Hello and welcome to the Investing Master Series. My name is James Boyd. Alongside me is Connie Hill in the chat. We welcome all of you here today. Many of you just joining us. You might be thinking, is this a one-off class or is this an every week occurrence? The answer is it's an every week occurrence and it's recorded. So good morning to all of you. Just real quick, we've got Elena, Teresa, Paul, Richard, Silas. Boy, that's a tough name. I'm not even going to try that. I'm going to use the initials G. L. Anyway, work with me. Lena, hello. Kelly, hello. And many others. Just real quick as we get started, I want to give us a reminder. We do post educational content on X.
So when I'm not teaching a webcast or anything like that, I'm on X. Do post frequently there. So check that out. Connie does as well. Just real quick as we get started, I will share with you our link to our YouTube page and our playlist. And I'll do that just momentarily. After the disclosures. Just real quick, when we talk about examples, in this class, we talk about stocks, we talk about options, and just remember that options carry a high level of risk and is not suitable for all investors. Also remember that the information here is provided for general informational purposes only. We use the paper money software application for educational purposes. It allows us to really kind of learn the function of the platform and how it might work if the investor said I might consider doing it in a real money platform.
And also remember that the investing involves risk, including loss of principal. Just because the trend historically has gone up doesn't mean that the future trend is going to go up, okay? And so that's why the investor kind of talks about stops, position size, and things like that. And also remember when we talk about short options, whether it's selling calls, selling puts, remember it's an assignment and, excuse me, it's an obligation. And that obligation can happen up to expiration regardless of the in-the-money amount. Now, what I want to do here today is we're going to take a quick look at the markets. We also do have a number of, I think, really good paper money examples. Some are stock examples of stop adjustments. Some are, for example, options examples of management, different types of management.
I want to talk about that. And then I want to talk about maybe probably three or four brand new positions. Let's hop right in so we don't waste any time. So first off, if I look at the S&P here, you're going to kind of see the S&P kind of a little flat this morning. Eight points a tenth of a percent, not a whole lot here, at least for the S&P that was a brand new high yesterday; would have liked to be back at that level, but we're sitting here about uh eight points down. Nothing major now, just real quick before I actually shift here, okay? When you look at the sectors, okay, and I'm just kind of looking at the S&P here and left-hand side, I'm looking at the sectors now; remember, we include I like to go to a little safety area, right?
If we were to look at kind of the areas that are getting a little push, you're going to see that IXV, which is healthcare, is up today. But when you look at the trend, it's still trend one. So it's not as interesting if you're in trend one, which means you're still below both moving averages, okay? Now, could it be carving out a bottom? Maybe. Been saying that for a long time. Whole lot of nothing with healthcare right now. Now, when you look at gold, plus 36, That is a major step from where it was last week. Now, we talked about NEM yesterday, AM yesterday. We're going to swing back to that. Sometimes investors think that every day you've got to come up with these new stocks. Why is that?
Why can't you just keep riding the ones that are trending? Now, we're going to come back to that. That's trend three. One of the other major differences we're seeing with the S&P and the sectors here today is real estate. And if you look at, let's say, real estate, that's one of the better moves. Now, again, when you think real estate, you might think of a product that is a different categorization of real estate. I don't normally talk about that. But there's been such a push lately to get interest rates down. And Fed's Jerome Powell has been under extreme pressure to cut the rates. And I think that kind of deserves some attention. So when we talk about real estate, some of you like some products that actually are trying to be income-producing real estate assets. Other investors, like maybe the homebuilders, we'll look at those in just a moment. Utilities has continued to push to the upside. Now, again, a lot of us have different levels of life. Some of us are 35, and you don't have a single gray hair on the side of your head. Some of us, like myself, 48,
melan okay and so if you say some of you are 68 where you say James I have assets I really just want to try to get a return on those assets in the form of a dividend and we know the dividend is not a guaranteed payment going forward they can change the the dividend and or cut it completely but utilities has actually been there where some investors like to be and that's why there are different sectors there's different levels of interest by different investors. Basic materials if you're trying to get a crossover, keep an eye on that. And if you also take a look at let's say communications, that is crossed over, that was a pretty decent push on communications.
