Sign Utah Profit Sharing Agreement Template Fast

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[Music] good morning and welcome everyone my name is cameron may it's 9 30 eastern standard time on a friday morning the opening bell has just sounded that means that it's time for our weekly discussion called managing an options portfolio i'm joined by my really good friend mike fallette we actually both live in the same little town if you if you can believe that saratoga springs utah so thank you mike for being here mike's role is to he's going to be helping us out in chat so if i can't get your questions he's going to do it he's a fellow instructor does a fantastic job a terrific resource to have here so thanks mike i also want to welcome our veteran traders for coming back week after week i always appreciate your attendance and your contributions i think it really helps with the learning curve for everybody involved and if you happen to be here for the very first time i want to welcome you as well if you'd like to uh just chat in let me know hey first timer here i always like to know who my my new audience members are and finally if you're watching uh the show on the youtube archive after the fact enjoy the presentation but be a lot be aware that you're invited to join the live presentation it kicks off right at 9 30 eastern standard time every friday morning all right so let me see who's here already chatting in i see the chats lighting up so hello there radio wayne and timothy phillip charles layla uh marty mike lars ricardo michelle ckcdom who else is here john and jay anthony sandeep peter irene white belt investor gary paul harold cw frank sm your first timer all right welcome good to have you and i'm sure that you're not alone i'm sure there will be others that identify as first-timers today so welcome to all of you let's sort of dive in here and as we do this we're going to start things off in the traditional fashion we always start by pausing to remember the risks associated with investing risks are real we are going to be using real examples in today's discussion it's not a recommendation or endorsement of those securities or those strategies as any investment decision you make in your self-directed account is solely your responsibility options are not suitable for all investors transaction costs are important factors and should be considered when evaluating any trade all investing involves risks including risk of loss and while this webcast discusses technical analysis other approaches including fundamental analysis may assert very different views all right yep i knew we have other first timers here phillip this is your first time in the managing managing options uh class welcome um all right good to see everybody all right so here's our agenda this is the agenda basically every week what we're doing here in this webcast is sort of mimicking how a self-directed investor might attend to the ongoing challenges of an options portfolio things change on a daily basis and so we try to replicate that here and show the management techniques that might be applied show the pain that might be encountered and some of the rewards that might be realized so here's our first objective we're going to review up our current positions and manage those as we see appropriate then we're going to look at our our resulting portfolio after we've closed things up if we if we see something that needs to be closed we're going to see how that changed the dynamics of our portfolio see what its biases are going forward and then we're going to look at current market conditions and use those to gauge how we might add a new trade to the mix right so elise is this your first time here too for this one okay very good all right well that's what we're going to do so let's go right to it we're going to start by managing our existing positions and i've i've taken a look at everything this is just a little time saver looked through our portfolio because we have quite a few positions and i identified just a couple that might need our attention today we have disney and we have walmart let's take care of walmart right away what's happened here with walmart is we had a covered call covered call expired that's great but that's left us with just 100 shares of stock now this webcast is not not called managing a stock portfolio it's called managing an options portfolio so we don't need a stock position here i used it to illustrate a point earlier i'm just going to close that out that that position overall it's up a little bit today uh this stock portion of that position up a little bit overall we're just going to take that profit right now free up that walmart cash i'm going to create that closing order and just sell that okay so um that takes us to our order page and just so you know this is not selling one share our order bar here is just getting kind of squished because this left column isn't allowing us enough space to see that so if i hide the left column now i can see okay yeah we're selling 100 shares of walmart and how about we just go ahead and sell those at the market price now when we submit a market order obviously we're running the risk we might not be satisfied with the price received that's a risk when using market orders but the the benefit here is it positions us to get a quicker fill so let's click confirm and send i'm going to sell that looks like it's gonna retrieve about fifteen thousand dollars of uh liquidity back to the portfolio we're gonna send that off okay so that's done we're out of that walmart but we did have also an option trade that we need to manage oh mike just made a great suggestion yes if you're new to options there's a webcast that immediately follows this one