at a $26 and
10 cent debit okay then we picked up and again do keep in mind investor these are
all absent transaction cost so we want to remember that we’ll just add these
credits on here right now we’re looking we’re looking at
a six dollar debit okay what if we what if we wanted to close it out though just
close out everything because we’re pretty close here our time starting to
wind down we’re currently sitting at about twenty days we could go ahead and
choose to roll again if we chose to roll again we’re probably looking at breaking
into a profitable area maybe we just want to exit the trade let’s come up
here to our activity and positions here let’s first of all look at a roll right
here if we wanted to roll again come in here and we’ll choose create rolling
order waiting for data that’s never a good thing or seldom is a good thing
we’ll do a roll right here and what does it look like with regards to okay so
that’s oh I’d be a two 2.95 credit this is only rolling out giving us an
additional three days though let’s look at going out more in the area of about a
week somewhere here perhaps let’s see about November fourth that’s more like a
week so that that actually does give us a 14 dollar credit if we wanted to go in
that direction now in doing that that would give us another direct that would
give us a credit that would also put us in a situation where we could roll again
but it also leaves open some risk with regards to the price moving away from us
if you look at a 14 dollar five cent credit that way or the other possibility
here is possibly just to close the trade out if we wanted to close it out
altogether come in here and just create a closing order to sell our diagonal
right here give that just a moment so that gives us that gives us a 1945
credit because we’re so close to the sweet spot right here at 310 we’re
currently at three zero zero eight we’re gonna play the part of the investor that
just wants to take advantage of this we got it we got a mid here in 1945 and
natural here at 1920 we’ll come off the middle a little bit but do keep in mind
that it’s always a good idea to get the best fill you can and if you’re not
teaching you have some time you might want to try to get filled with the mid
and then maybe move a little bit more down towards the natural if need be
we’ll come a little bit more towards the natural here see if we can get a feel
here at nineteen thirty-five send that here and we get a fill yeah we got a
feel so now we come over here and see how we do it how we did on that
trade then on our diagonal we got nineteen dollars and thirty-five cents
so what does that do for us then well we were at six rights would take 1935 will
subtract from that six dollars because that was our remaining debit well let’s
try that again 1935 minus six that puts us at thirteen
thirty five so we end up on this trade then underline this and at $13.35 and
what times that then by 100 and then what times that then by how many of
those did we have I think we had three if I remember correctly yeah we had
three of those four times that by three and this this would give us our before
transaction cost theoretical profitability so let’s just take a look
we got 13 25 times 100 times 3 so price we have a profitability here of just a
little bit under $4,000 now of course we know investors that trades do not always
end up that way right on this trade we were we were fortunate but we do want to
be mindful that they don’t always end up that way as far as being probably you
know yeah profitable ones and then you also have ones that are not so
profitable so that’s just a little a little review of the trades that we
previously have let’s look at at some earnings trades then so down here we
have our our watchlist our $1 wide liquid watch this is the watch this that
we primarily use in here with regards to options trading we’ve discussed putting
this option as putting this list together basically in putting an option
a watch list of stocks that tend to lend themselves towards towards option
trading you can use the scan tab on the thinkorswim platform and you first of
all you can look for an intersection okay on the scan tab
can say scan in all stocks you come over here to public and you can say that have
weekly options why would we like to have weekly options weekly options tend to be
advantageous because they give us a greater amount of flexibility with
regards to timing I’m different aspects of our trade do you have to have weekly
options you don’t but we’re going to play the part of the investment that
finds that to be advantageous then secondly on the scan tab will come up
here and will say intersect with will go to a public watch list that says penny
increment options so now we’re now we’re narrowing it down further we’re looking
for stocks that both have weekly options available and also the option prices are
quoted in penny increments then in addition to that you can you can build
some additional things here okay looks like I’ve got something that’s kind of
hanging out here right now I’ve got something in here that I’ve done
previously that we can just load up here let’s see a watch list maybe this is it I’m not sure but let’s let’s just see
when we when we load this up so this is st. and ask price of least $20 average
volume of at least 750,000 so we have that along with our penny increment
option and weeklies so from here then we could go ahead and ran this run the scan
I’ve got here the least 200 stocks you know there may be some other things
