Long Call Verticals | Trading a Smaller Account

Trading a Smaller Account | 11-10-23
Characteristics and Risks of Standardized Options. bit.ly/2v9tH6D
In this webcast, we focused on Long Call Verticals which is a type of debit spread. We walked through the components of a trading plan for this strategy as we placed 3 example trades on the thinkorswim paperMoney platform. All example trades included target exits.
Do you have a smaller account ($5,000? $10,000? $25,000?) or are you interested in trading a smaller portion of your larger account? Explore ways to trade, manage, define risk and learn about options strategies in this Active Trader class.
Options involve risks and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options carefully before trading
Follow Barbara Armstrong on X: BarbArmstrongCS
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[@kevindaly8660]

Just getting back into Options. Found you on You Tube. Very impressed. Trading on Think or Swim. Subscribed to your channel. Looking forward to Monday & Tuesday classes.

[@tradertalkswebcasts]

Welcome aboard! If you are just getting back into options, you might want to check out the Getting Started with Options series. Here's the link: kzbin.info/aero/PL8a6s5nq1lPRcGlhhMLSqx1BK1rttI00R&si=cXoEulViI77K7_f4. ^Barb

[@robertorosa6268]

Barb Thanks for explaining this so good and how to make money. I'll keep watching.

[@tradertalkswebcasts]

Welcome to this community. If you would like to join us 'live', we meet on Monday's and Friday's at noon ET. Here is a link to the playlist for Trading a Smaller Account: kzbin.info/aero/PL8a6s5nq1lPTl4QH-h71y1Z5KEePqtVgy&si=Qa_A-N0QuIP02aKM ^Barb

[@sjsphotog]

Thanks for the class BA. looking to learn more and long Debit spreads since Ive never done options before. Thanks. Keep up the good work. Good meeting you in Anaheim

[@tradertalkswebcasts]

If you've never done options before, the Getting Started with Options series is a great place to start. Here's the link: kzbin.info/aero/PL8a6s5nq1lPRcGlhhMLSqx1BK1rttI00R&si=9eAELOgSv-UORzDm. It was lovely meeting you as well. Take care. ^Barb

[@sealpacito595]

Hi Barbara- I am trying to understand how the opposite order caps the gain to 50% and how it might hit earlier. On the AMAT example, potential gain is 2.25/2.75=81%. For the opposite order, increasing the debit spread by 1.5x = 4.12, making potential gain (4.12 - 2.75) / 2.75 = 49.8%. Is that correct? If so, as 4.12 seems close to 5, which is the maximum intrinsic value, it does seem that it would probably take 2-3 weeks to hit if we're 35 days out? I also assume this means we should never pick a spread where 1.5x is greater than the spread of the strike prices. Anyway thanks for posting this video and all of your others, they are quite helpful. I know this comment is posted long after the video was posted so I hope you reply.

[@tradertalkswebcasts]

Yes, your math is correct. With a Long Call Vertical if volatility increases dramatically or the price of the stock goes up dramatically, it is possible to hit a 50% gain in a few trading days. However, if the trader wants to achieve max gain on the trade, they would likely have to wait until very close to expiration. If the trader's trading plan is looking for a 50% gain, then they might not place a trade that would not potentially have the possibility of generating that type of return. ^Barb

[@hernandezart123]

Do you offer a master class on vertical calls?

[@tradertalkswebcasts]

There are 2 weekly webcasts dedicated to verticals: 1. Short Verticals - Wednesdays at 11 ET with Ken Rose. Here's the link to the archives for that: kzbin.info/aero/PL8a6s5nq1lPTQAZhOf0joy7Z3y2zXCpHE&si=bF5KhgDu9GYnfTNC 2. Long Verticals & Diagonals - Thursdays at 11am ET with Ben Watson. Here's the link to the playlist for that: kzbin.info/aero/PL8a6s5nq1lPQoKbvXR3kkaAHB57JxRMs7&si=E-IrbQpLOWfMjcVY 3. In addition, I have created example trading plans for both a Long Call Vertical & a Short Put Vertical. They can be found in the Trade Management Mini Session playlist: kzbin.info/aero/PL8a6s5nq1lPQoKbvXR3kkaAHB57JxRMs7&si=E-IrbQpLOWfMjcVY 4. Lastly, if you keep coming back to Trading a Smaller Account, verticals are a popular type of trade given the smaller account size. You'll learn a lot about verticals if you keep coming back. In the meantime, if you have any questions, just ask! ^Barb

[@tiffanyboney]

How do you apply the setting that indicates price ytd change, and etc?

