Trading the Trend

Hello and welcome to Trading the Trend. My name is James Boyd. This is Thursday, July 17th. We have Brent Moors with us in chat. We welcome him and we also like to welcome all of you as well. The question every Thursday we ask ourselves is: what trend is the investor riding? Many of you investors probably have some assets, cash, and you might be wondering how might the investor might try to put the cash to work and try to ride a trend, whether that's shorter term or intermediate or longer term. Riding solo, and what are those trends now just real quick as we get started here today? Remember that Brandon myself, we do post educational content on X uh, as I mentioned yesterday my family probably 20 minutes ago they took off for the airport, so it's just me and Jack's for a week.

Riding solo, speaking of trends, yeah. Jack's uh, my dog, my Yorkie dog, he literally sat on the console of the uh of the car and wondered if he was going to go on vacation. So it was kind of a little sad, but we're going to have a nice little session here today and have a good time. So just real quick as we get started, remember with what we discussed, we'll talk about stocks and we will talk about options. If you have an interest in learning about ETFs, remember Connie Hilde actually does the ETF session on Monday afternoon. Kevin and I actually do that session tomorrow morning on ETFs if you have an interest of that as well. Some will be options. Remember that options carry a high level of risk and are not suitable for all investors.

When we talk about the information here, it's provided for general informational purposes only. And also remember that when we talk about examples, they are just that. Schwab does not recommend the use of technical analysis as a sole means of research, fundamental analysis, intermarket analysis, macro analysis. It's not all about technical analysis. That's a part of it, but it's not all of it. Application: Investing involves risk. And remember with what we discuss, we're going to actually talk about some of the trends we're seeing in the current marketplace from an index perspective. Do we have any changes in the last couple of days? Second, we'll talk about some of the sectors. Are there any changes that we should be made aware of? And then what we're going to really talk about kind of is some new and current examples like we normally do.

Now, just briefly, for some of you that are watching this, I want to kind of give you just a quick idea of kind of some of the strategies that we covered. Now, this is gonna be kind of a good take some inventory of like, what do you do? So our class, we're really trying to focus on stocks, okay? We're trying to find good quality stocks. So when I say good quality stocks, we're talking really about things that have strong fundamentals. Revenue's growing, earnings per share is actually growing. Maybe the company is paying dividends. It's one of the leaders in the industry group, et cetera. That's the foundation, okay? Part of that foundation is, Are we above the 30 period moving average or 20 to have a trend?

And is the stock above the 10 day moving average? So some fundamentals and technicals. So obviously that portfolio is going to start with stocks. The second strategy that we're really talking about, for example, and I'll put this, let me take something back here. And one thing I want to kind of bring up first before I even hit that is I want to talk about really the second strategy is really a cash secured put. The cash secured put is a potential stock position. And I'm going to put a little arrow to that, okay? Now, the next strategy, I'm going to put second strategy, first strategy, and the third strategy is really a cover call. And if you kind of think about that, that cover call is a stock position, okay?

Captain obvious, since we're getting there. And if I actually said, well, what other strategy? Well, one of the strategies we've talked about about four sessions in a row is a caller strategy. And if you kind of think about it, a caller strategy, That is a stock position. Ding, ding, ding, ding. You're correct. OK, fourth strategy. And if we kind of said, well, hey, what about a long call vertical? What about a short put vertical? So I'm going to put 5 and 6 right there, OK? 5 and 6. Now, these strategies that we're talking about, they are really more bullish strategies. The market tends to be bullish. Not all the time, but a majority of it, OK?

Going up somewhere and I think it would make sense that probably someone starts with bullish strategies first because that's probably what they're used to and that's what they potentially might want to do, might. Now, when you kind of think about the long call vertical, the short put vertical, this really moves at a fraction of what this stock moves. It's a fraction. So it's not moving one to one. The delta is less than one. So also remember, when we actually talk about these, these are bullish positions. I'll put a plus, negative theta, or neutral. If we actually said, for example, and I'll put a little neutral there. It's probably more neutral-ish than negative. Short put vertical, I'm going to put a plus there for bullish, but also positive time decay.

