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good morning all hey this is mike today we talk the case for and against weekly options or i should say weekly’s options technically that’s their name all right we are live and welcome everybody today is the is it the 19th of august i think it is yes it is wow um i think i looked at the date yesterday and i’m just shocked at how fast time is going um anyhow uh maybe i just don’t want summer to to be gone uh i love summer anybody else love summer as much as i do anyhow welcome everybody uh hey we do this class every single wednesday same time same place if you’re listening to the recorded session is wednesday morning and the bell just rang uh which means that uh the market just opened uh i don’t know if schools are open where you are but i think they’re actually opening back up here when i think of the bell ringing i think it’s cool uh anyhow my name is mike fallett on board with me i’ve got pat maloney he’s helping out in the chats and uh some good information is already posted there in the chats from pat some important data to think about today and of course earnings from some of these retail stocks uh target we talked about this last friday but target reported we’ll take a look at that chart in just a minute uh also tjx and uh kind of mixed uh markets out there in general uh between the s p and the nasdaq and so forth uh anyhow we’ll look at all that in just one second my twitter handle is there on your screen pat miloli’s got a twitter as well and his is way better than mine he posts a lot of really good charts uh that some of you might find uh extremely interesting based on anything from economic data down to using different indicators so check out his twitter uh anyhow let’s go ahead the bose that question always comes up uh let me let’s go ahead and hit some disclosures this class is for educational purposes only i remember what we talk about is not an endorsement for a stock or a strategy also there are education or not education but transaction costs that need to be thought about and in order to demonstrate the functionality of the platform we need to use actual symbols but again we’re not making recommendations past performance is not a guarantee of what’s going to happen in the future also paper money is for educational purposes only all investing involves risk including the risk of loss no soliciting no recording and no taking pictures and while this webcast discusses technicals and well sort of the there’s plenty of other uh techniques for approaching markets options are not suitable for all investors there are risks inherent trading options that could expose an investor to potentially wrap it in substantial loss losses when you’re dealing with these multi-leg strategies uh just be aware that the complexity can go up and also the transaction costs can go up as well because you got multiple legs going on um anyhow trades involving minimum benefit can be more significantly impacted probability analysis is not a guarantee of an outcome and also these uh short-lived options kind of like these weeklies right that we’re going to talk about today just remember uh that those tend to require closer monitoring uh you know there’s more explorations to think about also there’s a quick look at the greeks over there on the right hand side uh futures and futures options is not speculator is speculative and it’s not necessarily uh appropriate for all investors so just double check your risk tolerance and suitability before you get involved in futures also rolling and we will talk some roles today uh just be aware that um they can entail additional transaction costs uh when you’re rolling all right so i want to talk about the case for and against weeklies and one of the one of the main cases that some traders look at for weekly’s options is the way that they can be used potentially for the more active investor to generate income especially if somebody fancies themselves as a stock investor uh so somebody who is willing to maybe buy and sell stock but they like the idea of generating income along the way uh there uh there are some strategies and i want to go back to demonstrating some of those today where somebody could combine these weeklies with individual stock transactions uh and use a strategy for example called a a covered strangle or a long stock and a short call and a short put that’s a way for a trader to get uh possibly some of the benefits of

stock ownership plus the income from both the put and the call side of the market as long as they’re willing to buy new shares and sell their existing shares but they buy stock low and sell stock highs so it’s kind of an interesting case there for weeklies but there are some things to think about on the negative side as well for weeklies so it’s not just going to be a case four also you got to think about the cons associated with weeklies as well uh but this week remember last week we talked a lot about uh rolling you know and estimating role values i hope that was a useful class for you talking about those role values last week this week i want to focus on applying that information and talk about uh when it comes down to actually making roles what are some things that traders need to think about uh you know for and against a role and we’ll go through a couple of examples here today and hopefully get some new positions established as well so anyhow i hope you enjoy the session uh and uh certainly uh make sure you take advantage of uh different classes that we offer which can also uh back up this type of information kind of round uh the education out for you all right i’m gonna go ahead and jump over and uh by the way there’s target uh look at that how do the analysts get that one so wrong right so the earnings estimate was uh a dollar 64 and they come in at 338 in the middle of a pandemic right um in the market gaps up 11 bucks uh that’s eight and 8.5 half percent right how are they so wrong on that that’s all i want to know right uh how does the street put together an estimate of a dollar sixty four and it comes in at 338 