[@tradertalkswebcasts]

That is a script: YTD/MTD/WTD (Chart) Script: tos.mx/LJYKFc3 Note: Scripts are case sensitive & accuracy is not guaranteed. SCRIPTS: HOW TO ADD TO THE thinkorswim TRADING PLATFORM Left Click on the Setup (Gear) Icon in the top right corner on Thinkorswim Select Open Shared Item In ”Shared Item URL:” Type the script (or copy/paste) into the field. Note: Scripts are case sensitive. Click Preview When ”Import Item as:” appears, rename the script (something that makes sense to you!) Click import. If it is a study for a chart: Go to ”Studies Beaker”- Left Click Choose Edit Studies Type in Name of your Script. Highlight it. Click ’Add Selected’ Choose ’Apply’ You can also find the above information in the post pinned to the top of my X feed (along with a number of other scripts) @BarbArmstrongCS. Hope this is helpful. ^Barb

[@tiffanyboney]

@@tradertalkswebcasts thank you so much!!! You are great! I’m enjoying watching all the archived videos… I’m a beginner so I’m taking it all in and will be watching all of these videos at some point. Thank you for the excellent instruction

[@flavOG]

Hi Barb! Miss watching your videos :) Will definitely watch this one ;)

[@tradertalkswebcasts]

Thank you. I hope you enjoy this one!

[@akim9110]

If stock price up to strike 45 dollars, what will be happen? It's will be automatically closed the deal? Get whole profit without buy any of stock? Right?

[@tradertalkswebcasts]

With a long call vertical trade, our example included an exit at a 50% profit. So, if in the example, we paid $2./sh to place the trade, the target would be to exit at either $3 for a 50% profit or $1 for a 50% loss. Although, the short strike might be exercised at any time, the goal of the trader is typically not to actually buy or sell any stock. ^Barb

[@boxtrader9689]

Great webcast! So on Booking, if Max gain is 4.70 listed on Trade Confirmation before hitting send, does that mean we'd have 2.80 Entry price + 4.70 = $7.50 Target Exit (IF we were going for MAX gain?? & not just the 50% profit target on the 1st Trig Opposite Order exit set up) I'm trying to fully understand this LCV trade strategy. The only way to get that Max is at expiration... and because the Long Leg goes up in value, but more importantly, the short leg Time Decay loses full value, which creates the max gain result. Am I understanding that correctly please??

[@tradertalkswebcasts]

If you are looking at a LCV (long call vertical) with a $5 wide spread and a $280 Entry Price, the max gain would be 5-2.80 = 2.20/share. If a trader's goal is to achieve the max gain, they will likely have to wait until close to expiration. The 50% gain target can sometimes by achieved within a matter of days which is part of the appeal of lowering the target. ^BA

[@tonimontana1332]

Hi Barb, is there an indicator that marks cahold candles? Thank you for your videos.

[@tradertalkswebcasts]

I'm not sure. I have never used one. ^BA

[@amyamy1727]

please can you teach us how to get out from a trade when it has made 50% profit?

[@tradertalkswebcasts]

Amy, with the example Long Verticals trades we placed , we put in orders to exit at a 50% gain when we placed the trade. ^BA

[@LordofmyKingdom]

Very good class. Would it be possible to develop a template for OCO trades?

[@tradertalkswebcasts]

Thank you. If you are referring to a saved template on thinkorswim, I do believe that is possible but as an instructor, I tend not to use them as there are always new people joining the webcasts. ^BA

[@frankcummings3707]

Is there a link between the calendar events, and the youtube video the events refer to? If not, I think it would be very helpful.

[@tradertalkswebcasts]

Yes there is a link to the youtube video from the calendar event for each and every webcast.

[@frankcummings3707]

@@tradertalkswebcasts yes? Where is it?

[@lancelotdsouza4174]

I love your video. Could you do a class on the Wheel Strategy?

[@tradertalkswebcasts]

I'm not familiar with the Wheel Strategy.

[@lancelotdsouza4174]

@@tradertalkswebcasts Selling Cash secured PUTS and covered CALLs