And remember what we said before: communications, the sector of communications, probably tends to be the least talked about okay but I want you to also notice again, we do include gold in the sectors now, formally, that's That's probably not true, but for our class purposes and defense purposes we bring that up now a little shocker here-what's the Debbie Downer? Well, industrials dropped a little bit; that doesn't mean everything. We did see, for example, when you look at let's say discretionaries, little push to the upside-we talked about uh kind of mentioned on X yesterday, Amazon getting a little push still, okay, discretionaries, that's actually a breakout of the shorter term high and the moving average trying to cross over here today, okay fine now if you look at let's say Staples, nowhere so far.
Holy sideways, okay? And then, when you look at the financials just momentarily, trying to get a crossover. Probably some of the stocks in there, like Citigroup, Bank of America, Visa, among others, trying to get a push here, okay? But so, it kind of wrapped up what we just said in the last four minutes. Gold is a standout. Real estate is a standout. Utilities is a standout. Basic materials is a standout. Do not forget steel. Okay. And so, and also when we talk about that, we would say discretionary and consumer, excuse me, communications. When you look at communications, reminder, that's dollar sign IXC. When I say these sectors, you should be thinking like immediately, almost like we're in college and we hear a term, they tell us something about that. Same idea here.
If I say communications, name the top five stocks. If I say discretionaries, name the top five stocks that are represented in that sector, okay? Now, just real quick. That's funny. I would never laugh at you, okay, because I'll probably go in there, too. Actually, my dad, he doesn't have much gray hair. We'll find out. It could be different. Not a recommendation. Bill says, I cannot find a non-gray hair. Well, you know, my father always kind of says, if you don't have gray hair on the side of your head, I mean, what do you actually really know? You're just a kid, okay? So, Bill, welcome to that club. Now, just real quick, what I want to do is I want to kind of talk about some examples.
It's not always about, let's say, entering new positions, entering new positions every day. Sometimes the market pushes and then it pauses. And sometimes it's more about management. But then sometimes you can get times where we're not pushing to the upside or pausing. We're actually pulling back. And the investor is kind of playing what I would call defense. They're doing stop adjustments. And so on, I want to talk about that here just for momentarily. So the biggest actually thing about investing is kind of the psychology and the math. When we go through these trade examples, I want to kind of go through the discipline of just managing the portfolio, okay? Now, what I want to do just real quick, we already talked about gold in general.
You can pull up the gold chart if you want to see the price. AM, we are in the IRA account. And AM, which we mentioned yesterday, we have 100 shares of AM. That's a decent push here today, 441. Now, the one thing what you're going to notice is on the whole moving averages, and why change something when it's just banging away, okay? What type of trend do we actually have here? Now, this is trend daily, D for daily. This is trend weekly. And so remember, many investors, they like to own stocks that are in that trend three. There's momentum at that moment in time, and there's a trend. And it's not just on the daily chart, it's on the weekly chart as well.
Now, the one thing I want you to kind of notice in terms of the whole moving averages, two days ago, the whole moving average went green, two days ago. Seven days, the 20-period whole moving average went green, seven days ago. The green background is actually representing the color of the moving average. Number of days the moving average has been that color, green. Now, if I were to pull those charts and say, 'Is there anything to see here?' Well, nem, which we talked about being more of a diagonal line of resistance, okay. Well, you know, there's a little breakout over there, okay. Now, I don't have anything really to say outside of that the only position that is in the paid money portfolio means, is there just shares and shares only?
And so if we looked at the IRA, and we said, 'Okay, so what do we have there?' It's just what I can see. Let's just double-check this. If I go to the old layout, the three lines, and just go to old layout, it's just we can click on it. And the only thing that we have there is shares only. Is anyone else thinking about any other strategy on that? Now, a lot of times people say, well, I got a position. That's my position. Nobody said you only had to be one position on it, okay? Well, maybe let's go back to the chart for just a second and say, look, with this little push to the upside, might there be some opportunity to sell something? So the shares are there, fine.