on freaking target uh anyhow interesting to see some of these moves uh speaking of these uh some of these retail names they’re not all uh doing tremendously well in fact uh pat just mentioned uh tjx i believe there in the chats uh that is the symbol right it’s tjx i thought it was tj maxx uh uh yeah for some reason and maybe these charts just are not gonna work for me this morning uh let me try uh maybe home depot hd all right home depot’s not working either but uh anyhow we talked about this before just a big week for uh for these uh retail names uh okay these charts uh are not treating me kindly so i’m gonna move on from using some of these charts uh but uh you know since um since we’re uh on uh on the trade screen right now and we’re looking at individual options uh let’s uh let’s talk a little bit about weeklies okay we’ll just launch right into our weekly’s discussion uh anyhow weeklies are not available on all stocks okay there’s i want to say there’s what 500 550 something like that stocks that trade weekly’s options so it is kind of interesting when you look around for example uh one that jumps to my mind rost speaking of retail um is it our i thought ross and i’m just out of sorts here maybe it’s tj maxx is ross did ross just start trading weeklies i didn’t think they had weeklies anyhow some of these stocks uh i’ll find one eventually they don’t trade weekly’s options okay uh there’s tj maxx here on the uh on the trade screen you can see that stocks down uh three but i should say tjx companies uh it’s down three dollars and 82 cents uh but anyhow not all stocks are going to trade weeklies and i forget what the actual number is of stocks that trade them now but they don’t all do it now what is different about uh weeklies by the way well weeklies were kind of a creation of just those who like the idea of trading options that are consistently closer to the expiration week or the expiration date so for it for instance if somebody likes the idea of time decay time decay tends to be faster the closer one is to expiration right time decay speeds up the closer options are to expiration so somebody who likes the idea of generating income for example and especially if they’re okay with additional transaction fees and sort of the activity associated that you know it provides them with an opportunity to sell options consistent consistently they’re closer to that expiration date and kind of be in that quicker time decay but the thing is time decay isn’t necessarily just you know all you know kicks and giggles time decay or theta also has a negative aspect to it in the sense that if the market actually moves against that trader right if somebody’s selling options for the decay but the market

goes against them the losses can be magnified they can be much faster and and much more magnified being closer to expiration because really an option right is all about in terms of its price uh whether or not that’s going to be in the money on the expiration date or whether the market believes that option could be in the money on the expiration date and tjx uh is pretty wild market this morning so let’s go back to home depot but let’s uh maybe narrow this down so we don’t have as many options on our screen but um you know this is all about uh you know option premiums are about whether or not they’re going to be in or out of the money on the expiration date and if an option is in the money on expiration it’s going to be worth its in the money value and if the option goes way in the money on expiration it’s going to be worth a lot more value but then again on expiration when it’s out of the money it expires worthless right but if you can if you can visualize how that might work out an option seller if they sell an option and that option winds up going in the money and in the money by quite a bit well if you’re dealing with a weekly there’s not a lot of recovery time number one and number two because there’s no recovery time and because that’s all in the moneyness now those options can increase in value very quickly against the trader now that could be a pro though if somebody is buying options for example so uh an option buyer if they buy a call for example two days from expiration on home depot and home depot winds up going up you know five points uh you could have this 285 call for example right here and uh if home depot goes up to 290 that 285 call goes to five bucks very very quickly um so there’s there anyhow there’s pros and cons to trading these weeklies but they kind of fill a void for investors whether or not they want to buy options or sell them but one of the angles for an income generator is the idea of weeklies options close to the expiration date provide that opportunity to get that really fast time decay now one of the things about these weeklies that can be a struggle is this especially um when you think about weeklies that just kind of are new for example i’m going to go out and take a look at options that are expiring in 44 days on home depot these are weeklies right but these weeklies have not been around all that long uh they’re relatively new issues here if we take a look at for example these uh 287 and a half calls right here the open interest on those is 36 right on the 287 and a half call if we take a look at the nine day to expiration uh weekly well that is uh that one’s actually got 774 on the open interest there it’s this uh third column in uh that i’m looking at right here so you can see that these weeklies when they are newly established they they will tend to have very low liquidity levels of liquidity which means when they get established they have a tendency to have wider bid ask spreads potentially and you can even see that in these two options here right the uh the one expiring in 44 days goes for 8.85 to 960 so uh you know not quite a dollar but it’s getting up there and then if you look at these that are closer to the expiration that have the greater amount of open interest here uh the spread on that between the bid and the ask is closer to like 20 cents and that’s here at the market open it it might