Good afternoon, everyone. Welcome to our webcast on Long Options. I' m Connie Hill. I' m happy that you would join me here today. I see we have some veterans and some newer folks. We' re happy you' re all joining us. How many of you are one of those people that like to be fashionably late to a party? Like the party starts at 7 and you don' t roll in until about 7:30, 7:45. You know, that may be your MO when you' re going to parties. But when you' re trading Long Options, we don' t want to be late to the party, even if it is fashionable. We want to be on time to the party.
So, as we discuss Long Options here today, one of our focus is going to be on entries and identifying what makes a good clean entry so that you' re on time to the party. Now, I am joined in the chat by Cameron May. I' m glad Cameron' s here. He' s been trading options for years and years as well. So as you have questions, go ahead and ask them. Go ahead and put them in the chat if you' re listening to this on the recording. And I know lots of you like to do that. Put your question in the comment section and I' ll go back throughout the week and answer those questions as well. So you get your questions answered fairly quickly.
Well, let' s go through our disclosures and let Set out our agenda and get on our way. Options carry a high level of risk and are not suitable for all investors. What we talk about today is intended for educational and informational purposes. It should not be considered a recommendation of any sort. We will be using the paper money software application. That' s the software you download to your own computer. It' s the most robust; it' s a little bit different than the web and the mobile versions. Investing involves risk, including the loss of principle. Past performance of any security or strategy does not guarantee future results or success. And one note of difference in the paper.
Money software that is different from a live brokerage account is that if you have an option that is in the money that you have sold, it may not be assigned early in the paper money, which is completely different than your live account. All right. Well, I want to make you aware of three events coming up in the month of October. We have a Market Drive event at Santa Clara on October 12th. That' s going to be a Saturday. There' s also one in New York. On the 26th. And then Denver. Our neighbors here just barely to the east. October 18th and 19th, we' re going to have a workshop. It' s going to be a Friday-Saturday event. If you live anywhere close or just want to maybe take a short flight somewhere, you want to hit these events as you can.
So you' ll thank me. We' ll feed you. And you' ll enjoy yourself and learn a whole lot. All right. In our class here today, we' re going to talk about long options. That' s the focus of the strategies in this class. We talk about how price, time, and volatility may impact an option. And we' re going to be looking at quite a few examples here today as we get started. So just many of you might be trading options. There could be some of you that are newer to options. Okay. If you' re newer to options in your life, I don' You even know what a long call is. Well, stick around because it' s probably one of the first strategies I learned as a new trader.
Because it was so similar to a stock trade in that we' re looking for it to move directionally up. We' re looking for it to do that in a decent amount of time. But we don' t have stock ownership. Right. We' re just going to control a contract for a short period of time. There' s always going to be an expiration date on it. All right. And so, ideally, in our world of a long option, we want the stock to move directionally. Either up, for a call, or down, for a put. We need it to do fairly quickly. We don' I want it to dilly-dally. We want it to move. If you' ve got a stock that' s not moving a lot, it might not be the best stock to use a long option on.
If you' ve got a stock that is moving, that might be one that might pique your interest as a possibility to experiment with. Now, long options are what we call theta negative. What does that mean? It means that there' s an element contributing. In the premium that is attributable to time and every single day with the passage of time, the option price decreases a little bit, and the closer it gets to options expiration day, the bigger that impact is, meaning that the more quickly it ll decay as it gets closer to options expiration. So typically, we' re not going to want to hold on to an option for a real long period of time. We' re just going to look for it to make a move for it.
And then get out, regardless of when the expiration is. They are also, long options, are vega positive. What is vega positive? Well, it means when implied volatility goes up, so does the price of that option. It also means if the vega is higher, implied volatility is high, that option could be a little bit more expensive because of the implied volatility. And if it goes up, the price will get bigger. If volatility drops, that will impact negatively the price of that option. So typically, we want the price of the option to always be going up. We want to be, if we' re a long option holder of a call, we want it to go up. If we' re buying a put, which we' re really not going to cover today, we would look for it to drop.