we may want to put there like market cap different things like that if
we run this scan just of this we get 58 results now our watch list right here
one dollar wide weekly probably doesn’t have quite 58 because another thing you
can do to fine-tune this is once you have once you’ve run your scan and saved
it as a watchlist you go to the bottom of your stocks right here let’s give
ourselves a little bit more room out here to the side you can go to the
bottom of your stocks right here click on the bottom one right here then open
up an option chain maybe go out a couple of weeks here and then look for a couple
of things look for the distance between strike prices it’s advantageous if you
have distance between strike prices to be 50 cents or a dollar doesn’t need to
be that way but it tends to be advantageous if you do have that then
also just kind of glance at the at the money options and get an idea of the
slippage you know what is in we’re talking about slippage are talking about
the difference between the bid the ask price and you like that to be
as low as possible in this case we’re looking to Delta Airlines it looks like
a slippage is somewhere in the neighborhood of about two to three cents
on a on a $53 stock okay look at that and then if you if you like what you see
from those two areas then you can just hit your up arrow key if you don’t like
what you see with regards to those two areas then you can go ahead and hit your
delete key and then hit your and then hit your up arrow key do keep in mind
mind that when a stock has an earnings announcement coming up those that the
slippage tends to automatically widen out so you might want to be a little bit
careful about deleting something if you’re if you’re right around that
earnings announcement because during other during other periods of time it
may actually be in a pretty good place so then you could you could go through
your list in that way and fur it out some and then another thing you can do
if you with regards to having an options watch this you can maybe check some of
the primary sectors that you’d like to trade in and just make sure that you
have representation from those sectors so with regards to identifying stocks
that have earnings coming up you can see here’s our watch this right here I put
that together you know if we put this together I call it $1 why don’t you go
through the same process do the same type of thing and build your own watch
this but notice I also have here a custom
column this custom column I call it I call it earnings text and we’ve
discussed this and I’ve shared it in previous sessions I’m more than happy to
share it in this session as well but notice one of the nice things it does is
if you add this as a custom column then sort by it it will tell you what stocks
have earnings coming up either after the market or in the next one to two days
and we have four stocks here it looks like we have visa we have I think that’s
Intel it looks like we have Verizon looks like we have Illinois tools so all
of these would be potential candidates with regards to option trades to put on
okay these these would as well okay but but
there’s there’s a fair number of investors would like to have something
that’s going to be going to be expiring immediately and what will play the part
of those investors now let me just do this here real quick I want to edit the
formula here because I do notice that we have some new folks here and I do want
to welcome everybody here including the new folks so thanks for joining us here
great to have you alright let’s cancel this and
let’s see if I can pull up a little document that I can throw this up on so
that it’s it’s readable and so that it is legible they can pull this up here
we’ll try just about got it up here yeah okay so this is length that you can use
to build that column make it a little bit bigger there it is right here now
the key part of this link is really really the last seven digits because you
should be able to build it with just the last seven digits which looked to me to
be either either either a zero or an uppercase o followed by three all by an
uppercase D lowercase M looks to me to be an L that can be an uppercase or
lowercase F and then six all right so so what you can do is is you can take a
screenshot of this you can jot it down and then once you have it you where you
can once you have it jot it down or you’ve got a screenshot or copy of it
just simply do this and I’ll I’ll try to bring this up again later on in our
discussion but just come up here to setup click on setup click on open
shared item you click on preview then you click on open you get a little thing
that’ll say do you want to rename it you definitely want to rename it and then
after you’ve renamed it when you want to pull it up like when you have a column
like this you want to use as a custom column just to right click on symbol
here the top of your call she’s customized and it’ll appear and under
adages and that and the strategies we want to consider today would be straddle
strangle swaps double diagonals and iron condors now iron condors are just our
iron condors when you put on an iron condor you’re dealing with one
expiration date okay and because you’re dealing with with one expiration date
iron condors as are not as sensitive to changes in Vega as a straddle strangle
swap and a double diagonal both of those use to expiration days when you when you
use to expiration dates like that then that strategy is going to
be sensitive to implied volatility particularly on the back month because