actually tighten up as time goes by right but that’s another uh con potentially of weeklies especially when they’re further away is that there’s less liquidity out there but interestingly enough if a trader understands that as these get closer to expiration they tend to receive more participation and oftentimes you’ll see that liquidity or that open interest actually grow so anyhow just just be aware i’m describing some of the reasons why people would trade weeklies and some of the things that could cause them pain if they trade weeklies but when it comes right down to it the difference between weeklies and anything else any other option just a standard expiration is just that it’s just the expiration um their their multipliers are mostly the same right occasionally you might get like a split or something like that that could affect maybe the multiplier or the deliverable amount or something like this but weeklies when they’re issued they’re just a regular option it’s just that they expire closer to the expiration date now uh let’s talk about these from the standpoint of somebody who maybe would like to generate income for example and i’m actually going to go a slightly

different route here i mean uh everybody’s talking about the retail names and things like this uh just be aware the example that i talk about is uh is applicable to you know anything that trades weeklies right so certainly if if you wanted to practice what i’m going to show you here uh you know you could apply that with uh any stock uh that’s uh basically what some of the criteria might be a liquid or an actively traded stock and then something that somebody wants to generate income with and a stock that maybe somebody is okay with buying and selling right uh so let’s just go with uh maybe something that hasn’t been looked at as much lately uh energy uh energy has gotten some traction over the last couple of weeks although this week energy’s been one of the laggards out there uh but uh in the energy space there are some uptrends of building and uh these are kind of some stocks for example here’s apache uh involved with uh uh natural gas and uh even oil you know uh natural gas liquids and things like this uh but anyhow we’re starting to see some trends that are starting to build to the upside there um although it’s this sector so beaten up right it’s you still have uh quite a bit of volatility relatively speaking implied volatility priced into these options uh and these stocks naturally of volatility relatively speaking is higher in some of these names well it’s because it’s perceived the risk of owning some of these stocks is certainly uh higher that’s the perception anyway when volatility is higher well let’s take a stock like apache and as i’m looking at uh my portfolio here my little uh paper money account i just kind of looking through some of these names there’s really not an energy position of any substantialness in here so i’m gonna use uh apache here as an example let’s say somebody is okay with starting to build a position in a stock like apache okay and for illustrated purposes let’s say that trader wanted to buy a hundred shares of stock let’s go ahead and hit confirm and send let’s say we’ve got a stock purchase going okay so we just bought some apache and at the same time that trader right just the current price of the stock is what about 15 37 but at the same time that traders thinking i wonder what it might look like since you know these option premiums are a bit juicier than maybe you might see in different underlying stocks because of some of the risk associated with energy uh what if the traders thinking well i wonder how it might appear if if uh if the trader decided to sell a covered call right for example maybe an out of the money call but use these weeklies in order to do that i’m gonna go to the option chain and uh in the option chain we’ve got uh some contracts of course the weeklies are available here uh it looks like i’ve got four strikes on the screen but let’s open that up to maybe 14. let’s say the traders thinking you know what they’re okay with selling the stock that maybe they just bought at 14 you know for 15 and 35 cents or whatever that was let’s say they’re okay with selling the stock at 16 right i’m gonna go ahead and choose these nine day contracts so those are uh expire in nine days basically and the 16 contracts here strike price contracts are going for 35 cents right now if a trader did that in association with their long stock they’re effectively just in a covered call trade here right but that covered call interestingly enough uh really is only tied to the option for the next nine days right many covered call traders that have been doing this for a while they might be tied to an option for anywhere from a month to maybe three months out or longer right if if a trader found it appealing to generate more instances or more occurrence of income potentially they could use these weeklies options and if we looked at just for fun if we looked at these nine-day contracts those are going for about 37 cents right now if we compared those to contracts that are expiring uh 30 actually i can’t go 30 days because there’s not a match out there but if we compare those to these contracts that are expiring in uh let’s go out 58 days and see if there’s a there’s no 16 contract 58 days out either stinking apache anyhow we’ll go with 44 days here just for fun if you think about the amount of time associated right so uh this is again this is a nine day contract