And the last strategy we have not mentioned a long synthetic. Now that long synthetic, I'm going to put another arrow to the left. I'm going to put number seven strategy. And if we actually go back. Kind of really goes back to the stock. It's trying to have stock-like movement. Now, I don't know how old you are, okay? You might say, well, James, I'm 38. I'm 34. I'm 28, 48, 58, 68, 78, 88, whatever you are, okay? So the fact of the matter is-in 95% of our examples, followers We're really pulling from these seven strategies. Do you think if we focused on these strategies over time, do you think we would have a shot? Just to understand and have some confidence. Now, I've been doing the stock market since 1996, okay?

So I don't know how many years that is. It's a couple, okay? A couple days in. The biggest actually thing is: you do not have to like do all bullish strategies. You might pick certain strategies that you like. You are entitled, okay, to what you like. And you might say, I'm just kind of like stocks for dividends. That's fine. You don't have to look at the other ones. But in our examples, in our paper money portfolio, these are going to be the strategies we pull from. So we're going to kind of say, look, we want to get really good with these seven. Now, let's kind of go ahead and start chipping away here. I want to pull up just real quick. Let's pull up the Dow Jones first.

OK, so Dow Jones, we've been talking about the last couple of days. It's kind of been falling back down. Now, here's the nice thing is. When the Dow is falling down, this does not mean that nothing is going up. We just probably say there's more of a majority of stocks that are falling down, okay? Majority. This is very important that the investor is not lazy in saying that all stocks in the Dow are falling down, because that's not true. And if you did your kind of routine, you're going to find out in just a sec, that's not completely true. That most of the stocks in the Dow are actually kind of flagging back, if you will. When we actually take a look at the S &P, SPX. Little difference here. We kind of see that yesterday there was a long lower shadow, okay? Pushed back up. Some might call that a hammer, okay? If you think we're out of support and we're trying to push up again. The difference we actually see from today, yesterday till today, is the 10-period moving average, okay, starting to turn back green, okay? Now, interesting.

And if we actually do that, could we actually start to see maybe a little crossover action? It's a start. So the S&P in general kind of looking a little stronger, but still in this area of consolidation. Now, Pia, control yourself. This is what happens with Pia. She just gets so excited about hammer time, okay? He is a big pickleball player. And yeah, I'd like to see Pia at the net. Bet it's no mercy at the net for Pia. And just real quick, if we take a look at, let's say, the NASDAQ, any difference here? Well, remember we kind of talked about yesterday, uno, dos, tres, cuatro, cinco, seis. I don't even know. I think that's all I know in Spanish. My son is down in Ecuador. He comes home in three weeks, though, for the first time in two years. So he's been working with me, but it hasn't gone very far.

And so that's a brand new high in the NASDAQ. Now, I want to kind of just briefly, just real quick, look at this. I want to kind of speak to this really quickly. We talked about these indexes. And I was kind of looking at something just really quickly. So if you looked at the Dow 30, the Dow 30. If you look at the share price times the number of shares outstanding for each stock and you add it all up, the Dow Jones, the market cap of those stocks is over $20 trillion. That's a lot, okay? Now, just to kind of give us what are some of those biggest stocks on the Dow, well, the biggest stocks, you've got Nvidia at a $4 trillion market cap, over $4 trillion, 4.

2. Microsoft sitting at only $3. 8 itself. Apple sitting at $3. 15, which we want to talk about. Amazon sitting at $2. 37. So really, you got five, nine. You got $13 trillion-ish sitting in four stocks, Amazon, Apple, Microsoft, NVIDIA. Now, the reason why I kind of point this up is those four stocks, if you said, well, I live in Britain, and I'm looking at the FTSE 100, the FTSE. Well, the market cap of the FTSE 100 is $2 trillion. Those four stocks are bigger than the whole 100 stocks in the FTSE market. You've got to recognize that the DAX German market, 40 stocks, their market cap of the 40 stocks, the DAX 40, is $1. 8 trillion.