But could we overlay maybe another strategy that's not the same as the first? Well, let's kind of go back to this and kind of say, well, what is that volatility? I want to come to Apple back in just a second. Apple's on the trade tab there. But if I look at AEM and we go to, let's say, I'm going to go to this 19 September. Now, clearly, sometimes I see this and I'm going to be, I have four children. And one thing that you'll notice about me is I'm the most patient person you've ever met. you're now going to see. This blue line, this is gold price, okay? And what we're trying to look at, if AM goes up, it's usually going to be because the gold price is going up.
If gold actually starts to go down, then you actually see the AM going down. So now, do all stocks correlate with something like this? Not necessarily, but the stocks that are actually commodity-related, etc. They're classic, whether it's oil, steel, copper, silver, gold, and so on. Now, if you zoom in on this, what you're going to notice is gold has actually gone to the upside. Lo and behold, AM starts to move. So the point of bringing this out is you do not have to trade the gold price itself. Okay? Now, some of you might trade the ETF. Connie teaches the ETF class on Monday. I teach it with Kevin on Friday. Don't forget those. Those are not recorded. Some of you actually trade the gold. You're trying to trade something that tracks the price. Some of you literally trade the price itself. And then some of you are trading stocks that are trying to be correlated or exposed to the gold price,
bull price movement. Now, what I'm going to do is I'm going to go back to the trade tab. And what we're going to do is we're going to sell a put on this. Now, when we sell the put on this, what I'm going to do is we're going to look at the September expiration. Now, notice how we're kind of mixing up the expiration. We know with the August expiration, there's not a whole lot of time left. We have tons of August expirations. We're going to try to actually move some of these positions we have to September now. Little bit longer than what we would normally look at like fifth, 20 to 50 days expiration this being 59 you give it another week we're going to be right there at the top end of the range; what we're going to do in this case is we're going to sell the 120 now.
Sometimes investors will just say I sell the strike with a delta 30, 40. Other investors look at this chart say James: What I want to do on this case is I want to sell. I'll sell the strike where I think the stock could actually stay above that strike which is sold. Well, where's the breakout level? Well, the breakout level is right at 120. Okay, so the technician or the option trader says I'm going to sell the put where I think the stock could stay above. If that stay above is support, okay, fine. That's one way. The other way is, well, did it break out? That breakout, where it broke out from, that might be where the investor tries to sell it, meaning sell it, meaning the strike.
Now, what I'm going to do here is I'm going to come in here, right-click on that. We're going to go sell, and we're going to go to vertical. Why are we doing that? Well, what we're doing is we're in the IRA account. If we sold the put by itself, it's going to want to set aside about $12,000-ish to sell the put. We're going to come down to also what has a delta less than 10. And I'm even going to choose like the 100, okay? The reason why we choose a delta less than 10, we're trying to do something out of the money that's not so expensive. And if it's not as expensive, the credit is actually higher. The credit is higher, the break-even is lower. Back what I just said.
Now, what you're now going to notice is, if we take a look at this, we can now see this is the 120, 100. Do we really think the investor is going to make money on the 100? No. It's really for buying power reduction and creating the maximum loss. It's also to try to push down how much money needs to be set aside to do the trade. So there's already a stock position, but now what we're going to do is we're going to overlay on top. Now, what you kind of notice is cash secured puts are kind of pretty important, okay, for this paid money portfolio. Now you might say I would never sell a cash secured put.
You could say that, but then you could actually say, yeah, cash secure put is almost like a buy limit order to some comparison. And it's just saying you want to buy the shares at 120 from now until expiration. It's almost like you have like an open bid or an open order to buy, okay, where you have the potential to be the buyer from now until expiration. The put if they don't want the shares it's not just about premium it's about understanding what that premium represents which means potential stock ownership we're going to send the order there it is so trade number one we actually did here is we actually did, am now I'm going to go back to this real quick I'm not going to say much on any m, it's the same type of move which one is actually gone up a little bit more and the answer is any M, any M actually hit a brand new high here today.