uh how many nine day periods are there in 44 days right i’m just going to take 44 divided by nine and that gives us what almost five occurrences of nine days right within a 44-day time span someone sold these nine-day contracts uh this is going to be cheating just a little bit but like five times right just kind of prorating that uh out uh they’d be getting 37 cents times you know almost five for 37 i’ll just go times 488 48 times 0.37 and that would generate income of a dollar eighty total does that make sense so if the 16 strikes nine days out if you’re thinking if someone were to do that at the same rate right just every nine days for the next 44 days rather than selling this 44 day contract it actually all said and done be able to generate a dollar 80 worth of premium there which is higher than these options that are expiring in 14 days or excuse me in 44 days uh trading for a dollar eleven so the reason i’m telling you that is that for an income generator somebody who’s okay with the all the activity associated even though these nine-day contracts just straight up uh have a lower stated premium than something that’s farther away uh that premium per the time that the investment occurs is higher right and you can see that just through the proration there so now if a trader did this this would be basically a covered call they would have an obligation to sell that stock at 16 right which means they could get the appreciation in the stock from where the shares were purchased all the way up to 16 plus this premium over the next nine days now if a trader wanted to kind of get a sense for the amount of income that could be annualized or the amount of profitability that would be potentially annualized i don’t know if you’ve ever seen this before but you can actually go to uh one of the columns here i’m just going to choose my position column go down to option theoreticals in greeks and in the menu here you could use something called for example covered return i’m also going to take this implied volatility and i’m going to switch this over to max covered return so max covered return and covered return the covered return let me uh use my annotator here it’s not a vegetable but my annotation tool to outline these two numbers the covered return tells us okay if someone were able to generate this premium every nine days but they did that on an annualized basis like you know out of 365 days you’re actually doing that every nine days out of a calendar year that rate of income is actually 98 right so think of that as an annualized stated rate a little bit like you know on a credit card or whatever kind of the annualized rate there um now on the other hand if the stock kept going up and the uh option kept calling the stock out right under obligation to sell the stock at 16 that would result in a 201 percent return if that happened every nine days for a calendar year is that likely to happen no volatility changes and stocks don’t always go up right but this is one way for a trader to kind of look things over and ask themselves if it’s worth their while to go after that income because it’s like i’m telling you there are some risks here this expires in nine days so if in nine days the stock is above 16 basically the traders selling out of the stock right if they don’t do anything with it but it’s it’s kind of a binary thing but if the traders wondering you know is it worth my time these are just a couple of things they can look at to sort of evaluate that covered return and max cover to return but remember these are annualized numbers and that can be compared in contrast to different strike prices different expirations and so forth but if a trader were doing that that would result in if they own stock shares a covered call but they’re willing to sell their existing shares at that higher strike price now let’s say the traders also interested in potentially adding to the position so if the stock winds up going lower buying more shares it may be a slightly lower price but at the meantime they wanted to generate some additional income and if the stock winds up going higher have an option that could expire worthless well at the same time somebody could sell a put right so as they’re selling that call at the same time they could potentially sell a put at a and i chose a lower strike price here strike price of 15

that would put the trader under obligation to buy stock at 15 and they would have all the risk of buying shares at 15 but they’re getting gener they’re generating income of 30 whatever it is 37 cents on the puts plus if they did this at the same time as the calls their total income generation would be a total of 80 cents which is getting to be a pretty big chunk of the value of the underlying stock here right the underlying stocks at 15 and a half right now right but um you know so this is going to be on the more active trading end but this is an example of what some traders call a covered strangle right if they own stock shares and they’re willing to sell their stock if the stock goes higher and generate income at the same time if they’re okay with building a position so adding to their stock position that they already have they could potentially sell a put out of the money and that means if the stock winds up going lower than the strike price they sell that well they’re going to keep the income anyway from selling the put and the call and they would buy into new stock shares at a lower price than they are existing or than the current price right now so this is one way for a trader if you can visualize this you know if you ever thought um you know about building into you know or adding and subtracting in pieces layering in and layering out of a position it’s kind of what this is like it’s just the trader is willing to generate income to do that along the way and let the option strike prices basically be the represent the levels that they wanted to buy and sell the stock shares for does that make sense here but this is the idea of owning 100 shares of stock at least selling one call that is going to cover the stock or the stock covers that one call and then at the same time sell a put and that puts the trader under obligation to buy more shares of stock at a lower price generate income from each side but if you’re thinking about the total risk of the position the risk of everything the long stock plus that new put is is the same as 200 shares of stock okay so if a trader’s doing this they might want to think about starting small and then building up for example starting with a small stock position and uh generating income that way and then if the stock winds up going lower they could add to that stock