that's that's designed just for you it's called getting started with options so if you see me skim over some concepts you think wait a minute i haven't learned that yet well i would still suggest hang around for the rest of the presentation i think i think you'll still learn a lot but we do have one this one's more on an intermediate to an advanced level the next one is for just for beginners and everybody had to start somewhere i do not speak disparagingly about new options traders i think that's an exciting part of the career but uh all right there we go so let's go back to the monitor tab and disney this is interesting i just said we don't manage stocks in here and yet if you look at this disney position i'm going to lean on your veterans for just a moment 125 people in here this is not a stock position it's an options position but what what is it really we own a long call and we've sold a short put at the same strike on the same stock for the same expiration [Laughter] mike i know you're going with that mike's picking on me with my beard you'll notice that mike has more gray in his beard that's because he's less willing to use product [Laughter] yup in any case what is it when we own a long call and we've sold a short put that actually constructs a synthetic stock position this is that this is an options position that's designed to behave uh essentially just like a stock trade so it's actually done pretty well for us we got into walt disney if we click on the quantity we can see when we entered this this was entered into on october 22nd but this trade has run its course all right if we look in our in our pl open our pl day trade pl open uh we've made about 4 700 800 on this trade but it's now the 20 oh wait a minute wait a minute hold the boat this is my mistake pain-free santa fe is saying close it we might anyway but i made a mistake i can admit that what what did i miss here i was just about to say this thing is expiring two mistakes i just read i don't know what just happened i just read this backwards i don't think i've ever done that before i saw the january 22 no this so what what the way that we read these lines is it's the 21st of january of 2022. this is not experience expiring on the 22nd of january of 2021 which would be today it's actually expiring in a year so richard we now get to make a choice do we close this out or not because this actually has lots of time left what we might need to do is take a peek at disney let's pop over here to our charts and see if we need to do anything with this disney position right what do you think so the markets i believe were were set to open a little bit lower today right well disney is actually up a little bit and if you'll notice it's been bumping along a support line so if we were a stock owner a technical trader might look at this and say hey this looks pretty good because if we bounce off this support line or this price floor maybe we're set to go higher but we don't own the stock but we own a synthetic version of the stock essentially that's what it's called that uh marty this is a leaps co yeah it's a pair of leaps contracts yep leaps just if you don't know what those are those are long-term equity anticipation securities i know that's a mouthful it just means it's a long-term option other than that there's nothing special about it so yeah we have plenty of time left radio wayne i agree with you i was i came into this all set to close this out we're not going to close that out we're going to leave it on there all right so there we go so be careful as you're reading through the details of your portfolio it can lead you to make a mistake which i almost did but that's a learning opportunity for all of us so now we're done with managing our existing positions that was easy that leaves us with some time to talk about adding a new position so anytime we make a change to a portfolio like we just did we just closed out walmart walmart was bullish that was a long stock position it was adding what we call positive delta to the portfolio it changes the construction of the portfolio now with an options portfolio does anybody ever feel like it's a juggling act right we've got a lot of balls in here we've got uh we've got a vertical spread over here we've got a calendar over there we've got an iron condor in this and we've got a short uh a short call on that and short put on this and a long call on that along put on this and it can get very confusing to know whether we even need the markets to go up or down whether we whether we're going to benefit from the passage of time decay or it's going to negatively impact us or how changes in volatility levels are going to impact the portfolio so it can be a little bit messy when we have a stock portfolio we know pretty much well you know if we own 100 stocks even though there's a hundred stocks which way do we want the markets to go almost certainly we want the markets to go up it's not so easy with options because some may have bullish a bullish outlook some may have a bearish outlook there may be a combination of both within the same trade like calendar spread or a diagonal so we need it would be nice if we just had something to show us how our stock would behave as the s p does its thing and as time goes by and everything else so that's why in this webcast we use the beta weighting function on this on thinkorswim so i'm going to check the box next to beta weighting here and it just shows up by default right next to your position statement and i'm going to type in spx as we do that what the the signal that i'm sending to the system is hey i want to know how is my portfolio likely to perform as the s p goes up and down how do we gauge that well we can use our delta column if