So you've got four stocks in the Dow that are bigger than the entire FTSE 100, DAX 40. And then what we saw yesterday is that post I actually made yesterday on NVIDIA compared to other countries. NVIDIA is becoming a bigger market cap than many stocks in some of these groupings of stocks. Okay, so. Really, you want to kind of really watch that market cap. That's a big deal as far as gathering attention. Last thing I want to say on this just real quick, when we talk about the NASDAQ. 50% of the weighting of the NASDAQ is really coming through 10 stocks, okay? Microsoft, NVIDIA, Apple, Amazon, Avgo, Meta, Netflix, Tesla, Costco, and Google, okay? 50%. More of the story of why I'm going over there, going over this.

Watch the big ones. Those big ones tend to actually move the market. The thing that happens sometimes is we like to kind of say I'm going to watch these other ones but the problem is they're not really the big ones that are the drivers of the market, super quick on this. Obviously, Captain Obvious would say, hey, look, if the NASDAQ is going to the upside, I wonder what the technology sector is doing. Well, obviously, it's hitting a brand new high. Not a shocker there, okay? Semiconductors, is it hitting a brand new high? Not yet, but just kind of grinding its way higher. And we said that a couple of weeks ago with Kevin and I, is that the market kind of looks like it's just grinding those bears, okay?

Volatility, and you don't get pullbacks, at least currently, of more than three days, and the market just kind of grinds higher, even sometimes in the face of bad news. When you look at industrials. The industrials itself, when you take a look at that, that did hit an intraday high. And you see the financials are kind of in that flag pullback. Could they be starting to bounce here? Keep an eye on those. I also want to say kind of keep an eye on the transports as well for some of the airline stocks. Now, let's kind of take a look at a couple positions. And what I want to do is when we talk about some of these positions. I want to kind of start with, let's bring up just real quick, Apple, okay?

Now, Apple, we're coming into some of these earnings on these stocks, and Apple has kind of just not really participated, to say the least. If we brought up, let's say, study for just a moment, ad study, and so the reason why I'm bringing this up is, why haven't we talked about it? Not there hasn't been a whole lot to talk about, okay now if you for example take a look what I did on this chart is I'm showing that purple color line there that's the SPX candlestick chart that is Apple so it's not the greatest sign when you see this chart, the SPX going to the upside and what you're seeing is the stock kind of stuck. Now, earnings is coming up, and it's coming up on the 31st of July.

A couple times that stock has pushed up near the area of resistance. Now, let's kind of go back to just real quick the strategies for just a moment, okay? So I want to go back to this chart for just a sec, okay? Now, if we buy shares of stock, sensitive, capital intensive. Direction of price movement up or down. Cash secured put. You're on the hook to buy the shares at the strike price from now until expiration. Cover call. Got to buy the shares. More capital intensive. Caller. Capital intensive. But has some income potential and also using the income potential to actually create a max loss built in, okay? And I want to kind of bring up that collar example now.

If we bring this up for just a moment, the reason why I'm choosing a collar in this example And I'm not even sure if I have any money to do it, okay? But I'm going to try anyway. What I'm going to do is I'm going to go to the trade tab, okay? And if I take a look at this, step one that I'm going to do just real quick, let's change the strikes down to eight. I'm going to click on the ask price of the shares, okay? So $211. Now, when we take a look at this, many investors as we're going into earnings, to see what happens. Sometimes that might not be warranted. It might trend, okay? But why does someone say that? They're concerned about the downside risk, okay?

Well, I wonder if we kind of used our strategies and said, hey, I wonder if we just decide to sell a call above the current stock price, have the share sell the call. That's just your classic cover call. Step two of this is what we're going to do is we're going to use that cover call premium or call premium to actually come over here to the put side; the put now this is up to you and how you like to do it normally the put that we look at is normally with a delta of 30 to 40. Sometimes we like to kind of show the example of, if the credit is 340, we're going to buy the put at where we can pay 100% for the put and have a little bit of credit left over.