Now, the most you can lose on our option trade is what you put into it, right? Whatever you paid the net debit for that option is possibly at risk. You could lose 100% of it. Now, we don' t encourage that. You probably don' t want that either. And so we' re going to put some safeguards in. We' re going to put some safeguards in place to help avoid that happening. But theoretically, you need to know it could happen. All right. So as we look through our option trades here today, we' re going to talk about how they' ll be impacted by that price, that time, that volatility. And so we' re going to be talking about delta, which measures the change in the price, and theta, which is that time decay, and volatility.
The Greek assigned to that is called vega. All right. Let' s go look at some examples here today. Now, I mentioned to you when we' re looking to get into a trade, we want to be there right on time, okay? And so what we' Going to talk about today is a setup, and looking for a setup, and knowing when we have the entry signal so we know when to the beat of the party on time. First example we' re going to look at here is IBM. You' re probably. You' ve probably familiar with IBM. It' s been around a long, long time; right now it' s an upward trending stock. My chart' s fairly simple here today: I just have a 30-day moving average that kind of gives us the direction of the intermediate trend of a stock.
All right. Now, I' ve drawn a little bit on this chart, but what you' re going to notice is that it' s making higher highs and higher lows, and that' s important for if we' re looking to go bullish on something and buy a call. And we see it has had kind of a sharp rise up. A little bit of a move back, and then a break out here. We might call this blue line that I drew in here with my drawing tools with that trend line is what we might call a flagpole. And sometimes we see a flagpole and it' s really clear. Sometimes it might not be as clear. And so we' re looking for a sharp vertical move up. All right.
So I started at the bottom of this green candle, went up to the top, the highest point that it reached to form our flagpole. And then this little area here where the stock' s been consolidating, that' s what we call a flag. Two to five days is ideal for a flag. Sometimes they drag on a little bit longer than that. And so we don' t want them to drag on too long. We don' t want them to completely retrace the flagpole area, right? We do not want to see it get back down to here, say, 214. We' d like to see it make an action or a move out of the consolidation before it gets that low and then pop up. And so today, we' re going to look at that.
Today, we have something that some of you might be familiar with. It' s called a flag breakout. Now, I kind of like this time of the day that we' re talking because the market' s still open. But generally speaking, stock prices, not all the time, but sometimes they can be off their highs. And you can see that here with IBM. It was up higher here earlier in the day and then it' s pulled back, but it still is up 0. 7 percent or so right now. So what are we going to do with this? Well, we are going to buy a long option. We' re saying we are going to want to be on time to this party if it breaks out today.
Now, if you saw this in the morning and you thought maybe you had an entry, you could go ahead and enter it. It' s not guaranteed to be there, though, right? Sometimes we' ve seen price action run up and then pull back as the day went on. And so the breakout might disappear from us, right? But right now, I think it' s probably going to hold. To have that much more before the option or before the markets close. And so it' ll probably look fairly close to that. Now, the next thing with a long option is which one do you want to trade? Now, I' m going to let' s see, get rid of that, kind of clean that up a little bit. This is an option chain.
If you' re new to options, you might not have recognized this. OK, but each of these dates are the expiration dates for the various contracts. Here, the number in parentheses tells you how many days until that option expires. And then you' re going to see some of these say weeklies off to the side. Now, in ancient days, when Cameron and I started trading options, we only have what' s called monthly expiration. And the options that were available to us would expire the third Friday of the month. Well, we still have monthly options. All right. But stocks that are trading a great deal of volume. And have a lot of activity. They trade in some of these smaller time increments as well that we call weeklies. All right.
So we could choose essentially from any of these contracts. Now, the move we' re going to look for here is not tremendous. OK, what are we going to look for? Because we have a flagpole, we kind of have a distance. And really what we' re looking for on a breakout, we' re looking for the stock to make that same kind of a move. Now, it' s never guaranteed. That it' s going to do that. Right. And he' s noting, hey, we' ve got some earnings coming up here. If you' re a person that likes to hold over earnings, you might like that. Or we could be completely out of this trade even before we get close to earnings. OK, the sooner it happens, the better we like it.