you don't have delta as one of your columns here you can add it right over here where it says customize columns you can look up delta and just add it to your columns right here okay you can play around with that after class and you can add theta and you can add vega through that same mechanism all right but delta gives us a gauge of how a position is likely to respond as the s p moves so if we look down here at the bottom line 47 46 at this moment that literally translates to hey cameron if the s p were to go up one point that's a tiny little move on the s p your portfolio would likely respond by generating an unrealized profit to the tune of about 47.62 that's what our delta tells us if the s p were to drop we'd have an unrealized loss of around 47.62 it's it's it's an approximation but it's a pretty good one theta tells us how our portfolio is likely to be impacted by time decay and right now that's negative you might think isn't that true always with options no it's true with buying options not true with selling options in most circumstances finally are vega vega starts with v so it is volatility it tells us as market uh volatility levels fluctuate this is how your portfolio is likely to be impacted if volatility were were to rise on the s p by 1 that could generate about a 362 uh paper profit for this portfolio as currently constructed if volatility drops it might be negatively impacted so what we need to do is align these three variables with what we think is going to happen do we think the s p is going to go up do we think that volatility is likely to rise do we think the time is going to go by answer the last question is yes first two questions though we have to check a chart that's one way that we might get our fingers on the pulse of that so let's do it let's uh let me come over here and open up this left column again because here's what we wanted to do first of all manage our positions next review our greeks so that's what we just did all right now we want to pair those greeks up with it with a market outlook let me see eve says what's a good gauge of a weighted portfolio delta number oh either you're asking how um how much delta is quote unquote good or bad that's that's a good question that's going to just depend on the trader's preference though i think that a a good way that a trader could do that is just look here's here's something that we that you might do go to your charts let's bring up spx because we might look at this and say um all right so right now we have a 47 delta i'm going to round that just a little bit 40 47 delta uh yeah mike is saying someone will consider it as a percentage of capital invested maybe maybe a certain percentage generally five percent or less maybe something like that but another thing that we can do is go right to the charts of uh of the s p and we might add something like the atr follow me on this this is i'm going to try to do this quickly so i apologize you might have to go back to the archive and revisit this if anybody struggles to follow but i'm going to go to atr and i'm going to apply that to the chart okay and i haven't ever oh let's see let's add it to the chart first and then click apply there we go but right here this tells us what is this number around 40 that tells us the average uh number of points that the that the s p is moving from top to bottom in a single day 40 points i just said that if the s p were to go up one point we might see about a 47 uh a 47 profit unrealized gain on our portfolio or 47 loss so then we could just come here and say well 47 times an average day let's say we get an average down day that's about 1800 bucks 1900 bucks so we can start to sort of gauge just how volatile could this potentially be for my portfolio if if this number starts to make us sweat what do we need to do with that delta what do you think might need to dial it down so eve is that helpful if we're thinking geez it's not moving fast enough for my preferences maybe in that case we need to dial that delta up but what i'm going to do though is right now our portfolio had the portfolio has a bullish bias it will benefit if s if the s p goes up it'll be negatively impacted if the s p goes down that's not always the case with an options portfolio an options portfolio can be constructed to um to be bearish we just need to determine well are we bearish all right so let's come back to this chart let me remove that atr there we go and you'll notice i drew some lines in here already i did that on purpose there's a point that i want to make today this is not me attempting to lead the witness so to speak but overall we can see that the markets are going higher highs and higher lows they have been over the last several months but today as i zoom in on this you can see that we've come back a little bit there's a red candle partially obscured by the line that i drew in here but so a trader mig t look at this and say all right so we have been going up but i think let's just say that we think this little path pattern that's been established is likely to repeat over the next couple of weeks right so that might mean oh prices are set to go down for a couple of days does that mean that the trader needs to go make major adjustments to their portfolio's delta outlook right now we're bullish and yet our projection might be for the next two days or three or whatever we might be bearish so do we need to go in and put some bearish trades on not necessarily all this might tell the trader is hey you might have to be patient for a day or two this might not be the most thrilling part of the ride but as we're adding a new position if the overall outlook is upward and let's say that new position is going to play out over not the next two or