position if the stock winds up below their short strikes all right um anyhow covered strangle here i’m going to go ahead and hit confirm and send on the strangle part and we’ll go ahead and put that in so now we’ve got a strangle here uh that we’ve added and let me i don’t think i put those in the multi-leg account so let me go down and actually move this uh to the multi-leg group here so there we go and here’s the apache position now if somebody is evaluating this from the perspective of the greeks right what do they get uh with a position like this if they if they’re looking at the greeks this is going to be a bullish trade right this is equivalent to basically 94 deltas or 94 shares of stock but in addition to that though it’s got almost six dollars a day in time decay working for it and it is a little bit short volatility here where uh if volatility does come down this position could potentially work uh faster or profit faster but you know here you can see long stock the obligation to sell that long stock is 16 which means there’s some stock appreciation there between 15 37 and 16 right plus the premium we got for selling those calls and we’re under obligation to buy new shares at 15 hey but we got premium for doing that and uh basically the trader now has uh something that represents buying new shares lower selling existing shares higher and generating income from both sides of the market along the way right so i don’t know if you thought about buying low and selling high but that’s what these options represent uh and if you’ve ever thought about the idea of generating income that’s what being on the short side of these options represents as well now remember assignment is kind of part of this right if a trader’s doing something like this generally they’re gonna be okay with assignments uh not in all cases but a lot of traders are thinking okay if i have to sell the stock to 16 fine or if i have to buy into the stock at 15 fine because i pre kind of bake that into the cake so to speak but on the other hand some traders might decide to roll right roll the position and let me show you an example of something this we did this uh about a month and a half ago as i recall

but this was a covered strangle that we put on in boyd gaming uh boyd at the time after we did this covered strangle the stock started to drop and so we got assigned and what started as 100 shares of stock it turned into 200 shares of stock because one of the puts got assigned so that’s where we are now now at the same time though with the 200 shares of stock the next step that i applied and not everybody has to apply this the same way but the next step that i applied was just selling straight calls against this right just once the stock position was about as big as uh you know the trader wants it i then one thing they could do is just think about selling calls after that point and that’s what we got here we’ve got two short calls there’s no puts now now one thing that has occurred here is that the stock has gone up right so the stock is right now at 27 and we are short the 25 puts or excuse me the 25 calls so if we do nothing with this position and the stock stays where it is right now in two days what’s going to happen with this position so if we do nothing with this and the stock stays right here for the next two days what’s gonna happen we’re gonna wind up selling out of our existing stock shares okay and so if we have to sell out of our stock that’s fine as long as the trader you know has baked that into the cake like i said some traders might decide to roll and this is where hey if the short options are getting close to the expiration date the trader could always consider buying back those short options and potentially sell another set of options in an extended duration and that’s all a role basically is and so for example in order to create a role if i just i put a right click on this short option right here in the menu that pops up up we could go to create a rolling order create rolling order and what we’ll get is another menu that pops up in that rolling order that’s going to show up as sell calendar okay so that means what this does is it buys back the existing set of options oh this is one that doesn’t have weeklies actually there’s no weeklies in this one maybe that was the one i was thinking of instead of ross but anyhow so weeklies would not necessarily apply on this one but nevertheless you get the point uh the trader could buy back their existing set of options uh expiring in august and at the same time sell a new option at the same strike in the next month out now in this case this shows a mid price of a dollar 62 that’s a pretty wide spread in this case but if the trader was able to for example get this roll filled for a dollar 55 for example given up some of that mid price that would be a way to generate income but they’re under obligation to still sell the stock at 25 now if the trader were thinking i’d like to give this more upside i’d like the stock to have more of the upside here the trader could rather than sticking with the same strike right stock right now is above 27 but they could sell maybe a higher strike price and so for example if we bought back the 25 and sold the 26 right under obligation that’s not what i meant we’re under obligation right now to sell the stock at 25 if we if we got this roll through that would put the trader under obligation to sell the stock at 26 so that would get another dollars worth of appreciation as long as the stock stays above 26 and right now it’s a 27 and it would create another dollar five worth of income in terms of the credit if it could be filled for a dollar five i’m not terribly confident that could happen but let’s just say 95 cents something like that we’ll give up something but this is a roll right and this is just extending the duration basically one way to avoid assignment and quite possibly if you just step back and think about what that means whatever the short strike is what the obligation is obligation to sell the stock at 25. what if i swap that out for the obligation to sell the stock at 26 that means as long as the stock stays above 26 there’s another dollars worth of stock appreciation in there plus whatever credit if the trader could pull a credit out of that on the roll okay but anyhow i’m going to go ahead and hit confirm and send and there’s a roll not with weeklies i apologize uh however the principle still kind of applies there now um that concept of rolling right so we just talked about um