the front period is usually is usually going to expire you know within the next
day or two so implied volatility will have a little bit of an impact but not
but not in that much basically that option is going to be trading at at its
intrinsic doubt and its intrinsic value within a day or two an implied
volatility only has an impact on the extrinsic value while on the other hand
that back month options they can have a fair amount of extrinsic because you
have time value and they can be knocked around with regards to implied
volatility so when you’re looking at an earnings trade you’d like the back month
the back period implied volatility you’d like you like that to stay as calm as
possible now we’ve got we’ve got four stocks here to look at and I’m going to
scroll down here a little bit on our scratch past weekend so we can make some
notes here first of all we’re going to take a look at V here what we want to
look at on V let’s bring it up V and we’ve got our trade thinks we have V you
can see this here’s the options right here these are going to be after the
market tonight so probably have a pretty good idea of what type of thing we can
expect tomorrow these are going to be before the market so for these we should
have a pretty good idea of what’s going on by the time the market opens up
tomorrow so looking at V here we wanted we want to see actually if we’re looking
if we’re looking at it from the standpoint of one of the two we want to
look to see what the change of implied volatility was on the back month option
the last time we had earnings and we can either use 22 days or 29 days here they
tend to be fairly close since this one says weeklies I’m going to go ahead and
use 29 I’m going to go out about 29 days so to do that what we can do is we can
come up here to the n line well let’s first of all we’ll go over here to the
chart the last time we had earnings here we need to move this out a little bit
because we’re going to need to look at our last earnings we’re going to come
back out here to six months the last time we had earnings let’s just roll
over at earnings was on 7:23 let me just jot this down this is on V on 723 and it
was after the market so what we want to do is we want to look at the change of
implied volatility from 723 to 725 or and we can do that on the analyze tab
right here we’ll go to analyze and we’ll choose think back right here and we’ve
got V right here what we want to focus on is this option right these options
right here these two guys right here let’s go ahead and we’ll go with the 30
weekly one again they should be fairly close with we just want to see the
change of implied volatility over here we just let me just highlight that a
little bit or draw a little line here just to highlight it so what we’re
looking for here again is we’re looking at these options right in here and going
out about 20 or 30 days and we’re gonna look over here we want to see the change
of implied volatility when we go from when when we go from the from before the
earnings to after the earnings so we’re going to change our data up here we
change our data up there to 723 because the earnings announcement came out after
the market closed on 723 so we’re in think back right now so let’s go back
here to 723 that’s gonna be July 23rd right here now again we want to go out
in this area right here let’s let’s go ahead we’ll go with this weekly one
right here so we’re currently sitting at nineteen point one one nineteen point
one one so let’s see how that changes for that when we go through the earnings
of here so that went to sixteen point five so what was that then so it’s nice
16 17 18 19 about a 3% adjustment there Ryan right at about 3% okay so we’re
next candidate then we’re gonna look at we’re going to look at Intel to see what
to see what kind of adjustment there was with regard to these back length options
so let’s pull the chart for Intel then IMTC and we’ll come over here so now
we’re looking at Intel the earnings announcement was back here on 725 after
the market so we want to look at the change between 725 and 726 on on on
Intel here from 725 to 726 let me just double-check that right here so P p.m.
after the market on 7:25 okay and that is int see just make a note
here int c7 25 to 26 well come over here on the analyze tab core here for Intel
on this one now we just want to move we want to move forward to 725 we’re coming
down here again in this area right here we want to see the adjustment here of
this 31.9 o fact I’m going to grab a little calculator here so we can be a
little bit more scientific 31.9 o and then let’s move forward a day well
that dropped down to 23 – twenty-three point three seven that’s a that is this
that’s a significantly bigger move than what we had four V’s isn’t it so int see
that move was eight point five three percent so what is what does this tell
us at this particular point in time well if we’re looking if we’re looking to do
an iron Condor on one of these and we’re looking at maybe doing a straddle
strangle swap as well well Intel it’s going to be our iron
Condor candidate because we don’t want to deal with that drop off of the back
month implied volatility and these are right here it is going to be our perhaps
our straddle strangle swap candidate right here at this particular point in
time and again we could we continue to go through these so so we’ve got let’s
look at Verizon here we’ll check out rise I don’t know that we’ll have time
to do all these but but but we may have time we’ll see how it goes so Verizon