Do we have a position in NEM? It is right there. And if we kind of looked at this and said, what is that? Well, there's your collar piece. And really, on this, the reason why I'm not adding to this, you're going to see that right there, there's the short put, or I should say, the cash secure put, okay? The 57. 5 and the 45, and there's your collar piece, okay? Now, let's go to work a little bit on some positions, okay? Now, remember, so I'm going to close that. And what I'm going to do is I'm going to go back to, there's a couple positions, coin, OK, I want to talk about. And I also want to bring up hood, OK? Now, those were two stocks today that were a little volatile this morning.
I'm going to show you the chart. And so when we talk about stop adjustments, OK, so I want you to kind of think that. I want to kind of talk about mentality, okay? I want you to imagine that you were paid to do a process. You could say that's kind of like what you do at work, okay? Let's take that same idea, that methodology, that mindset. I am paid, the investor says hypothetically, to like follow a set process. OK, now let's follow the process that what we've been talking about. And what I'm going to do is I'm going to look at coin for just a moment. This is where this trade was entered. This is where it is right now. When was actually that trade put in?
It was put in about two weeks ago, 20 days ago. OK, so about three weeks ago. Now, what we're trying to actually really do is say, where are we in relationship to where that 10-day low, eight-day low is and where the 10-day low is? Answer. So if we look at where the mark is, it's at 409. If we look at where the 8-day low is, it's at 373. There's still quite a bit of play there from the current price down to where the stop is. Now, what I want you to kind of notice is just the other day, coin went up near that targeted area of the 161 extension. We always talk about, and I'll repeat, if we get within 1% to 2% of the target area, The investor might consider adjusting the stops, doing like a 1 to 1.
5 reward-to-risk ratio. We got to 2. 8% away. Well, it didn't get inside 1% to 2%. It was 2. 8% if you were watching. That price, now, by the way, the price was at 445. And then this morning, we went all the way down to 393. So it kind of shows you sometimes when you go up near the target area, it did not get inside our area that we talk about percentage-wise. And it fell down about 50 points. What's the job of the investor? Well, the process is move up the stock. So let's actually go to this fourth chart in. And the fourth chart in is really going to show us. Where the stop is, remember, let's think mentality here, okay, the mentality is, 'I'm the investor says I, 'I'm paid to do a process,' okay, it's like a job that's what it is, okay.
You worked at McDonald's if you worked at an accounting firm you worked at a legal firm whatever it is there's a process of the firm your job is to follow the process now what we're going to do is we're just going to kind of move these stops up and I'm going to go back to this chart and kind of say, well where is that? Now, the thing that's kind of nice about this is we can just look at the market watch and say, where is that low? We'll confirm that on the chart. I got $373. 02. If I pull this back up and say, OK, where are we at? That white line is right there. And we can see it visually. I'm going to go also back to that paper money account.
And what I'm going to do is I'm going to right-click on that, create closing order. Stop right at where that eight-day low is. Now, you can go back and count the number of days to verify that. Is that really the eight-day low? Now, I'm going to move up the stop, 373 . 02. You might be saying, 'I don't even have a stop.' Well, good thing you're doing the process. GTC now remember with the stop this is in order to sell if we get to that price or less. What the investor really wants here is a couple days of consolidation so that the lows go up and it becomes higher and higher, so that way the stop moves up and it has an order at a higher price level to try to sell at a higher price and try to make a bigger amount.
Fill we need to see where it fills; it's a trigger to sell, could fill at a lower price level now, could it fill at a higher price level, it could; okay not hoping for, not counting on that but the biggest thing is that's a trigger to sell. We're going to have to see where it fills confirm send; and now what you're going to see is send the order now the other one just real quick is And I'll fix that. Hood. Now, Hood is another one. Purchases the shares at 98; It's sitting here at 102. OK, where's the eight-day low? We're going to right-click on that, 97 . 16. We could actually go through the chart again, 97 . 16. Limit, stop, data GTC. Now, if we look at this, how come that previous example rejected us?