But we' re going to say, let' s put a target on this and let' s put a stop loss on this. So our target is going to be essentially the length that it ran before. Again, it' s not guaranteed. I' m going to duplicate the drawing. I. m going to put it here. And there are two places we could put this duplicate flagpole to give us a target. One, the more conservative, would be kind of back here in this area of the flag. It' s more conservative. That could be one place to put it. Another place to put it would be where you deem the breakout to be. And so with my little naked eye, I' m saying about right there where that stock broke out is where I would want that measurement to start.
We can put our mouse on here and it' ll tell us the time. And it looks like the target goes there from about almost to 230, well, 230. 59. OK, so that. As a pretty decent run for a stock that right now is sitting at 221, right, about eight, nine more dollars. OK, we' re going to take the more aggressive target here because we' re going to put it in our trade. So we' re going to leave off the 39 cents here. OK, well, we will put a target of 230 here. And then the question is, well, where should we put a stop? Now, for a flag pattern, we teach a class on flags. I think it' s on Tuesdays at 2 Eastern time. That class, it might be one Eastern time in that class.
That' s all we look at in this class. We' ll look at various entries that might be appropriate for a long option. But in this case, we see. We see that that would be our target up there in that neighborhood. Or if you wanted to go a little shorter than that, you could. Right. If you have a rule on flagpole, you' re like, I don' t think it' s good to do all of it. But the stop, if the price comes down here and it closes back in this consolidation area, then the pattern is broken. It' s no longer valid. We no longer want to trade it because it' s not doing what we expected it to do. So we' re going to put a stop loss on this.
And I' m just kind of putting my mouse. We' re going to put it in this consolidation area. You know, if it were to drop down today or something, you know, it might be around, say, that 215 area. So I' m going to put our target at 230 and our stop loss at 215. Now, your eye might see it a little bit differently. Right. If your eye sees it at 216, 216. 49, whatever it happens to be. Right. You' ll go ahead and put that number in there. Let' s go through. Let' s do the steps for the trade. We' ve got I kind of made some little notes here where our target is 230 and where our stop is going to be 215. Now, which one should we choose?
You know, that flagpole was about five days. And so what we might expect now that it' s broken out, maybe it' ll take five days. Maybe it' ll take longer. Maybe it' ll go shorter. We would love it if it totally went shorter than that. Right. And hit our target. But we want to buy enough time. Well, what' s enough time? We want to buy plenty of time for the stock to make it to its target plus some buffer. And so some traders like to put a buffer of their, you know, four weeks, 30 days, something in that area so that we' re not cutting ourselves too short on time. So as we look at the options that are available here, the monthly expiration for November could be a fit.
Possibly the November. November 8th could be a fit. Maybe six days for the stock to move and 30 days for it to have that buffer zone. But we re going to give ourselves a lot of buffer. We' re going to go with this one here of 43 days. I' m going to open it up. And depending on if you want to be more conservative or more aggressive, you might have different strike prices you might choose from. Now, I have some custom columns here that I' ve created. This column. The first one is our delta. Sometimes we' ll look at that delta to identify what strike price we might want to use. This column is my open interest. I love the open interest here. We' ve got thousands of contracts.
You' re not the only contract out here, right? When we see something like that, volume is just today's activity. So most of the open interest contracts were well before today. And then always we' re going to see the bid price and the ask price here. All right. So this one. Yeah. If we were looking at the 220, that would be our at the money option. And that' s the one we' re going to do. If somebody wanted to be more conservative, they might buy an option a little deeper in the money, maybe a 215 or a 210. If they had a really far target and wanted to be more aggressive and expect more movement out of the stock, then somebody could buy an out of the money option. Okay.
We' re just going to kind of go the middle of the road. The one that So the closest to the current price of the stock, which is going to be 220. Now, as we bring this up, I' m going to right mouse click. We' re going to say buy custom with OCO bracket, which means one cancels other. That means we' ll put our target in one place and our stop in another place. And whichever one executes first, that' s the one that gets us out of the trade and hurrying cancels the other one. Right. When we' re not in a trade anymore, we don' t want open orders sitting out there. So that' s what that OCO stands for. So our buy line is green and our two selling transactions here.