three days but the next two or three weeks maybe next month possibly longer is it going to be bullish or bearish probably bullish right if this is the investor's outlook now i have to say someone else might have an entirely different outlook for the markets you might think that we're top heavy we're headed down from there that's totally fine what i want to be able to demonstrate in this webcast is how do we take whatever our conclusion is for the s p 500 and put that into action with new trades so that's what we're going to do my trade today is going to be bullish let's ask let's uh let's make some objectives for the day all right i'm going to pop back here to our monitor tab and update our greeks this this is what we did last week okay so let's change this to this week 4650 is our current delta our current theta is about 9 minus 635 and our current vega is about 350 450. there we go now you've heard me say this a bunch of times but we've already made a decision in the management of this portfolio we try to keep this theta positive it has slipped to negative recently so the very first thing that we're going to do as an objective for our new trade is to increase our theta in other words make it less negative or even hopefully take it into positive territory now we just need to do decide what we're going to do with our delta and our vega well we just looked at the s p 500 right now our portfolio is positioned to benefit if the s p goes up we might have a couple of rough days if the chart plays out like uh like it looks like it might but beyond that this might align very nicely with the traders outlook for the s p and maybe if anything if we're adding a new trade let's look to make this more bullish now going back to eve's question if this delta is already too large for somebody they might just hit the pause button they might even back off even if they are bullish they might accomplish that through closing additional bullish trades or they might accomplish that by adding new bearish traits but we have a final decision to make and that's what are we going to do with this vega our vega is quite positive i don't i don't use the phrase bullish or bearish with vega because it just goes up and down on sort of a horizontal plane horizontal axis so are we positively or negatively impacted by by rising volatility so i want to go to a volatility chart but this is another part of the lesson that i wanted to teach today typically there's a there's a relationship between the s p and the volatility index what have we heard if the s p goes up where does the volatility index typically go what do we think usually there's an inverse relationship so if the s p goes up we might expect the volatility index to go down if the if the s p goes down we might expect the volatility index to go up well look at what's been going on since back here november 10th and even further back but i use november 10th to start my drawing just as a reference point so here we are from november 10th we are decidedly upward so if we anticipate that traditional relationship between the vix and the spx where would we expect the volatility index to be decidedly downward right hmm interesting let's look at what's actually happened i've drawn a box around the period since the 10th yes there's been some downward movement there's also been some upward movement net what have we accomplished pretty much sideways so be aware that that that traditional relationship between the vix and the s p can start to break down if if the market in its own collective wisdom has determined that volatility is already low enough now could it go lower from here absolutely but my my take home lesson is sometimes it can be a little bit disappointing when a trader is saying oh market's going up so vix is going to go down and they position themselves aggressively for that purpose it doesn't play out okay the vix has really mostly gone sideways if you look at you might say yeah it's lower here than it was back there this is where we were close of business on the 10th yeah but you could also credit all of that to about the last two or three days you notice as a as of earlier this week the vix was actually right in line with where it was back on the 10th so bottom line here is that it's not always as easy to gauge the volatility index as it might appear to be on the surface of it because it it can be tempting to just say oh okay we're bullish on the stock then we're gonna we're gonna decrease our vega not always so what i'm gonna do with our portfolio today is since we've been primarily range bound with vega and right now it's it's mostly it's it's not mostly positive it is positive well it looks like there may be more upside potential than downside risk on vega at the moment and we're positioned to benefit from that i'm just going to sort of not emphasize vega today i did want to take that opportunity for a little teaching moment though um for vega it's not a point of emphasis we're going to say it's fine if we maintain it does that sound fair if it happens to go up a little bit from our trade that we placed today that's fine if it happens to go down a little bit from our trade that we place today that's fine but we're going to really emphasize adding some delta and adding some theta so what that meant what that translates to is we want to add a bullish trait that adds positive delta and how do we add positive vega by selling something right particularly selling something out of the money so if you need a little rule of thumb generally to increase delta you open a bullish trade and generally to increase theta open a short position sure short bullish position is selling a put right or something like that what we're going to do though uh to minimize