will take a look at the chart here for Verizon and we’ll come over here and
what we got here for Verizon so earnings is 8 1 a.m. before the market so on
Verizon then in looking at Bryson then we want to go 8 once we’re going to want
to go like 7:30 1 to 8 1 to get an idea of the
of implied volatility so we’ll come up here then over to our analyze page we’ve
got Verizon we’re gonna want to go there’s a one right there so set there
731 and right here’s our options right here we’ll look at this one right here
so we’re at twenty point five five we’ll move over that earnings announcement now
twenty point five five and one of the ghosts eighteen so twenty point five
eighteen so about two and a half on Verizon so BZ here is two point five
percent so Verizon and and Visa they’re looking a little bit more like the where
we’re going to use pop possibly a back month and a front month maybe in perhaps
do it do a double diagonal on Verizon and then last but not least here let’s
take a look at Illinois Tool Works and see what we have here for Illinois Tool
Works so come over here to our chart and let’s pull up Illinois Tool Works right
here yeah boy look at that it’s come all the way up here to kind of tea cream
right here could you could start moving down from here from there will be
interesting to see what happens here but yeah nice move they’re kind of teetering
right there but what do we do how about our earnings announcement so we’ll come
over here to the last earnings announcement and that was 726 before the
market so this one will look at 725 because it’s going to come out 726
before the market so we’ll see the change on 726 so come up here to the
analyze tab we’ll come down here to think back on ela noise tool works come
over here and let’s go to 725 yeah and here’s our here’s our periods right here
22 to 30 days right here let’s take a look at this one so this is twenty five
point eight one let’s grab a calculator probably just be a little bit more
accurate here 25 point eight one okay and then we’re gonna subtract from that
or we’re sitting here at the end here let’s see I’m going to make a little
adjustment here on my desktop okay I gonna go forward a day that went to
nineteen point nine for nineteen point nine four that seems a little bit on the
healthy side nineteen point nine four that’s five that’s gonna be five point
on the Illinois tool works that’s gonna be Illinois tool works that’s gonna be five
point what was it like like five point eight seven okay
so we’re probably looking at if we’re going to look at the two lowest here with regards to this with yeah I’m
thinking Illinois stool work is one of the two highest so we’ll probably be
looking the Illinois stool work with regards to a potential iron Condor right
there now again investors the reason the
reason we went through this little exercise here is because when you’re
looking at a lot of stocks that have earnings announcements and you’re
looking at some of the different strategies that can be used we want to
keep in mind that usually on these strategies the back period option that’s
an option that we buy and so we’re along that option which means that’s a
positive Vega option which means if when we buy it before the earnings
announcement the earnings announcement occurs in Vega drops that’s going to do
damage to that back period option so we’d like to would like to keep that
damage to a minimum and one of the ways in an effort to do that is to look for
lower changes of implied volatility from a historical standpoint of course we
know what’s happened in the past is not necessarily going to occur in the future
but let’s take this one right here else let’s let’s let’s let’s look at to visa
here to begin with pull up visa and I’m going to Mars I’m
going to shrink that here a little bit and so be this visa is going to be after
the market and so we’re looking at this option right here if we want to have
instant gratification so this big it’s a little bit different because we’re not
getting any population off that markets still open right yeah and that’s
interesting looks like we got a glitch here maybe we’ll pass on visa and maybe
look at you got going on here boy this is not
this is not super friendly in here right now is it well you know the good thing
is this and I because because sometimes we do have some difficulty in this in
the rim when we’re presenting here I actually put on a trade before I came in
here and I believe I kept a copy of it out here so that we could look at it so
let’s see if we can take a peek at that I’m wondering if there’s anything else
that could be going on here hope you know what are we in think back that’s
probably it yeah we’re in think back that was the problem good so so I think
we are in good shape now we’re looking at one day here great ok so let’s go
ahead and open this up then looking at visa and likes let’s look to do a
straddle strangle swap and what is a straddle strangle swab a a straddle
strangle swab is when you sell a front month straddle when we’re talking about
selling a front month straddle we’re talking about selling the at the money
options so we’re currently sitting here at 176 and so we want to look at the
option that’s closest to that the closest option to that is 175 notice
okay notice this on this one investors that we don’t have the 50 cent
increments we don’t have the dollar increments so you may say why is Visa
sitting here and this watchlist well it’s probably it’s probably one of