One is this first one' s really meant to be the target and this one. s meant to be the stop loss. Now, in this case, we' re going to be basing the stop and the target on the price of the stock as opposed to the price of the option. Now, could you do it based on the price of the option? Absolutely. You could say, hey, I would like this option to get up to $19. Before. You' re hitting the target and you' d maybe put a stop in here. Some people will use a 30 percent or 40 or 50 percent stop loss on the price of that option. That' s kind of a point where they say it' s just not working for me. It' s not doing me any favors.
I need to get out and just salvage what I can out of the trade. But in our case, we' re going to do it based on the stock. So instead of having a limit order and a stop order, we' re going to change them to market orders. And then we' re going to put some conditions. On the stock. So the condition for the target, we' re going to put in this first row. The condition for the stop, we' re going to put in this second row. All right. Now, you' ll notice here there' s a gear. It doesn' t appear until you actually put your mouse in that area. And then it will bring up this order rules box. And so we' re going to say, what is the condition? And then what do we want to do once that condition is met? So in this case, we' re going to say, all right. If IBM gets greater than or equal to our target of 230. Try this again, 230.
Then we want to get out of the trade. What will it do? It' ll trigger a market order. We' re going to make this GTC. So it' s good to cancel so we don' t have to go set it up every day. Right. That' s kind of a pain. So, yeah, just use your GTC. We' re going to go ahead and save that. Now, this bottom one, we' re going to configure as the stock. So this is our top loss. But again, we' re just going to use a condition on it. Click on the gear. Same thing. We' re going to say the price of the stock. IBM is less than or equal to. In this case, we' re going to use 215. All right. $215.
And you might want to just kind of look down here. Make sure you' ve got your less than or equal to arrow going the right way, so this is less than or equal to 215. Do what? Trigger a market order. That market order says, ' Let' s get out at the next available price; just execute me quickly.' But the price itself is not guaranteed, but our intent is to get out pretty close to that price. Now want to look here real quickly the chassis if there' s a question that I need to address. I know Cameron is helping me out here, looks like a question here says, ' You know, I thought that
we weren' t supposed to place stop losses on leap options that' As a leap option is one that has a lot of time; it has at least nine months worth of time however neither of these are leap options, we' re just doing some fairly short periods of time but it is a personal decision whether you put a stop-loss on something like that or not so appreciate you bringing that up. We' re gonna hit here; we' re just gonna do one contract here; we' re gonna hit confirm and scan this. This little red message lets us know, okay, one of our orders here, and actually both are based on the price of the stock. And this is saying, yeah, we might have wide markets or liquidity. We might have to substitute a limit order there.
That We' re fine. We're happy if they need to do that for us. All right. We' re going to send it on its way. And we just bought that option. All right. Let' s go to another chart here. There' s some questions out there that are a little bit general in nature, so I' m going to let Cameron handle those questions, not necessarily related to what we' re doing here with the trade. All right. Here' s another one. Okay. Now, I' m going to pull it up, and I want you to kind of observe what' s going on with this. All right. We have a real steep flagpole, and then a flag. Okay. Some consolidating action. And then it just kind of meandered a bit.
Now, we're re not going to trade off a weekly chart, but I want you to see what the weekly chart looks like here. Okay. So I' m going to change my daily to a three-year weekly. Just kind of zoom in here. So each candle represents a full week here. And we can see our flagpole, a sharp vertical rise up. We' ve got boom, boom, boom. And some might say a continuation of boom. Right? Or some people, when we look at it on a daily chart, what we' re going to look at here is that it' s more breaking out from this week-long consolidation. All right. But on a daily chart, you' re like, whoa, that is some steep activity. Are we going to expect that on the next move out of the stock?
Well, we hope that it gives us something similar to that, but we' ll just have to wait and see if it actually does it. So I have drawn in my little flag. Here. I have a little area consolidation here where I had it a couple of weeks ago. But now the time has passed on. It really just hasn' t moved a whole lot. Probably would do something drawing in the flag here maybe kind of something like this now, okay, where these new lines are being drawn. And today, looking at a potential little breakout there. It' s not guaranteed. It might not be there when the market closes in a bit. But it' s looking pretty strong. It' s holding pretty close to what its high price was at 135.