Now, if you take a look at this, we're now going to see this. So we're going to hold this over the earnings. Now, what I'm doing is I'm putting this up on the risk profile. The purpose of putting this up on the risk profile is we really kind of want to see could be like so, I got a hundred shares of the stock, okay? And let me kind of change this there she goes. By the way, if you click on the little icon, float it, and we can kind of move it down so we can kind of have it where we want to have it. And we can kind of stretch this bottom out and have a little conversation, and we could see the stock price. So we can kind of move that around.

Now, what I want to kind of bring up is if someone said, well, what is the maximum gain? The maximum gain is right at the tip, 220. That's literally right about $1,000. You're going to see that, wonder if it goes down. Well, right at 200, that's where the max loss is. That's the point to sell the shares at the strike price. So when you have a $1,000 potential max gain, $1,000 potential max loss, it's very similar to like a long call vertical or a long put vertical. The difference is you just own the underlying shares. When we take a look at, let's say, the price slices for just a moment, you're now going to see that the delta is 24. And that's pretty normal for a collar.

Delta between 20 to 30 or so. Typically, theta here is a little bit more negative. And the biggest reason why that actually is, is really the put. These puts are going to start to become a little bit more valuable as you're going over the earnings. The volatility, though, if volatility expands, Well, the position could benefit from volatility expanding. Now, the comment says, why not a short put vertical on Apple? The answer to that question is I want to do some trades with callers where we're holding over earnings. So my intention of showing this is putting on max gain, max loss strategies, but then holding them over earnings with the collar strategy in place. Okay, now, nothing yet short put vertical.

If we actually set a short put vertical, you'd probably need about three contracts to get to about the same delta, okay? So now what I'm gonna do is I'm gonna go ahead and we're gonna confirm and send this trade. And you're gonna notice there's a commission to sell the call and there's a commission to buy the put. So trade example number one is a caller strategy on Apple and the intention is to hold it over the earnings. Now, the question might be brought up, well, wonder if, let's kind of throw this out here. Let's say the date is, I don't know, the 30th, July 30th. And let's say this stock is now up to, I don't know, $ 220 bucks, okay?

Well, if it's up to 220 bucks, we can approximately see what that potential gain would be and so on, okay? Wonder if the stock actually goes down. If the stock actually goes down, let's say it's down at 203, we can approximately see what that gain or loss would be. Get used to using the risk profile. It's helpful to see the price fluctuation, as well, when I say price license I'm really talking about how the the option Greeks change if the price moves up or down. Now, just real quick, so the comment was, when we brought up the shares here, how did you bring up these next ones, the short call and the long put? Answer, go to first triggers SEQ, and then all you got to do is just click on the ask price of the stock, check.

Step two, sell the call. Just click on the bid price. And then step three, just click on that. So it's like one-click functionality. So the key is just right there. First triggers SEQ. Okay. All right. There you go. Trade number one. Now, I want to go back to just real quick. The other one I want to go back to just real fast is I want to take a look at just TTD for just a moment. Okay. Now, remember, we had a discussion on TTD yesterday. And we said that's actually the company that actually is taking the place of A-N-S-S. Now if you look at ANSS once it was actually found to be being delisted off the S&P 500. It's kind of had a pretty rash reaction to the downside fairly aggressively over the last couple of days.

What we're going to do on TTD is we're going to look and see, can we sell the put on it or do a short put vertical? Speaking of short put vertical. Now, if we look at today and said, is today an entry setup? Well, if we go down and say, what was the most recent red candles? Which one is the lowest? Well, it really came back from four days ago, okay? Why do we get a green dot there? Because we're trading above the high of the lowest, most recent red candles. Now, what we're going to do in this case is we're going to go back to the Trade tab for just a moment. Let's put this right on the TTD trade tap. We're going to go to the 15th August expiration.

Now, I'm going to kind of do something that might be a little bit more aggressive, OK? So if we sell a strike closer to the current stock price. Okay, you're kind of more, you kind of think that. Kind of think that that stock might trend in your favor. You're getting a bigger premium, but there's a greater risk of the stock to close below or trade below that strike price. We can see that the odds are elevated by the delta being higher at 45. That 45 is telling us there's a 45% chance the stock could close one penny below the strike price. The 45, again, also representing if we said stock went up or down a dollar, that's also telling us the option price theoretically would move by about 45 cents-ish.