the idea of uh weekly’s option using weekly’s options and one of the ways i wanted to demonstrate that was through this process of buying stock and then selling an out of the money call and selling an out of the money put so basically obligation to sell existing shares generating income obligation to buy more shares generating income a way to potentially scale in and out of a stock position over time uh using weeklies but there are negatives associated with weeklies as well and you know one thing um that i did want to make sure that i got out there that i don’t think i was very clear about in that example on this apache you know if a trader is wondering hey you know what uh strike price are they going to sell if they’re going to go with these weeklies these near-term options like this what strike prices do they use you know i use something out of the money something above the stock and below the stock if a trader’s wondering you know sometimes you’ll see traders go somewhere between 30 and 40 deltas on those short strikes and on this apache let me just go back to apache apa uh i kind of did that subconsciously but i didn’t call it out the stock’s actually going up here a little bit but when the calls were sold the calls had a 37 delta and when the puts were sold the puts had like a 35 delta something like that the stock’s gone up a little bit here but somewhere between 40 and 30 deltas that way these are out of the money options and it would take an up move in the stock to get assigned on the calls and a down move in the stock you know to to see the assignment likely on the puts and remember obviously the obligation’s there so assignment can happen no matter what uh but you know buy the stock at 15 which is lower than where it is sell the stock of 16 higher than where it is but that’s just a range maybe between 30 and 40 deltas on these out of the monies and on the expiration basically just use some of those techniques that we talked about to select an expiration that seems right for the individual but balance that against the liquidity that’s available in those weeklies as well okay now moving on if you remember last week and this is going to go more into the concept of rolling we’ve already demonstrated a role example using the apache weeklies right but last week we did an example on federal express fedex and we were using this example as something uh kind of like a calendar spread prior to an earnings announcement that could be coming up now fedexpress they have earnings coming up on the 15th right um so there’s still a couple of weeks before that earnings happens more like uh just under a month right but we’ve got this calendar spread where we’re long an october contract at the 110 strike and we’re short uh uh august contract at the 110 strike there’s only two days remaining though on the 110 short option okay so this is then this is something that comes up a lot when we’re talking about rolling and using things like calendar spreads but see how this call is in the money right here at 210 uh the market is at 209.51 if the market just stays right here 209.51 two days that 210 call uh expires worthless right this short option so some traders ask the question well should i just wait this out and see if that short call will expire worthless writer what do i do because this short option still has 200 217 worth of premium left in it some traders might wait a little bit longer but other traders just hey if they’re close to expiration like this and by the way we bought that calendar for 8.45 and right now it’s worth 10.70 so it’s gone up a couple of bucks that’s nice but sometimes you’ll see traders just kind of think about this logic well if the option that expires in two days has gone up in value or has held its value like that well that means the new option that expires in nine days or whatever it is last week we sold the nine-day contract that means that it’s gone up in value too right or it’s going up in value as well so rather than worry about whether that option’s going to be in or out of the money expiring in two days some traders will just sell the next week out because they know the next week out option is getting inflated as well or is holding its value as well and so to avoid some of that gamma or some of that closeness to the expiration concern uh what some traders will do is just roll right especially if we go right close to that short strike which is really good for a calendar spread uh now a roll would look something like this like right click on this position i can’t because this hasn’t been rolled yet this shows up still as a calendar spread don’t sweat that too much but just right click where it says calendar and then in the menu that pops up create a rolling order now the role here