So we' re going to do the same thing. We' re going to say, are we on time to the party? Yeah, we' re getting in today. What if you saw it tonight? Would that be all right? And then you put your order in the next day? That' s what can happen with some people, right? They' re not trading intraday. They' re just kind of looking at things at night. Yeah, certainly you could do that if that were your rules that you like to use. We' re going to duplicate the flagpole. Again, we' re going to bring this up. I want you guys to note is that this stock is up pretty nicely at $2. 47% on a day when I think our markets are still pretty mixed here.
We were up for a little bit. We' re down for a little bit. But this, I would say, is an incredibly long flagpole. Okay, this probably is not. Let me zoom in a little bit differently here. Okay. This is probably not very common, okay, to have a real steep and tall flagpole. So this is going to be pretty aggressive here. You can see our high today here is 135. If I put my mouse here on that duplicated flagpole, it gives us a target of 173 . 66. You' re looking at that and you' re like, that is like 35, almost 40 points higher. That is an enormous flagpole. So maybe we don' Take the whole flagpole, right? Maybe we don' t go up here for the top target.
Maybe we take something that we think is reasonable, that we' re getting a lot of meat off this bone. We' re trading a lot of the move, but not necessarily holding out for that tippy top move, okay? So let' s maybe look at it here. Let' s maybe go to 164 as our target here, all right? Now we' re going to play that. Now the stop, it' s the same thing. If it breaks down and closes inside of where it broke out of, this one' s kind of more of a horizontal breakout, it closes down here. And I' m going to say, you know, it needs to probably come back 127. 50 or so. If it really closed down in that area, then we' d want to say you' re not doing any favors.
We need to get out. The follow- through on the breakout isn' t happening, okay? So let' s go ahead. Let' s load that up. Now as I look in the chat here, I' m just noticing that there is a survey out in our chat. Now many of you have seen our surveys before, and you are so helpful to us as you fill that in, basically giving us feedback on this session. It' s super easy. I like easy surveys. I don' t like long ones, okay? But there' s two questions. You just fill in the radio button according to how you feel. On a scale of 1 to 10, 1, I hate this, 10, I like this, right? Just whatever your feeling is on things, all right?
There' s two questions, if you want, after that, that can require a response. And one thing I' ll ask you is if you want to communicate something with me, rather than answering the question, or you get added to the answer to the question, you can use that space to communicate something with me. We' ve got a regular group here that meets on Thursdays. And you might say, you know, Connie, I' m having a struggle with X, whether it' s getting to the party on time, whether it' s missing the target altogether, you know, some kind of concern so that I can address it in an upcoming session, all right? So I' ll encorder, I' ll appreciate it. I guess that' s the best word to use, I' d appreciate it if you fill that in for me.
Now, you don' t need to do it now. Class isn' t over. But if you click on that link, it will be active. And when it' s your time to go, then you can go ahead and do it. You can go ahead and fill it out at that time. All right. So let' s go put this order in. Let' s go to the trade tab. Now, does this have a lot of trading activity? Well, 2 . 2 million shares today. Usually when there' s a lot of volume in the stock, there' s a lot of activity in the options. It has a couple of weekly options here as well that we could choose from. We' re going to go ahead and use the November 15th, those monthly expirations.
Love the numbers sitting out here. They' re in the hundreds and thousands. So if we' re just doing one little contract, we' re just a tiny little bit in there. It should be easy to get in and out. Okay. That' s what we' re looking for there. Price of the stock right now is at 134. And we' ve got $5 increments for this. So the 130 would be a little bit conservative and come with some intrinsic value about, what, $4. 37? Yeah. That' s a little bit of a chance-ish, right? We could go at the money. The 135 is our at-the-money strike price. That' s the one that' s technically the closest. And so some people might feel more comfortable there if they wanted to.