Well, the reason why it rejected us is there was a stop on it already, okay? So now we can see that. We can pull up the trade tab, go to that. There it is. I'll just kind of fix that, 373 . 03, and that way that stop is adjusted. And by the way, man, this is not very taxing work. It just kind of takes a specific focus and saying, do I know what I'm doing? Okay. And is the investor being disciplined to that? So, the stop has been adjusted for coin. That's why I rejected it. We go back to hood and say, okay, where's the stop on hood? The stop on hood is at 90. 84. Where is that eight or ten-day low? On hood is at $97. 16.
So what I'm going to do is I'm going to come back into here and I'm going to right-click on that, create closing order. It's now going to shift us now to, and by the way, we could just go to the trade tab too. We could click right on the cell at the bottom left-hand side here. I'm on the bottom left. Click on that. $97. 16. What was that number again? I think it was $97. 16. There it is. So here's the deal. A lot of times when the market's going to the upside, people feel confident. When they feel confident, they get undisciplined. And all of a sudden, the stocks pull back, and they say, 'I was doing so well until, OK?' And the problem is, it wasn't that there wasn't potential there.
The investor got sloppy. Lazy. Undisciplined, right? And all of a sudden, they just felt like, 'Hey, this is going to keep going up.' We know that at the end of the trends, they do fall down, okay? Now, what I'm going to do is I've moved up the stops on coin. I've moved it up on hood. And what I want to also do is I just want to just quickly, if I can, when we look at, let's say, something like Microsoft, just 14 shares of stock, you're going to see if I went to the trade tab and say, does Microsoft have a stop? It does. We see that there. Where is it? $94. 40. Go back and say, 'we're now by the way.
Is it possible to have like another screen where you could just put the chart on the right-hand side and see it as well and not flicker back and forth?' Of course. Okay. I'm just teaching on one screen. So that's why there's a clicking on the trade, clicking on the monitor. But if I had a second screen, heaven forbid, a third screen. Yeah, you could just be looking at the screens and see it. Okay. So that low is at $497.80. So if I'm going to go back into here, double check this. Be moved up a smidge 497. 80 now again it's not about what you know it's what you did with what you know so we can say hey moving up stops is important but have you done that so first opportunity to improve here today is have you moved check the checks and have you moved them to the upside okay so what we did here is on stock trades coin hood and Microsoft we move the stops up
OK, now what I want to do is I want to kind of move down just a little bit. And I want to kind of talk about, and I'll close these up so there's no distraction. I want to kind of just go back to something just real quick that we talked about. And I'm going to start with just this Newmont mining call. I just want to try to simplify what we actually talked about here. And I think a lot of times people like the math scares people. OK, my own wife. You know, I asked her one time, how many zeros are in a million? How many zeros are in 10 million? You'd be amazed how many people don't know, okay? Some people, some of us, we're just mathematically, like, that's just us.
We're built like that. Other people, not so much, okay? We love all people, though. But I'm just saying, some of us, it's just easy, and other people, like, I have to think about it. That's okay. So I want to go over this. Now, if I, for example, said, okay, 5077 is the stock entry price. and $60. Can you just tell me approximately how much that is, the difference there, from the two yellow lines there, from 50 . 77 to 60, and just round to the nearest dollar. We don't have to get exact, okay? Well, if we're at 50 . 77, let's just say 51 bucks, okay? Let's round up. If we have an obligation to sell 60, I mean, this is basic math now, it's $9. Does that make sense?