That will depend upon the bid-ask spread and other factors. But what we're going to do is we're going to go right to about the 80, OK? Now, when you look at doing any strategy, whether it's stocks, options, we're really kind of looking to see what is the where is the liquidity. When I look at liquidity, just you can look down the spreads, okay, you can see those. But the other place you can actually see that is the open interest. Where we're kind of seeing a little bit higher open interest is right around the 80. Trade number two that we're going to do is we're going to sell the 80, OK? And then now the question always happens here is, well, what should the investor do? Should they sell the 80 and then buy the 77 .

5? Well, what you're going to notice is when you look at the 77 . 5, there's really only 203 contracts. that are on the 77 and a half. And if you look at the 75, it's 16,000. So, what are other investors kind of doing here? It looks like there's more investors maybe buying or selling the 80s, buying or selling the 75. Some went to the 77 and a half, but it's dramatically different. We're going to show the exact same example. Right click on that, right click, sell vertical. And if we go to the vertical, what you're now going to see is we're going to sell the 80 of the 75. Now, ladies and gentlemen, boys and girls, this is where you got to be disciplined, okay?

We can't wake up every day and say, here's what I want to do. That's probably not how you're going to run a business, okay? We're going to say, when we go back to this account and say $34,000, if we said we're willing to risk 1% of the value of that, that's how we started the year, right after Christmas or right before Christmas, it's going to be about $340. And it's going to give us a per contract of 300. Now, if I also go to, let's say, where it says single account, multiple accounts. In the IRA, if I pull up the IRA for just a moment and kind of say, okay, we said a half percent on that, $110,000, half percent on that, $110,146 times 0.

005, $0. 01 would be 1%, $0. 005 is half of 1%, $ 550 bucks. Now, here's where sometimes the investor might say, 'You know what, James, on the margin account, IRA, we said 550. If we did two contracts in the IRA, well, that's going to be about $40 higher than what we showed. Is it dramatic? No, some investors might go for it. Other investors might round down. We're going to round up. And that loss could actually be $40 more than the max loss. Not dramatic. Now what I'm going to do is, so in trade example, Here on TTD, what we're going to do is we're going to do a short put vertical. Okay, and that's really the 80 and the 75. Okay.

Now, when we actually do that, now remember, it's also going in both accounts. Now, James, I wonder if you had like a traditional IRA, you had a margin account, you had a Roth IRA. If those are using the same username and password, would they come up here in this list? Yes. Okay. Send the order. And there they go. Okay. So trade number two there, if we pull that up, you're going to also see, oh, we'll have to pull up Oracle for just a second. Trade number two was TTD. And that was a short put vertical. Okay. Now, when I go back to the monitor tab, and I look at which account. And what I did is I was looking at the filled orders because I said, hey, one order, something filled.

What was it? Well, there was a, it looks like a target or something to sell Oracle if it went to 250. 49 or higher. Let's just take a quick look. I don't want to really get into it. I wasn't planning on talking that. I know it went up, but it wasn't something I was really going to talk about. Now, what you're now going to notice is for just a moment. Where was that exit? Go back to the monitor tab. It was at $250. 49. Where was that on the chart? $250. 49. It was about right there, OK? Right about there. So right at the top of that little wick there. So we had a target. It looks like what we kind of did on that is we kind of talked about, we didn't know, is it going to go to the 200?

Sometimes we'll put the targets like right in the middle. And that's kind of looks like what happened. So Oracle did hit out. And it was how many shares? Answer, 28 shares of stock. If we go back to the account statement for just a moment, account statement. We pull this back up and said, look, I just want to go back maybe about the last 30 days. We could actually just say, look, can we just see Oracle by itself? Name the trades that were done by Oracle in the last 30 days. Now, this is just like a bank account, okay? Show me the checks in the last 30 days. Show me the debits in the last 30 days. Show me the credits. Same idea.