Somebody wanted to be more aggressive. They could come out here to something out of the money. But it' s going to require a bigger move on the price of the stock. We talked about the most you can lose in a trade is what you put into it. So sometimes people are really tempted. They' re kind of like, ' ooh, I want the cheap contract.' I don' t want to lose that much if it doesn' t go my way. Okay. So they might choose something way out of the money. But know that the price of the stock has got to get to whatever your strike price is, 165, plus whatever you paid for the option. So if you chose this one that costs 310, we' re looking for $168 .
10 that it needs to move just to break even. Okay. So sometimes people think this has got to be like Costco and got to be cheap. And not necessarily. That' s not always the best way to trade options. Now, we' re going to be go at the money again. This one will be slightly more aggressive because it is a tiny bit out of the money. All right. So we' re going to go with this 135. We' re going to do the exact same thing. We' re going to say buy. Custom with OCO Brand. We' re going to do the same thing. We' re going to base it on the target price of the stock reaching where we want it to go. All right. So here we' re going to change this to a market order.
And again, another market order. Top one we' ll use as a target. Although technically it doesn' t matter. You could do it in any order you want. We' re going to make both of these good until canceled so we don' t have to set them up. Then we' re going to click on the gear. And we' ll go ahead here. And we' ll say we want it to be greater than or equal to for our target price of the stock reaching 164. All right. That' s a $25 move. So pretty hefty. We' ll go ahead and hit save. And remember, we didn' To go clear to the top. All right. It could go longer than that. But we' re being a little bit more conservative.
We want to play the meat of the move but not necessarily get greedy. Okay. I know. I don' t wake up in the morning and say I' m going to be greedy today. I don' t really think that way. But sometimes when we' re trading options, we kind of have to hold ourselves back to do something where we' re like getting a good chunk of what that stock or that price of that option is doing for us and not think we' ve got to get every little last penny out of it; I squeeze it really tight. But with options, not necessarily the same thing. All right. This is going to act as our stop. If the price of the stock drops to $127. 50 or lower, it means it' s not doing us any favors.
It' s dropped $7. It' s not going up the way we expect it to. Okay. So we' re going to get out of the trade. Both of these are already marked. Good till cancel. We' ll go ahead and hit save. And just kind of review it. When you hit the confirm and send, make sure you realize, yeah, it' s going to trigger two market orders. Whatever the price of the stock gets to that one. If it gets to that point or higher or on the stop part, if it gets to $127. 50 or lower, free to that order, get us out of the trade. The price isn' t guaranteed. Right? We' re going to throw that in our bucket here.
Now, I' m just going to take a quick look at the chat, see if there' s some questions I need to address here. Looks like you are keeping Cameron fairly busy. That' s good always to keep Cameron busy. Keep him on his toes here. Now, Araceli, I might have just butchered that. You' re wondering about the delta and if you could use the delta to help you decide. You certainly could. Okay. Let' s just look at APP here. Our delta column is right here. And the one that we selected has a 55 delta. Well, what does that kind of mean to the average person? Well, some people will use that delta as an idea of how likely the option is to expire the trade.
So, let' s say that the option is to expire in the money by one penny on options expiration day. So, sometimes they may use this delta or sometimes they may use a probability column. Now, my probability column that I have here that is also showing volume is probability in the money. Okay? So, it' s a number that' s fairly close to the delta but not exact. So, this is saying here there' s about a 46% chance that it would expire at least a penny in the money. Come options expiration day in 43 days. Now, we Re: not planning to hold it until options expiration by any means. Not planning to go there at all. Okay? But if you wanted to, some people say, you know, maybe I want to be more conservative and choose a blank delta.
A 60 plus delta. A 70 plus delta. You certainly could do that. Or somebody may say I want to be a little bit more aggressive on this one. And maybe they' ll go a little bit out of the money. But not necessarily out to super low deltas. Right? If you go out to much lower deltas that have a lower probability of expiring in the money, yeah, then they are less expensive. All right. Hopefully that answered that question. I hope so. Yarek says, you know, if we stopped out at $127. 50, what would be the loss in addition of the premium we paid? How would you actually calculate that? Now, I wasn' t really planning to. I don' t want to go into detail about that. But I am going to answer this question.