the vega impact and to increase the probability of success on the trade let's do a bull put spread you know that's that's kind of a basic trade but it's one that i haven't done in this webcast for a while and it's also one that allows us to explore this is the this is sort of the um how we do what we do open a bullish open short i want to talk about why we do that get into the details use the greeks to gauge the the potential impact of of our trade on our portfolio bias before we place the trade so let's uh let's bring up a stock that to a technical trader may appear to be bullish now not every trader even looks at charts when placing their trades they may just say hey i just need some i just need a bullish position so they go place a bullish options trade on a liquid stock and they need that to be positive theta so they sell something out of the money and they're fine with that without even using a chart we do use charts in this discussion so let's look at adobe and what you'll notice with adobe is that it's been generally pressing higher but recently it's come back and it's bouncing off sort of a fulcrum point of of uh stock prices we have a horizontal area of support and a diagonally ascending area of support that sort of came together right there around the around that 455 level it's interesting we came right down to that and we're currently bouncing and once again with adobe as we saw with disney even though the markets had a softer open these two stocks have had a little bit stronger open so for some technicians that might mean hey if we have a stock that can be strong on a weak day maybe that's a particularly strong position bullish outlook right so whatever the case let's just say that that the trader has a bullish outlook for adobe one said when was the first webinar in this series i'd like to go back and watch so i can get up to speed oh and i would suggest if you want to go back to just last week sometimes we go a little bit faster pace other times i kind of pump the brakes and go a little bit slower last week i intentionally went a little bit slower so otherwise there's not really a starting point for this series i've been doing it for a long time and i do it every week so you'd have to go back like 100 sessions ago but i do think that within within a few sessions you'll start to get the rhythm of what we're doing here okay but i'm going to go place a trade here is the bottom line for this trade we want to place an adobe trade that will make our portfolio more bullish that will position our portfolio better to uh to profit from the passage of time and that won't have a severe impact on our portfolio's outlook for volatility changes that's it yeah mike says they sort of stand alone these discussions sort of true they kind of tie together there's definitely a running theme through them all but it's difficult for me to pinpoint hey go back and watch this one um i might be able to dig through and find that maybe give that as a recommendation later but i don't know anyway let's place our trade let's go to our trade tab and as we place this trade let me open up some blank space here we're going to do an example trade we're going to do a bull put spread that's going to be our trade so let's let's start to build this trade and i'm going to go out maybe the 19th of february now when when selling an option there's a balancing act for traders if we go out too far and we sell an option selling option strategies they have limited reward potential if we go way out in time we're waiting a long time to realize our profit potentially a very long time and we're giving it a lot of time for that trade to go severely wrong okay so going out too far might not be might not appeal to the appetite of a of an option seller staying too close to to expiration let's say only going to these that expire in a week well then as we go to sell we might be disappointed with the amount of credit that can be generated from the trade so maybe we're trying to strike a balance here between too far out too close to expiration so for some traders that might be between like 20 and 40 20 and 50 days that's just a general rule of thumb okay uh robert that's what i was thinking of there was one although i have amended our approach since then that might be useful about a year ago so not this last december but i think it might it was maybe maybe exactly a year ago like january 1st or something of last year for this webcast i did a sort of kick off and i think that might be useful but you'll notice that i've changed things a little bit since then all right but placing our trade this is a two-part trade two legs first thing we're going to do is sell a put i'm actually going to need a few more strikes up here let's come up here and change the visible strikes to like 24 instead of 14. and the first thing we'll do let's use gr the let's use the delta as a gauge for where we're going to sell delta is sometimes used by options traders to gauge the likelihood that an option will expire in the money so like this one has about a 31 chance of expiring in the money if we're selling we probably prefer that expire out of the money so there's about a 69 percent chance that it does exactly that so that's a high probability trade let's do that um you know what i'm going to pick one is slightly different just to make our numbers easier rather than having to deal with it 57 and a half just as i'm teaching i prefer to use the big round numbers it's easier for people to follow so let's go for the 460. so we're going to sell the 19th of february 460 put and that looks like that's trading between 880 and 925 i'm around that right to nine dollars let's say we're able to get nine dollars for that and at the same time we're