Is everyone on the same page? $9. Okay. So that's the first thing without even pulling up a calculator, without pulling up an Excel spreadsheet. How much did you buy the stock for? What's the short call? What's the cap at $60. The difference between those two numbers right there, $9. That's where we got $9. Check. All right. Now, when we look at the caller, a lot of times we always talk about, was it like a zero cost caller? Meaning, is the call and the put about the same? It's not it's like 40 cents okay, so really the stock has appreciation of about nine-ish dollars if we got real technical, it's 927 923 and the debit there was about 40 cents.
So if we just did kind of easy math, the most we can make on this position okay is right around eight dollars and 60 cents now. If we said okay let me get exact, it's really 923 on the stock That's $0. 40, and it's going to be about $8. 80 or something. Now, why do I bring this up? So you could kind of run the numbers in your head. The first thing that I always want to know is the stock cap. okay that's from where you bought the stock to where the short call is, that's going to be pretty easy, the caller, okay the caller is it a debit D, or is it a credit? Most of the time, it's going to be flat. Most of the time, OK?
Not all, most. And so I just kind of want to find out the number. So if I looked at this and said, OK, $ 880 is the most we can make, even out of the calculator, we're just doing this just right on the screen with a pencil. And where are we at now? Well, we're at $732 of the 880. What does this tell us? Hello? Right here. Okay. Well, I mean, if we're sitting on 732 and this is the maximum gain 880, well, just now let's use the calculator. Now, if I pull that up, $ 732 divided by 880, and we're sitting on about 83% of the maximum gain. Okay. Now, many investors might say, well, I want all of it. Okay. We talked about being greedy yesterday. Okay.
We've got a class for that. Now, if you take a look at this, when was that trade placed? First shares were purchased in April. What you're now going to see is in June, we added the 10 shares to get to 100. And then July 15th, we actually put on the color position. So, in the last three months, I want to kind of show you this just real quick. This position has been a holding of about the last three months. Let's just say $740. The investment was how much? I mean, if we take a look at the trade price, $5,077. And if the math is right, over a three-month period, that was about 14% over about three months. Now, we're not annualizing that because we don't know the future. But if you look at that, not terrible.
Okay. Now, Prakash actually says, 'Is there any way we can do a caller in the future? Okay.' In the current date with buying the security. Well, the example that we talk about is, and I can show you that, is wondering if you said, I want to put the collar on if the stock goes up to this price or down to this price. The answer is sure, okay? So what we're going to do is, I'm going to kind of reset, and that's a great way to say it, okay? We're going to reset it. What I'm going to do is, now, by the way, if you looked at NEM, that position, NEM is today just breaking out, okay? Currently, sitting on 83%.
Now, what the investor might do is they might say, James, these positions right there, they actually have 24 days remaining. Option number one is the investor could say, 'I'm going to take it all off.' Exit the caller, which is the call and the put, and then sell the shares. Option number two, which we talked about, if it breaks out, the investor might say, 'I'm just going to sell a put.' I'm going to sell a short put vertical on top to try to keep the delta a little higher to try to get some sensitivity to that direction, or I should say exposure to the potential upside direction. OK, by the way, it could go down too. Now what I'm going to do is this: I'm going to take this and I'm going to get out of the collar piece.
Hold the shift key down. Create closing order. OK, we're going to buy it back. Now when we do that, we're trying to get out at the mid price. How do we do that again? Hold the shift key down. And if you hold the shift key down, you can then click on. The caller. The caller is the call and the put. Right-click. Create closing order. Buy it back. Confirm send. Send the order. Now, the thing that we don't have, we haven't done yet, we want to make sure this fills first. Why? Because we have a short call. If we come in here and sell the shares first, you're going to have a short call. That's also known as a naked call, which means you have an obligation in which you do not have the shares.
We good on that? Now, we want to make sure this fills first. Once that fills, then we can come in here and sell those shares and sell into the strength. Now, you've got to remember something. When we have 83% of the 100%, it can only get so much better. Now, let's kind of talk about, well, what happens if it doesn't go to the upside? Oh, perfect example, Uber Technologies. We can see on this that it hasn't gone well, OK? Now, if we take a look at this. It was purchased at $95. 83. Now, remember, I'm still watching this right here. We're going to give it two to three minutes. Does it fill? And if it doesn't fill, we'll go and adjust a little bit. We want this to fill first.