the major representations for the individual industry that they’re in and
in order to have that industry representation that’s that’s why they’re
currently on this list do we have to trade visa we don’t if we wanted to move
over to some that had had more favorable had more of a favorable situation with
regards to to the increments and the option and the options we could
definitely do that in fact how we do it on time let’s go
ahead and and I’m gonna I’m gonna hold off on visa here for a second and we’ll
come down here to Verizon and we’ll put it together a straddle strangle swap
here on Verizon and given time we’ll come back up here will return to visa
yeah and we’ll do maybe maybe a double diagonal on visa well let’s go ahead
we’ll do a straddle strangle swap then we’ll do an iron Condor given time will
come up here to a double diagonal and come down here and do another iron
Condor but let’s shift gears here and look you add Verizon c4 our strike
prices are a little bit more friendly around an earnings announcement
so now we have 50 cent increments with regards to our strike prices so let’s go
ahead we’ll do our we’ll do our straddle strangle swap here so we’re going to
come in here then we want to go out maybe come out here to 15 or 20 days
here that’s going to be let’s let’s let let’s shoot here for 22 days so that
means we’re going to go come out one two three periods and do three periods and
since we have 50 cent increments here how far do we want how far do we want to
go as far as being wide well we’re probably going to want to go maybe at
least $2 so that’s going to be 1 2 3 4 we’re going to go 3 periods and we’re
gonna go for strike prices white as far as setting this trade up now to do that
we could go ahead and enter in the legs individually and hold our control key
down let’s try this let’s come over here on the on the call side this is the at
the money the 60 50 because we’re currently trading at $60 and 66 cents so
I believe that’s the at the money right there I’m going to right click on the on
the bid price right here and I’m going to choose buy and the
reason I’m going to choose buy is because typically when you’re doing a
when you’re doing a a trade of this nature it’s not unusual to end up with a
debit okay when you’re selling in the front month and you’re buying in the
back month a lot of times I’ll send up those end up those end up in debits so
I’m believing I want to use the bike tab here we’ll find out though okay whether
the buy tab is appropriate or not so I’m going to do buy that I’m going to come
over here to deep and wide and we want to go out three months right we wanted
to go out three periods to get out into that 20-day range we wanted to do four
strike prices to get a dollar wide then we’ll come over here and because it’s a
straddle strangle swap it’s going to be a double diagonal actually have two
diagonals rather than one and then we’ll come over here we’ll just come over here
and choose yet we want to do a straddle strangle swab okay so this is our trade
that came up then this is it right here and we have a looks like looks like we
have a 56 cent credit so from here then we can take this over and look at it on
the monitor tab let’s do that I’m going to come over here and do it right click
here and we’ll choose analyze trade bring this over here and I’m gonna
collapse this collapse this yeah I want to go to the risk profile here so here’s
our risk profile I want to make sure we may have two of them in here because
just to make sure we could get things done in here I did and I’m going to take
this one off in case we had a technical glitch I wanted to have a backup in
there we’ll take our guy off right here so here we are right here okay now
before we look at this further let’s take a look at the market maker move on
the chart let’s set this to begin with let’s set this slices to break-even as
of there’s our break-even point these options they expire tomorrow we are
right here let’s pull up the chart and I’m gonna get rid of these guys we’re
probably going to be seeing them again here real soon but just to make things a
little cleaner notice on our chart here that we have our market maker move right
here that’s that’s showing for us it’s given us our vertical lines here on our
market maker move and I’m going to try to create a little bit more room over
here yeah there we go I just wanted to get
that second mark and make her move to print there but it’s not quite printing
and I think I think it’s because it’s it’s awfully close to another value that
we have well there if I roll over Matt’s given us our print okay meaning over
there it’s given us our market-maker move so this is giving us the
market-maker move for those of you that aren’t familiar with the market maker
move while the thinkorswim platform if you’re if you’re if you’re if you are
working with options okay where there’s an announcement earnings announcement
coming up and the front month option encapsulate that earnings announcement
date and this this one does the front period option then you’ll get this
market maker move this market maker move as an estimate using a proprietary
algorithm and thinkorswim of where the stock could move either to the upside or
to the downside so what what I have on this chart here is I have a custom study
that provides me this market maker move on the charge so I can see it visually
right here and also up here I have market maker move it’s a dollar 24 tells
me what percentage of the price of stock the market maker move is now I can share