going to buy the 19th of february um let's say the 455 round number again makes my teaching easier 455 put trading between 725 and 765 let's call it 745 so that is our trade for the day i'm gonna maybe i might expand those out in just a moment but what do we get for doing this why are we choosing this trade number one it's a bullish trade so if the markets go up very likely this trade will work out the markets go down it's probably not going to work out um number two it is a time sensitive trade where it benefits from the passage of time when we sell options that are out of the money as long as they stay out of the money that trade is well positioned so every day that goes by and this option is still out of the money that's a day that's working in our favor it's a day that we're closer to expiration therefore we're benefiting from the passage of time that so what we're doing here is we've made a delta positive trade it's bullish and we've made a theta positive trade because it's a selling it's a it's a credit trade that's out of the money but that's easy for me to say what i prefer to do is is uh demonstrate that mathematically so i want to look at our delta impact okay let's look at that 460 delta um when buying options if we're trying to to calculate the impact on our portfolio if we're buying the option we just use the delta as it's displayed so if we were buying this put what would be its what would be its impact on our on our delta position right it would be negative however we're not buying this option we're selling it so we invert this that actually turns us into a positive impact we're we're bringing in a positive 34 delta from that short put however we are buying the 455. so what does that do that has a negative delta that's a negative impact so we're going to subtract 30 delta so we're getting a positive 34 minus 30. what's our net delta impact it's positive yeah so i can say that a trader who is bullish uh maybe they go out and sell a put spread and that makes that introduces positive delta okay that's easy to say this is how it actually works okay well what about our theta theta we do exactly it's the same process if if we're buying the option we just use the theta as displayed if we're selling the option we invert it so look at our 460 that we are selling here's our theta it's negative but we're selling that one so that's a positive theta of 25 but the one that we're selling apartment but the one that we're buying we actually just use that theta as displayed that's going to be a minus 24 it was a minus 23. kind of wish it had stayed there for a moment it would look a little bit more dramatic for teaching purposes that's okay so is our theta impact positive or negative it's positive and if i want to make it more positive if i want to make if i want to have a stronger delta impact if i want to have a stronger stronger theta impact what could i do i could do multiple contracts right now what about vega vega is not a point of emphasis but i do want to use this as a teaching moment well our vegas same deal the one that we're selling we invert so that's a 49 negative vega but the one that we're buying we just used it as displayed that's a positive 46. so our net our net vega impact is going to be a negative 0.03 and you might think oh it's devastating is it really we already have a 350 positive vega so introducing a few negatives it's going to bring it down a little bit not a lot but i just wanted to show you um i can i can come up here and say generally to increase delta open a bullish trade this actually shows it being done mathematically generally to increase theta open a short trade this is demonstrating it actually happening and finally vega opening a long trade would have increased our vega we didn't open a long trade we opened a short trade so it decreased it there we go so there we can we could if we can learn that process we can start to anticipate the impact of a trade and this can be done on any number of legs you know if we just do a single leg option like buying a put or buying a call we can just look at the greeks and see the anticipated impact if we're doing a vertical spread we can start to add those up and anticipate the impact if we're doing an iron condor it has four legs we can add all those up and anticipate the impact all right so there we go so that's something if you need to go back and watch the archive you can see that being done but let's go ahead and place this trade all i know is that this is aligning nicely with our expectations for market conditions it's a bullish trade that benefits from the passage of time which is helping out the portfolio toward that end and uh yeah it's reduced our vega a little bit so placing the trade how do we do that here's a quick quick quick way that we can do that let's come up here to where it says spread single that means that it's just showing all the single or individual strike prices let's change that i'm going to click on that go down to deep and wide and i'm going to go over to one month two strikes what i'm doing here is notice that our spread they're both in the same month but they're two strikes apart because we have the 460 we skipped over the 450 750 and went to the 455 right so they're two strikes apart we're going to check vertical now look what that just did it actually paired up the 460 with the 455 right there so now to create our trade all i have to do is click on the bid price and that creates that vertical spread so let's let's hide our left column for just a moment there we go and here's our vertical spread looks like that's offering about a 156 credit at the mid price right now so how much does that leave over for risk three dollars and forty three cents right this is a five