Okay? I have on my screen a little calculator. And it' s called the Theo Price Calculator. What you have to do is you have to make sure you have Theo Price, which I have right here, is one of my selected columns. This one I custom made. But there' s one here that says Theo Price and Mark. So doing that alone would bring up this theoretical calculator. And it sits right here. You can see my big old mouse. This is the calculator. Now, I' m going to reset it. Okay? And then you can say, well, okay, what if it did go down to $127. 50 and hit my stop? That is about, what, $7 away? A little bit less than $7. Let' s say minus. Let' s go minus 680.
Okay? I think that will be fairly close. That gets down to one. That' s pretty close. That' s close enough. So we' re going to say the price of the stock drops that amount to get near our stop area. And you could come in here to account for time decay. Right? The passage of time. It' s not like it could do it, I mean, it could do it tomorrow, but more likely maybe over a few days that it might hit that. So, you could say, okay, well, what if it does it in, say, a week? Right? That would be, we' ll give it until the 27th. A week and a day. And if you think there' s a change in implied volatility that you want to account for as well, you could go ahead, you could put a positive or a negative.
If you don' t have a good reason to adjust it, I would just leave it alone. Right? There' s no reason to work with it there. All right. So now that we' ve plugged these values in here, and let me kind of mark this out for you. This column here, the price, tells us what the theoretical price of the option would be given those parameters. Okay? So within a week, if it goes down and gets to, I think I have 127. 68, just a little bit higher than that. Right? Roughly, theoretically, the price of the option could be in the neighborhood of 916. Okay? So you would be losing here not quite $3 off the price of the option. Okay? But, yeah. Definitely something off that option.
The field price calculator is helpful to work with as you' re putting in your what-if scenarios. Okay? So, again, how do you get the theoretical calculator? Make sure you have a column that' s marked that you have here. Either this one, field price, or I' m going to go back to my columns that I' Ve created here that also include field price here. And so we can use that calculator. If field price isn' t on there, nothing shows up in this field. Okay? So if you' re looking around, looking around, don' t see it, you might not have that column up yet. And so just go change your column, bring it in. All right. Let me take a quick look here. Perfect. Yark says, well, why do we set a stop then?
We were setting a stop based on the price of the stock because typically we want to have a place where we think the stock can get to for a target. And also a place where it So not doing us any favors if it drops because on this pattern, when we see the breakout of the pattern, we expect the stock to continue to go up. We don' t expect it to dilly-dally and go sideways or backtrack. We don' t expect that. We can, you know, expect it to continue to go up. And so that' s why we put some parameters in there so that you have a target to aim for. And that the system can help you catch it so you' re not babysitting everything. Right?
First thing in the market, stocks go off. They' re moving all over the place. It' s hard to babysit those. But if you have your order in, you don' t have to try to catch it. You can go, you know, be eating lunch or walking the dog or whatever. And you can let Thinkorswim software to go ahead and execute that for you. Okay? Hopefully that makes sense to you. All right. I want to follow up on a couple of trades from two of my clients. Two weeks ago. I haven' t been here for a couple of weeks. So, our last class was September 12th. And I want to show you how a couple of our trades played out. All right? So, first trade we' re going to look at is Dash.
All right. On Dash, we were trying to be on time to the party. We saw the breakout of that consolidating flag. See, this is one that went longer than two to five days. It' s a little bit longer. We put on a conservative estimate for this. We put the flagpole down in the consolidation range versus out here where I placed our new examples today. So we got in here just shortly after that breakout. We had the target on this set at 145. Just going to double- check my number, 145 even. All right? And it dilly-dallied for a couple of days. So faded decay hurt it a little bit in there. But then it gapped up. And then it kind of continued to run. And it hit our 145 target on this day.
I' ve circled it in yellow. That means that' s our exit date. And we made money on it. Okay? Well, how much money did we make? Let me show you real quickly on Dash. On it, we were in the trade 13 trading days. And we' ll go back at least 30 days here. That will work for us. And I' ll open up the trade history here. We did the same thing with this order that we did on the ones we just put in. We had a target and a stop loss. So our target is the one that got filled. Our stop loss was canceled because it filled our target. And what was our value there? Click on the gear. We wanted to get out at 145. Got us out on that day.