this with you as well so let me just come over here and and and and you would
bring this up in the same way that we described with regards to the others do
it with regards to the custom study that we were looking at so I hope I can share
it yep their goals will say share here yeah and I’m going to close this and say
cancel this and cancel this and so this was the link earlier here for the custom
column right and this link here is if you’d like to use if you’d like to use
that market maker move okay so this is the market maker move again feel free to
take a screenshot of this or feel free to jot it down again this little final
six digits are the keys here okay all right okay so and I’ll and I’ll try to
bring this up again by the way this session is recorded as well she can come
in here and catch a via the recording as well already so here we are
okay this our market maker move so let’s see we’re looking at here on the analyze
tab then here’s our breakeven points let’s kind of assess what our risk and
reward is here so looking over here and some this is a little bit
difficult to see so I just want to kind of draw this out for you a little bit
right here when you’re on the analyze tab you got this line right here I’m
kind of trying to trace it I’m not doing a great job at it then you have your
zero zero line right here so anything up in this area is profit and down this
area is lost it’s one thing we can see here is the extent of our loss here is
greater than the extent of our profits would want to keep that in mind and then
over here in this little box right here as you roll across this at different
points it will tell you the profit and loss and loss levels so with that in
mind then right here I can see right here at a super sweet spot I’d be
looking at making and making $100 over here it looks like the max loss on this
before transaction cost is a hundred is about one hundred and forty-three
dollars now things can happen in at rates your max loss could be greater
than that depending on when you get filled so you do always want to keep
that in mind but we want to look at right here here’s our breakeven points
but we want to make that adjustment for that back month volatility so we can
come down here and we click on our gear here and after clicking on our gear we
can choose more parameters right here and let’s see we got I just what have we
got we’ve got something else going on here I don’t need I don’t need anything
on that other date that we had here we just got October I had this third guy
right in there and it looked a bit unusual scroll here again and see we got so we
just need November 8th this 25th of October and you know what this does not look like
the trade we want to look at because we want to have something that’s well know
it is because we want these to expire then we want to give ourselves a couple
more weeks that we don’t need this November 8 in here I’m going to go ahead
and delete this just so it’s not interfering with things that should
change this a little bit more yeah it does so so here’s what here’s our front
month right here so we want to make this back month volatility adjustment that we
have here for Rob for Verizon and that was 3% when we do it I want you to
notice these lines up here these lines should come in because that’s going to
decrease the value our back month option it’s going to it’s it’s going to make a
narrower range with regards to our break-even point we’ll come over there
and do a minus 3 and you can see our breakeven points moved in just a little
bit so I’m going to have to buy I’m going to move both of these lines to our
break-even point so now we want to see how this relates to our market maker
move on the chart in other words the anticipated move that we have from
thinkorswim and to do that we’ll grab we’ll come over here click this which
you set slices to charts there we go so what can we see here we’re a little bit
shy on the upper end here we’re sitting right on the lower end right here okay
so from from a theoretical perspective we’re giving ourselves enough room for
the market make remove the downside but we’re a little bit tied up up here on
the upper side so we’ll do is we’ll play the part of the investor that’s seeing
the stock kind of fade here a little bit but realizing anything can happen over
an earnings announcement okay but it is but it’s ok look at this could we adjust
this a little bit yeah we could adjust our straddle a little bit you know we
could we could sell a straddle that’s that’s a little bit higher rather than
rather than a little bit lower and that could possibly move this up a little bit
but when you look at it it may bring this up then a little bit tighter down
here so so one of the things keep in mind is is you’re not always going to
have the perfect scenario you know there’s always going to be risk related
to this we’ll play the part of the investor
that’s okay with what we’re looking at right here realizing that this looks
okay theoretically but we’re a little bit tight here the stocks fading a
little bit here but again you don’t know what’s going to happen on the earnings
announcement so with that then let’s come back over here to our analyze tab
and I’m just going to take the order as it is here and duplicate it and I
probably don’t have to duplicate it it’s probably already sitting over there I
just want to make sure that we’re looking at the same order here and let’s
see if we can get filled here then we’ll do a well what was our max loss on our
max loss was $147 right let’s pray let’s play a part of the investor that doesn’t