dollar wide spread minus a dollar fifty seven credit and i know for those who are new this is going to look like it's going to look like magic and it's also simultaneously going to look really complicated for those that are veteran with vertical spread traders they're going to say that's obvious right yeah just learn about vertical spreads you'll know exactly what i'm talking about here but this credit represents the maximum gain on this trade the 343 represents the maximum loss on the trade so if the stock is above this is a bullish trade if we're above 460 as we move toward expiration we're in position to to make money on this trade if it happens to slip below 455 that's where the trade doesn't work out all right hey it looks like it just went to 160 that'd be nice we get a nice round number in any case let's submit this as a limit order i'm actually going to back off for that requirement let's see if we can let's let's try to increase our likelihood of getting a quick fill i'm going to move that credit requirement to just a buck 55 and confirm and send that order all right so that gives us a maximum gain of 1550 maximum loss of 3450 that's very typical of a high probability vertical spread it it's not a not a cause for panic that that the maximum gain is smaller than the maximum loss of a high probability of vertical spread uh transaction fees our consideration let's send that off see if we get a quick fill there we go yep sold it for a buck 55. all right so here's exactly what we've done to ourselves as we come back down to this trade let's open this up that other note down there just pertains to a different discussion so we don't have to worry about that but when we sell this bull put spread we need to be above the spread as we move toward expiration well we're solidly above that right now we're 473. if it helps to visualize that uh we sold the 460 right down here at support and our 455 is just down below that support so as long as we're up above this as we move toward that february 19th expiration we're in good position to to benefit from this trade all right if we happen to slip down below that we'll need to pay attention to that in a future webcast but let's see what the impact has been on our greeks here was our original delta it was at 46.50 we saw the markets going up we went with the assumption that we think the markets are going to go higher so we dialed up our bullishness we went from 46.50 delta to what do we have now 51.50 so did we accomplish objective number one yes objective number two was we anticipate that that the sun is going to rise tomorrow therefore time is going to go by therefore we're going to position ourselves to benefit from the passage of time we had a negative theta time was working against us up to this trade now we have a positive theta time is now net working in the advantage of this portfolio now you'll notice that just changed why did it just change i didn't place any new trades the markets are open that's what's happening this can still just market changes can impact these greeks right you'll see those changes we're talking but finally our vega was quite positive we anticipated that that was going to drop a little bit with this trade is that what happened yeah it's still very positive it's at 320 rather than 354. but we really accomplished everything that we set out to do our primary objectives were to dial up the delta dial up theta that's check check vega we weren't as concerned about because it's primarily it's really been sort of sitting in a range so that's it we have connected all the dots for our discussion today i really hope that this has been helpful for you this is your very first time i realized there's some brand new kind of heavy lifting but you're going to see this done each week if you want to join me every friday morning we go through this process we pick new trades we manage that portfolio as we press forward always trying to align our new trades with what we actually expect to happen from market conditions all right pierre hey my it's all right if you want to join late totally fine uh dennis says what's the cash reserve required to sell a put spread dennis is a good question then it is one of those essential elements you want to learn with vertical spread trading it's the maximum loss of the trade so if we just sold this for a buck 55 and it's a five dollar wide spread here's the math five dollars minus 155 equals the maximum loss that would be three dollars and 45 cents for this uh for this trade times 100 for each contract so that's 345 times the number of contracts there we go that's how you would do that okay everybody thanks for giving your time today here's what we that was those were our objectives for the day we did all three of them hope that's been helpful for you this is not the only way to manage an options portfolio but hopefully it gives some structure to those who are looking to pull it all together and understand how the different variables change on an options portfolio as trades change and how do we tailor new trades to our convictions for market conditions everybody remember that risks are real we did use real examples in today's discussion it's not a recommendation or endorsement of those securities or those strategies thanks mike for helping out with the chats i could see they were keeping you hopping as always uh we're going to do this again next friday i do have a new webcast pretty much every single day of the week so if you want to join me in any of those you're certainly welcome but hey whether i see you on monday or tuesday or circle back next friday uh until that moment arrives i do want to wish you the very best of luck have a great weekend good luck and happy investing bye you