And then step two is, we're going to sell those shares. Now, in the paper money account, there's a vertical on that position as well. So don't think there's not any exposure to that. Now, we can see where the shares were purchased on Uber and where it is now-it's at 453. Now, what is so mind-blowing about this is the stock has gone down, and we can tell. Okay, so it's lower than where we bought it for. Fine. But what we haven't seen a whole lot lately of is the short call is up $240. The long put is up $105. Now, if the long put and the short call are making money, What does it tell us about the stock direction after the paper money account got in? What does it tell us?
That tells us that the stock went down. Now, the hardest thing for people to understand is a stock position that's positive delta, meaning if the stock goes up, it could benefit from that direction. The stock went down, the paid money portfolio is down, and we can see that. Now, when you buy the put, is that bullish or bearish? Well, if you buy a put, it's bearish. If you sell a call, that's not bullish, that's bearish. So if the stock goes down those two positions, they should benefit some. But why is the call down more? Well, which side of the trade benefits from the time decay? Well, the short call benefits from the time decay. So if we kind of have the stock going down somewhat, but not super aggressively, the short call burns that time decay, assuming the volatility stays flat.
Sudden we have a situation now. Now, on this short call, do you see anything that you might say, James, pay attention? Do you see anything that could be managed here? Now, whether we sell a call or we sell a put, the investor is talking a lot about, geez, if you could buy that call back for 50% less than what it was sold for, 65% less than what it was sold for, 80% less than what it was sold for, et cetera. The investor might try to roll the position. Okay, now, why are we talking about rolling? Why? Because we got 24 days left. So let's get over kind of the first thing that we're not going to do. We're not touching the long put. The long put is really the backstop.
It's the right to sell the shares at the strike price from now until expiration, or I should say from the time we put it on until expiration. We're not trying to profit take on that, okay? That is really the backstop. If there is an opportunity to grab 50, 65, 80% of the maximum gain in the paper money account. There's an opportunity to roll. Now, if the investor said, 'Well, could I grab the $240 and could that theoretically reduce the average price of the stock theoretically? Yeah, welcome to covered calls, ladies and gentlemen. And so now it's pushing theoretically the average cost basis down to $93. 43 if you include the short call premium that could be realized. We're going to find out. So now this was the initial entry price.
This is the covered call. That's the call premium, the CP.' Down if you include the premium so how do you roll the call assuming you still have time left let's show it okay well we're going to right click on this create closing order option number one you get to say look I want to try to buy that back first I like this because it's a little simpler for people to understand. We're going to exit what we have now. I'm going to buy it back. And what I'm going to do is I'm going to kind of, I'm going to overshoot the mid price by a whopping penny and see if we can get filled. Okay. Now. I want to make sure that fills.
If that fills, I want to now look at the expiration that we're in, which is the 15 August expiration. Well, which call do we have now? We have the 100, which, by the way, is not even on the table. We're at that one. If we were going to sell another call, which call might the investor sell? Now, without even looking at the strikes column. What I'm going to do is I'm going to say, where do we have liquidity? Not so much, not so much. Ah, right there, 97. 5. So there's a really good likelihood that we're going to roll down from the 100 strike to the 97. 5. Now what I'm going to do is I'm going to click on that. It has not filled yet.
I'm going to change it to the market order so I can fill as soon as possible. So all I did there is I said, look, just buy it back in the market price. Okay. Now, step two is once that fall is purchased back, how do we sell another one? We're going to click right on the bid of the strike that you want to sell. We're going to click on that, the 200. We're going to come in here and we're going to say sell. So that did fill. Okay. It's gone now. And we're just going to roll it. Now we kind of did the manual roll, but that way we can kind of walk through the process. And confirm and send. Now, notice when I did this, we got a mid price of 203.