want to lose that that is okay risking seven hundred and fifty dollars take
that and we’ll divide that by about a hundred and forty seven I believe it was
and it looks like we can do five of these contracts we’ll go ahead and do
five one two three four five of these we’ll try to get filled right here 56
but we may have to come towards 53 but let’s go ahead and try to get filled on
this one at the mid right there we’ll click on send here and so we got filled
okay and this is a paper trading account so we don’t know if we would actually
get filled in live trading so now now we have this trade on this this trade this
trade the for the front part of its going to expire tomorrow so it is
something that you need to keep track of you need to go in there and your paper
trading account and see what’s going on and keep track of it just to be on this
to be on the relatively safe side okay so with that then let’s shift gears here
then let’s let’s look for an iron Condor to the end and on the iron Condor this
is where we’re okay we’re not necessarily okay with these higher
levels of with regards to the back month drop off okay but we just know that that
that it won’t have they won’t have near the impact that it would have unlike a
straddle strangle swap a double diagonal or or or even a calendar you know things
things things of that nature okay so let’s do this then I just want
to come over here check our monitor tab see we got a feel that looks like we did
so you got yeah we’re all done let’s shift gears for then we’ll look at our
look at an iron Condor the iron Condor let’s let’s do this
let’s choose the one that from a percentage standpoint perhaps has an
Outlook of maybe not of maybe being not quite so volatile so we’ll go with the
lowest market maker move in relationship to the price will play the part of that
investor so we’re looking at Intel first we’ll come over here to Intel the market
maker move is four point five six percent of the price as or here’s our
white bars right here and then we’ll take a look at Illinois tool right here
Illinois Tool is three point two seven so let’s go ahead and we’ll camp out
here with Illinois tool I’m going to remove this drawing set right here
and let’s let’s look at doing an iron Condor here for Illinois tool and see
what it looks like we may be able to get at get outside the market maker move
here we may not we’ll come up here let’s I just want to know where the market
maker move though is we’re a 165 to the top slide and we’re 155 to the bottom
side so again an iron Condor is just too short verticals so so so we’re gonna
want to set these short verticals up as far as the short put area we want to put
them maybe just a little bit above 155 and on the short call area maybe just a
little bit above 165 where they could be right on there because we’re looking at
we’re looking at credits that should push us a little bit above there but
let’s let’s kind of see what we’re looking at here so we’ll come over here
to the trade tab and let’s first of all look at our put side put side we’re okay
being a little bit above 155 we don’t on this way we don’t we right right in here
at the at the money options it’s interesting we get dollar increments up
here but when we’re at the money we’re sitting here at two dollars and fifty
cents not super great for for some traders okay we can also see that we
have some widening out here between the bid the ask price let’s go ahead and
take a look at it and see what it’s looking like though so we’ll we’ll set
this up to be two and a half dollars wide on the on the put side will go 155
150 250 and then on the call side we want to go we’ll do 165 160 750 so
let’s and I’m just gonna on this one will hold argh I’m gonna hit the ctrl
key down we’ll go this we’re gonna sell that one and we’re gonna buy this one
that’s two and a half dollars a $0.32 crowded and then on the call side we’re
gonna go 165 and 167 50 that puts us at that gives us a a 72 a 72 Center a $72
credit so let’s take a peek at this and and on this one we’re just doing an iron
Condor we don’t we don’t need to make that adjustment for the back month fall
till if the price stays within that range regards to what implied volatility
does the price stays within the range holds it throughout the day then we
should be in good shape we’re here and let’s take a look at the well analyze
this trade over here so here’s our typical iron Condor right here come over
here and set slices to break-even there’s our breakeven so let’s move this
over to the chart and see where we’re sitting in relationship to the market
maker move that slices to chart we’ll come over here right here so it looks
like on the market maker move we’re sitting right on the upper edge and
we’re sitting a little bit below the put edge so that looks we’ll go ahead and
play the part of the investment that’s okay with that could we spread it out
further yeah we could spread it out further would be looking at less of a
credit so our reward risk ratio would become more inferior but we’ll go ahead
and play the part of the investment that’s okay with it sitting right here
so with that then we’ll come back over here to the analyze tab I’m going to
duplicate our order here create a duplicate and let’s let’s let’s let’s
let’s look at our risk on this notice the big difference here between the mid
and the natural when you have a big spread like this a lot of times when
investors will do they’ll just go ahead and put it at the mid, if they get filled at the mid great if they don’t they’re okay pass on the order we’ll