And then it drifted down. And we didn' t care because we got out. And so if you go through and do that. Do a calculation. The gain on this trade was $9. 55. And it gave us a return of about 93% in 13 days. Okay? So you might go, okay, that' s kind of interesting. Right? That piques the interest a little bit. The second trade we made some money on, but not as much money. I' m going to show you the money end of it first because we' re out of that trade as well. That was ticker symbol AEM. We bought an 80 call on it. And we were out in six trading days. We put it in on the 12th and it got us out on the 18th.
We paid 610 for it. And we received $ 760 for it when it hit our target here of $84. 50. So this was not a very long trade. Okay? Let' s pull it up on the chart on it. And, again, here is the day we got in. We got in on this breakout of the flag. We were on time to the party. It ran up a little, retraced, and then ran clear up here. And on this day near the top is where it hit our 82. 50 target, executed the trade, got us out, and we were done with it. Now, that was six days and it made a return of about 25% in those six days. So sometimes we might have what we call base hits, some that are smaller in terms of their return.
And then at other times we might have bigger returns. So this is an example, actually, one of each of those with a 93% return and a 25% return. And, of course, it could be anywhere beyond that or anywhere in the middle of that just depending on what the stock does. But the idea here was we got out pretty quickly after we got into the trade. We didn' t let it go on for several weeks or months. Okay? The idea with this one is a very short taking advantage of a burst of momentum. Catching the meat on the bone as that stock runs up and then exiting the trade. Don' t worry about trying to nail the top. It' s very difficult to do. You can just use some calculations that seem realistic.
Okay? All right. Hope that makes sense to you. Now, are all of you subscribers to our Trader Talk channel? Man, if you want our content, you got to do it. Click on that icon in the bottom right of your screen. Looks like YouTube with a blue painting in on it. Okay? Click on that. That will allow you to subscribe to our Trader Talks channel. When you do, it' s really easy to have access to our classes. So I had pulled this up when Barb' s class was going on right before mine on Shirt Verticals. I' ll refresh this. That' s letting us know right now our long options class is going on. And then there are some different playlists that might be helpful to you. So one is what' s coming up next.
Okay? Brent Moores is going to be here getting to know Schwab. He' s going to tee that off at the top of the hour. That will be our next webcast. And then suppose you are somebody that is looking for example to learn more about stocks growth stocks value stocks This is a great playlist James Boyd runs that class and so here are some of his recent classes Maybe youre somebody thats newer Maybe you came to this options class but youre like I dont know that much about the markets quite yet You might want a getting started class I actually teach that on Fridays Well it disappeared on me In any case I teach a class on Fridays It comes on right at the market close 4 p.
m Eastern time And we get you started with all the basics so that you not only can trade stocks but you take that information you re able to use it for option trading as well. So I' m going to encourage you to follow along with our content so that you can get started. Get what you' re looking for. You' re not just getting fed random stuff from YouTube. All right. Well, you guys, it' s time for us to wrap things up. What would I encourage you to do is maybe your next steps. If you' re maybe newer to options or maybe newer to what we talked about today as far as getting in as soon as we see the stock make either a breakout move or a bounce move.
Most of them, the two new ones we did today, what happened to be breakout moves, right? Break out of that flag consolidating pattern. Then, practice that out in your paper money account. Or if you' re new to paper money, do some practicing of the trades that you like to do, so that you get comfortable with it. You' re feeling comfortable. You know what buttons to hit. Yeah, Connie knew, but she' s been on it for a long time. Right? You might need to hit our getting started with thinkorswim, so that you get comfortable with it. But the biggest thing is just practicing. Okay? So I' m going to encourage you to practice what we did today. Practice putting in and kind of deciding a target. Deciding a stop. Putting those in. Do some example trades in your paper money account, so you' re reinforcing those principles. Well, I appreciate every single one of you being here today. It was my pleasure to spend some time with you. Cameron, thank you so much for helping out in the chat. I know the chatter sometimes gets really busy. Appreciate you helping me out here today. So top of the hour, Brent Morris will be back here with gettingtoknowschwab . com. We' ll see you then. Bye -bye. .