That's why I moved that price there. Confirm and send. And now what you're going to see is we're going to sell it for $203, try to, less the commission. And send it. Now, if that trade can fail, all we've really done here is we've just rolled down for a credit. OK, so in other words, you gained on the last one. And then, what the investor did was they sold for another credit. Now, I want to kind of notice something here. When we put this trade on, notice what the delta is now. The delta is 17, OK? So when you look at this, if the stock goes up $1, the net position is up about 17-ish. Stock goes up $2. You know where this goes. It's up about $34-ish.
Stock goes down $1. It's down negative $17-ish. Stock goes down $2. It's down literally about $34-ish. So what this is, is a caller is a strategy that is not as sensitive to direction. Okay? Still has the max loss built in. Still has the max gain built in. But it's using shares, okay, as well with options. So you could say a cover call is, excuse me, a cover call is shares and selling the call. Okay? And by the way, you could say a caller is a cover call with downside protection. You could say a caller is a married put because it has downside protection. So it's kind of using shares. A protected put or a married put and a covered call. Sandwiched all together, okay?
Now, I wanted to kind of show that example of something that was not doing as well. Now, don't say, James, you're so guilty of not showing bad trades. Problem is the market has been bullish, so there hasn't been a whole lot of bad trades, okay? Because most of our trades have been bullish, if not almost all of them, okay? Now, what I want to do is I want to kind of show you just real quick, I want to end on Apple for just a moment, okay? One of the stocks, and Pia has kind of asked about this, want to kind of go back to an example of Apple. And Apple has kind of been pushing up near the area of resistance. Now, the main reason why I've been hitting a collar for about the last week and a half.
There's a lot of times when people have earnings upcoming; they say, 'I'm going to sit on my hands for the next two weeks, three weeks, four weeks, whatever it is, their earnings, and I'm going to wait and see what's going to happen.' The investor might not have to take that strategy. They're just concerned about the downside. The investor could still play the upside while protecting the downside. If the investor buys the shares and sets a stop, that doesn't guarantee anything; it only triggers to sell, but not at an exact price level. Now, let's say the investor says, 'James, I'm kind of thinking that Apple might go to the upside.' And then they come in here and say, 'Trade number two.' They're going to come in here and buy the shares of Apple.
And with this, what we're going to do is we're going to buy those shares of Apple. Click. Okay. And what we're now going to do is we're going to come down. So once I click on the last price, we need to come down to where it says single order first triggers SEQ. Okay. This is just telling it, do it in this order. Buy the shares first. Okay, here it is. Then what we're going to do is we're going to come to the 15th August expiration and we're going to say which call has a delta of about 30 to 40. If we chose that, it would really be the 220. Now, the math should be going through your mind already. Geez, James, if we buy the shares at, let's say, 213-ish.
And we sell the 220. What do you think the point is I'm getting at? We probably have about a $7 upside. Okay. Now that's assuming that whatever put that we purchase is about the same price or lower than what the call premium is. So if we bought the shares at 213-ish, sold the 220, the maximum gain is going to be $7 or $700 on 100 shares. We're going to click on that 370. We're going to try to get 375, which is the middle price. If we come over to the put side and say, hey, we're going to try to buy the put with a delta of 30 to 40, and if we did that and said, okay, so what is it? So do we have a credit or debit?
The credit for the call is $3. 75, and the debit for the put is $3.45. So it's really about $7, and then add $0. 30. This will be our second and final example trade. We're going to try to play Apple through the earnings and see if we can't get that stock to push to the upside. Now, what I want you to do is there's a ton of earnings lately, these types of callers over earnings. And I want to see if we can't even get some downside trades where they go down and maybe they actually close below the long put strike to kind of see what happens in that scenario. Now, remember with what we discussed here today was done, for example, illustrated purposes only. Cameron May will be coming up next with getting started with options. Thanks to Connie Hill as well. We did two example trades and we also did some management of current positions. Thank you so much for attending today's session on investing, Master Series, and stay tuned for Cameron coming up next. Bye-bye.