So the entry on that was on the July 2nd at 227 and changed and sold at, let's say, right around 250. Now, my math isn't great. I'm just double checking here. That was about $23 on 23 shares. $23 moved to the upside on 28 shares so that looks like it was $644 on that And if we kind of looked at that and said kind of, you know, approximately how much of that moved the paper money portfolio, that moved the paper money portfolio, this paper money example, theoretical, hypothetical, paper trading, simulated trading, there, disclosed it like six times. It was about six tenths of 1%, okay? And it's just a little stock trade, okay? Now, let's kind of go back to questions that you have.

Now, yeah, so the question is on posting. So just real quick, let me kind of show you something, okay? So now notice we're kind of getting into some of the technicalities a little bit, because this is what happens in real trading. It's like you're watching your trades. You're putting on some trades. You're looking at your orders. What fills were they? How much did they move the portfolio by, up or down, right? This is what happens. Now, so first off, if you said, James, where can I actually see this in terms of like following? If you have not subscribed already, it will say 'subscribe' okay? If you have already subscribed, and you click on 'you can also click on unsubscribe', that unsubscribes you, okay?

So you only want to click on it really if you want to subscribe. And then it puts those subscriptions on the left-hand side when you're on YouTube, okay? Subscriptions doesn't necessarily mean you pay for it. It just means you're following a channel. And our channel is the Trader Talks Schwab Coaching Webcast. That's number one. Number two, this link, for example, yeah, we're going to go to Google. I'm glad you brought that up. This link that I'm sending you is the playlist from this class. So think of this as like, hey, you went to Netflix and you said, hey, I like this favorite show and I want to go back and look at previous episodes. You can. And last week we talked about how does an investor trade trend? Show me.

One, two, three day pullbacks and catch momentum. That was two weeks ago. And I can assure you this is a lot more interesting than most of the TV out there where they're showing Rocky V for the thousandth time. Right? Makes sense. Now, if we take a look at this, let's also go back to just real quick one stock that I had on the list, Google. Okay? Now, Google's kind of been an interesting stock a little bit in the fact that it's kind of been grinding away. Now, sometimes these patterns. I kind of always joke that we like the pattern when the pattern is finally over, okay? So the pattern that I'm referring to is really an upward sloping support. and really a horizontal area of resistance right there.

Now, why are we bringing this up? When's the earnings? Right there. What's the date on that? And if we pull that up, what is the date on that? It looks like it's the 23rd. Okay, right there. Now, I want to kind of go back to something for just a sec, and I'm going to go back and just see kind of where do we see some prior levels of resistance. Well, let me draw the level that we kind of have. It's kind of a big deal where we are right now. I'm going to kind of zoom in on that candle just a moment. Where do we see anything above that? Maybe there, maybe there, okay? Now, so those are the levels kind of to the upside for the most part.

You got a little bit right there at 184. Now, let's zoom in on the candle. What type of candle are we getting here again? Now, you could say this is really the old resistance turning into the new potential. support. Okay, now this is not unusual. The breakout day, the breakout day, we just simply define it as a green candle, where the whole body of the candle is above the resistance. A green candle and the whole body is above. Red candle? Red candles are not typically viewed as an entry day, unless you're trying to buy them a little dip. Red candle day again. And then all of a sudden you get a little ha ha ha hammer. Where's the hammer? It's happening down near support.

So clearly somebody was waiting with hands stretched to the heavens saying, 'please get me in', the investor said, because I mean, that wasn't just random. You don't just come down right to almost a line and just randomly it starts going up. So someone might've had an alert. We talked about those yesterday. Someone might've had a buy limit and those triggered or alerted those investors and said, 'Man, we want to get it anyway,' and here it is. Now, does that mean the investor's guaranteed to make money? No, it's a setup. Now, what I'm going to do is let's go back to the strategies for just a moment, okay? Now, we know that when we look at, let's say, the strategy like stocks, that's high delta.

If you pick a stock strategy, you better get the direction right. It could be unbelievable if you're right on the direction, bad if it goes to the downside. Now, I'm also going to kind of take a look at this. Let's go over to the vertical section, okay? We said that when you did like a long call vertical, that's really more like a one to one reward risk strategy. When you look at a short put vertical, it's really kind of more like a one to three reward risk. It's maybe like a two to three reward risk. And you sure hope that it's at least minimum of 1 to 4. Okay. Now, if you had a one to three, it'd be like a 33% ROR. If you actually had a two to three, it's like a 66% ROR.