is sell a calendar right we bought a calendar originally sell a calendar in the next and what that does basically is it is it buys back the existing option and it sells the next week out right now in this case it shows that that would generate a credit of a dollar 85 or a dollar you know it’s oscillating back and forth right now 1.85 now if the trader were okay with generating some additional credit here and reducing the risk of the original calendar spread or bringing that down they could apply that role right there now interestingly enough if the trader were thinking that there’s more upside for federal express they could actually consider rolling their short strike higher as well i don’t think i’m going to do that in this case but just like we did on that covered call right even though a calendar spread is covered by a long option uh the same kind of principles of a covered call could still potentially be thought about here or if the trader wants to give the position more room to go higher right if they’re more bullish they could buy back that existing short strike and sell a higher strike price and in this case that would bring in 93 cents and i’ll tell you what i’m gonna do one of each i’m gonna sell one of these higher and bring in hopefully around 93 cents or so credit confirm and send and then i’m going to do another one as a straight calendar spread and sell the exact same strike sell calendar and we’ll just do one of those buy back the uh uh august and then make sure i sell the september for no uh the august uh 21st and then sell the august 28th and look at that it says it’s actually going for almost two bucks now right now it says 1.85 but on one of them we’ll roll the short strike higher and on the other one we’ll just kind of keep it the same i’ll hit confirm and send and uh hopefully that will get filled here but this is an example of uh maybe you know doing one of each uh just rolling one straight across and then another one uh rolling and selling a higher strike price and that’s something that could be done as well if uh sorry i’m gonna do a cancel and replace on this if there’s pros and cons to each side all right let me just hit market on this all right there we go but if there’s pros and cons to each that’s something that could absolutely be done is is do one of each here where did that go did i just buy back the wrong one i think it’s down here why it went to that other section here let me move that back to the multi-leg group and there we are so anyhow there’s an example of rolling just using the calendar but kind of layering in uh two different strikes right now if someone does that if they’re they’re creating a more bullish position they sell a higher strike price they’re creating a more bullish position one thing that’s frustrating is that uh you know we basically lose track of our original cost of our calendar spread this is going to be looked at now is basically a bunch of separate options but the same logic applies let these short options work uh and as we get closer to expiration next week you know role opportunities might present themselves where a trader can do that again generate income and possibly make adjustments to those short strikes okay uh anyhow uh how are we doing on time we’re about out of time uh so i’ll tell you what i’m gonna wrap it up there but there’s uh with that fedex situation that’s really another example of how those weeklies could be used as a way uh for a trader to uh you know kind of find those in between sort of expirations the flexibility of those in between expirations where uh there’s more role opportunities but also you know the trader when they’re rolling more actively transaction uh costs are going to go up and there’s definitely more activity involved but you can see that there are actually pros associated with doing that in terms of the rate of premium that’s received relative to the time to expiration but there’s there’s pros and cons to using these weeklies options so what i would encourage everybody to do is just maybe practice using them for a while if you haven’t already maybe in a paper money account either do a calendar spread or maybe a covered strangle and then practice what it looks like how active you have to be when you’re trading those uh shorter term weeklies options but hopefully you’re learning some things about weeklies what they can do for and also what they can do against a trader uh it’s not all pros there are definitely some cons in there uh and hopefully going through a couple of roll examples

gave you a better idea of how these these roles whether it’s a calendar spread or whether it’s one of those covered strangles how that might be applied i don’t have the opportunity to go through rolling all these um because there’s just time constraints but uh hopefully that was still a useful session for you anyway all right if you want to learn more about strategies like calendar spreads um and even for for example how to use options more actively based on volatility scenarios i go to the education page and i can’t remember if i’ve shown the group this lately but i’m going to do it right now but under the options section in the education page there’s actually course work here called options for volatility and if you haven’t gone through that you might want to because that allows you to kind of see multiple examples kind of in written format of using time spreads basically where you’ve got those different expirations and that explains kind of the concept of rolling and how those positions could potentially profit or hurt right um you know when you got those multiple expirations associated uh so hopefully uh that will give you something to work on as well on the education side throughout the week all right guys um i gotta go hope you enjoyed the session uh if you did enjoy the session we appreciate the likes so uh go ahead and uh and like the session if you enjoyed it also more than anything subscribe to the channel there’s a little subscription button there in the lower right hand corner you just hit subscribe that’ll make it easier for you to go back and identify and listen to the archived and recorded uh webcasts uh we do have more education coming up in fact today in a couple of hours uh that’s gonna be at 10 30 my time so 12 30 eastern time i’m going to talk about uh iron butterflies not the 70s uh rock song or uh no uh iron not the 70s rock band right in a gadda or uh iron butterfly in a gadda da vita but the trade right which is another way that a trader could use basically short strangles but defend short strangle uh by buying options that are out of the money quite a ways uh and uh trade basically you know uh short premium strategy to generate income as well so anyhow if you can make it probability based options i’m going to talk about iron butterflies today all right thanks everybody here’s your final disclosures thank you pat and uh everybody have a terrific day bye now you

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