play the part of that investor here today all right so we’re two and a half
dollars wide and we’re getting a credit here
72 bucks so when you’re looking at your max loss on an iron condor you take the
distance between the strike prices you subtract from that your credit so our
theoretical max loss is $178 again this is before transaction cost so we’re
looking at looking at 178 here so let’s go ahead and we’ll say okay we’ll play
the part of the investor that on this one is okay risking $750 take our 750
we’ll subtract we’ll divide that by 178 and that looks like for contracts so
come in here we’ll go one two three four right there and we’ll do a confirm in
sand radio right there we click it and we’re not getting filled so this is one
of those deals hey if the if you don’t have good liquidity on the underlying
options many investors are not going to go ahead and chase the chase they’re not
going to go ahead and chase the trade say hey if we get filled fine if we
don’t get filled then then we’re going to be okay
passing on the trade we’re gonna play the part of that investor here today
okay now so what have we what have we done here today well we’ve done a double
diagonal here on Verizon we don’t have an iron Condor to match it up what if we
did Intel I’m just curious we didn’t want to do
Intel because the market maker move how are we doing with your good look we have
50 cent strike prices why don’t we go ahead and throw one up here for Intel we
got time I’m gonna have to do it relatively quickly until where we
looking to have 54 54 and 49 it would be nice just to have a couple in here that
we could follow up on next time so come in here realize it gets volatile right
we understand that so on the put side 49 will come in here will go a couple dollars wide here so well I’m
actually going to go to 49 50 49 50 here 48 50 47 50 right there and then on the
call side what have we got on the call side we want it to be at 54 so on the
call side we’ll sell 54 and to be $2 wide then 54 55 56 up here and hit this
one so 47 48 49 56 56 looks like we’re good there notice we have better
liquidity on this will quickly take this over the analyze page there we are
we’ll set our slices to break-even right here and we’ll send those slices over to
the chart right there we’re sitting below on the put side we’re sitting
right on on on the upside suis a little bit more room to the downside we’ll play
the part of the investor that’s okay with that come back over here I’m just
gonna create a duplicate order right here and what we got here folks were $2
wide 200 minus 62 so 138 750 divided by 1 38 we’re just using some of the same
numbers we had puts us in at 5 contracts okay and let’s see if we can
get filled on this one so we’ve got something in there and we got filled so
that’s great hello everybody so what we talked about here today well we talked
about earnings and we talked about strategies related to earnings we’ve
kind of focused and we drilled down on looking at that back month volatility
realizing it’s concern for some of these strategies and looking and looking at
looking at looking at stocks and relationship to that and choosing stocks
to trade or earnings strategies on in relationship to the drop off of that
back month implied volatility I’d like to encourage all of you to engage in
what we’ve talked about here today go go ahead and bring up a watch this you
had a lot of stocks that have earnings announcements right now you’d go ahead
and duplicate what we’ve done here if you fell a little if you felt a little
bit overwhelmed here today that’s that’s understandable because this is this is
an Advanced Options class we did we do and we kind of got a little bit in the
weeds here today but if you felt like totally overwhelmed we’re just even a
little bit overwhelmed but I’d encourage you to also attend our getting started
with options webcast that’s on Friday at 11:00 a.m. Eastern Time with our very
own Barbour Armstrong also coming up is growth and value strategies that’s being
taught here following our session here today so I encourage you to to hang
around and enjoy that session as well all right just want to check over the
chat window see if there may be a question or two over there that I can
address and the time that’s left here see Ricardo hello the loda Ricardo and I
got PS as well Dan everybody else welcome and and everybody I just want to
welcome you here and best of success your investing I don’t see any questions
over there that’s that’s fine again bestest success investing I hope
you have a wonderful week going forward I actually won’t be here we know
actually we’ll be here next week next week I’ll be here I’ll just be getting
home from a an excursion with my son in the Olympic Peninsula we’re going to do
some salmon fishing and some other things perhaps I’ll have some pictures
for you next week I can’t guarantee that but I’ll see what I can do so just
reminder investors that in order to demonstrate the function at the platform
we need is actual symbols however TD Ameritrade does not make recommendations
already turn with a suitability of any security or strategy for individual
traders any investment decision you make in yourself Twitter account is solely a
responsibility everybody again best of success to you and we’ll catch later
thanks again for joining me and hope to see you next week bye everybody we’ll
see you Thanks

Robin Kshlerin

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