You had a one to four, it's a 25% ROR. And you know about RORs, okay? So we're just saying that these are moving in a fraction. Why are we choosing a long call vertical in this example? Well, if the investor's kind of more, now when I say one to one, I'm saying the credit to the debit here. Okay, so if I, for example, pay 250, and I should say like this. The debit, take that back. It's the debit. Divided by the max loss. So I'm going to take that out. Since we're talking about a long call vertical, the debit, as you'll see in a sec, to the max loss. Okay. ML. Show me what you mean by that. Glad to.

Now, when I pull this up, what you're now going to see is we're going to go back to Google, go to trade tab. We're going to actually click on this right here. Google. And what I'm going to do is I'm going to take, go to the 15 July, 15 August expiration, excuse me. And what we're going to do in this case is we're going to go down to kind of like look at the put side and the call side. What I like to do is highlight them. And I just like to kind of see how tight is the bid-ask spread on the at the money call and the at the money put. $0. 10 on the call side, $0. 10 on the put side.

I like to kind of look at the open interest, thousands right there, and also thousands on the call side as well. So probably at the moment in time, there is some liquidity currently. OK, now what we're going to do is if the investor said, look, I'm going to go on the call side and what we're going to focus on is a long call vertical. If we pick, let's say, the 180 that has a delta of 59, that's the first strike that is in the money. We're going to right-click on that 970. We're going to go to where it says buy, and then go right to where it says vertical. Now, James, wait. Before you said like a one-to-one. The one was really the debit, and now we can see that.

It's 258. Five-dollar spread and the debit there is $250, 258, the max loss which we said is the other one is really going to be uh, the max loss, okay? $ 258. And the max profit there really actually 242, okay. Now, I actually, sorry about that. My drawing was wrong, okay? I was looking at the comments. So let me rewrite this. When we say one-to-one, I apologize about that. But hey, doing three things at once. We're really saying what the max loss is. And that max loss, since I apologize, I'm going to fix it. Max loss is the debit. Do you like how I apologized? You can tell that my wife has groomed me well. Say you're sorry. Okay. Here we go. Max loss. She's not here to hear that.

Okay. Don't tell her I said that. Max loss debit. Okay. It's 258. Fine. Okay. The other ratio is really the max gain. Okay. And that is really 242. So if we said kind of where do you get that one-to-one, it's really max loss or the debit. I said, sorry. Say sorry, I did. And divided by the maximum gain, it's really about a one-to-one. So if someone does a long call vertical, they are trying to actually make more money than a short put vertical typically. The biggest con about it is the break even is higher. It's not as forgiving as a short put vertical typically if you talk about a standard vertical. And now what you're going to see is if I go back, we can see there's the commission as well.

Yeah, that's why I talked about it. Yeah, I'll take the blue off. Okay, now, so what's the trade example? Trade number three, let's kind of write this down here. Trade number three is really a Google, okay, short put vertical. We're talking about the 180, 185. Long call vertical. Now, what I'm going to do is go to single account, multiple accounts. In the margin, tell me how many contracts we're going to do in the margin account. Answer. Well, if we could risk $300-ish, $340 in the margin account, answer is going to be right at one contract. So I'm going to go plus one. In the IRA account, risking a half of 1% of that portfolio is like $600-ish to contracts. So there's some similarity in the last one as well.

Now what I'm going to do is I'm going to go ahead and send that order. Now these numbers, what you're now going to see is, hey, it changed it. That's true, it did. It's taking the three total contracts and saying, for these three contracts, This is the max profit given the vertical and the max loss. Noted. Send the order. Okay? Now, good. Now, let's kind of fast fire here. Now, a couple of things that I want to kind of bring up, kind of some of the movers and shakers here today. Oh, my gosh. I don't know how much more the paper money account can take. Okay. Just some quick stocks that are on the move here. Palantir up 377 here today. Broken record. Groundhog's Day. How much more can investors take it?

I don't know. It's just plowing to the upside. Huda's up 150. Could it continue? Well, we actually look at the margin account, something that's kind of standing out a little bit here today. On the margin account, let me actually take that back. No, that was the margin account. The IRA account. coin was up about 10 it's up about six and a half you're also going to see that microsoft is now this this is kind of just absolutely well by the way hood has done this as well you realize that hoods 20 period don't like the blue hood 20 period moving average has been up 32 days in a row scripts not guaranteed for accuracy verify the other one where that 20 period moving average has been up 32 days, okay, on Microsoft.

Now these little 14 shares of stock, okay, has amounted into almost pushing in the paid money portfolio, simulated trading, hypothetical in nature, not a guarantee, okay, literally $754 on 14 blasted shares of stock. Speaking of that, let me just come to this real quick. Microsoft. Problem is, we can see there's a major issue with that stop. It's way down in the basement. Okay, we're gonna go actually to the kind of the fourth chart here and what we're gonna do is like we did yesterday's be disciplined; it doesn't matter what we know if we haven't done it. And now what I'm going to do is I'm just going to grab that stop and say, 'Thank you very much,' as Hannah would say, and move it right up to that white line.

We said what this was yesterday if you went to the class. And now what you're going to see is we're going to move it up, and we're going to move it up right to the same charts that we talk about all the time, that white line. Can anybody remember what that was? If you don't know, you can right-click on it; 8-day low. Red line, that's the 10-day low. And the 20 right there is the 20-day low, OK? So it's moving up. That was moving up by quite a bit. Now, a couple other stocks that we're just going to kind of end with, they're getting a little bit of a push here. We're going to keep an eye on. DataDog, OK? This one is kind of one that's actually fallen back down to a trend line.

And some investors like to see a bounce off the trend line. Datadog, woof, is actually trying to get a little push. It also kind of has like a little tilted up W pattern, but who's looking, okay? So Datadog. We also see, for example, if you look at, let's say, a stock like App, you're also seeing that one is kind of grinding back to the upside. If you like, let's say, basing pattern reversal breakouts, This one might be an example of a stock that might try to break inside the old channel, if you will. Try to go up to the top of the channel, or probably right around about the 402. Keep an eye on app. We're talking about a technology stock.

Now, if we also look at, let's say, MSTR, you're going to also see that's been on a little continuation pattern, has earnings as well. I want to keep an eye on that. And if we also go back to, for example, I want to go back to Microsoft for just a second. We said that the 20-period moving average had been up like, what, 32 days in a row? Is that even true? Okay, now what I'm going to do is I'm going to click on this. And I'm going to go back to when's the last time. We saw that 20 period moving average. Red. It was right there. Okay, so that's the last time we saw the 20-period moving average red. And if I kind of follow this through it, just kind of guide your eyes a little bit.

It hasn't turned. What we did see for a short period of time, the 10-period moving average went red. But the 20-period moving average. That's been green since all the way back on June 1st. As an investor, we hate this when things are simplified to such a point. The way it was like, wow, why didn't I just follow the technical analysis? And that's where the investor realizes they have met the enemy and the enemy is themselves. And we all face that. Now, here's the thing I want you to kind of be thinking about is these charts, this package that we've actually been talking about, notice how we keep using those for entry setups, management, et cetera, whether it's targets or stop adjustments. Continue to practice that in the paper money account.

We did actually three trades here today. Apple was a caller. TTD was a short put vertical. Google was a long call vertical example. Now, I'm out of my time here today. To kind of just quickly make mention, we have another class coming up right at the top of the hour. Stay tuned for that. Thank you, Brent Morris, for answering those questions in chat. Also remember to subscribe to the Trader Talks channel right on YouTube. You can grab it. You can also watch us right on your mobile device as well. Now, remember with what we discussed here, it's done, for example, illustrative purposes only. Investing involves risk. That's what we talked about that and position size for that potential risk, given the strategy. Thanks to all of you. And this has been the class on Trading the Trend for July 17th. Take care. Bye-bye.