Tony: Katie we're back. Back to cool.
Katie: What's up?
Tony: How are you?
Katie: Fine, how are you?
Tony: Very well.
Katie: Good.
Tony: Did you win any Superbowl pools? Between yesterday.
Katie: Not today.
Tony: Not today.
Katie: Yeah, no, there was not game last night.
Tony: No game. Don't you hate it when there is no action?
Katie: There's a hot game tonight. Maybe I'll throw some money down on that.
Tony: There you go. Hot tickets are hard to find these days.
Katie: I know. Hard to come by.
Tony: Used to be a lot easier.
Katie: I know. Now you just got to watch it.
Tony: On the tube. On the telly.
Katie: On your couch. Yeah. That's okay, though.
Tony: It always is.
Katie: You don't have to well no, I'm not even going to go there. Never mind. (laughs)
Tony: Let's take a look at your account, see what's going on. You had a great day yesterday, up around $300. Pretty close to it. You're down about $20 today. Looks like you've got a couple of outlier moves. Outlier moves I just mean things going against you, not really outlier moves. Just to go in alphabetical order. FCX. Before you open it up. Draw a circle around the Delta there. Now I remember when we put in this position FCX, we want to lean a little bit low on FCX. Now I see this 84 short Deltas and typically we only do one contract. You're looking at like a hundred shares. I say to myself, "Okay, what did we do here? Let's open up FCX. And what is FCX doing?" FCX is up $1.13. We did a 1 by 4 here.
Katie: Correct.
Tony: Now we originally used I think the 21 calls. And we did the whole thing when the stock was trading around $18.70 if my memory serves me correct. I think our net cost on 1 contract was like 18.25?
Katie: 18.26. Yeah.
Tony: 18.26. We did like a covered call. The stock is back to where we originally placed the trade, and if we had done nothing we probably would be up on this trade. But we rolled down, we stayed mechanical. We're down about $130 in the overall trade. Now we just sit. I mean that's all you can do in this trade right now. You've got about 98 cents obviously, total extrinsic premium for 45 days. We went from being bullish, one stock to rally slowly, to staying bullish yesterday, still wanting the stock to rally slowly, to now you just want the stock to sit.
Katie: Right.
Tony: We don't want the stock to go on any higher. Close up FCX for a moment. We want time to go by in there also. Just going down the list, I look at Netflix. Open that up, please. You're down $70 on there, $40 for the year to date. We have a small profit in there, around $30. Netflix up almost $12. More of the biggest mover's in the Nasdaq. The Nasdaq's actually down 3.
Katie: Right.
Tony: Here, instead of being short, the Nasdaq being short to queues, we decided to go do something that we thought was over bought and we'd go down faster than the queues. As it turns out working for us for a little while, now it's working against us. Now we sit. Not too much we could do. Assumption doesn't change. With 17 days to go, our choices are actually limited to… You can't sell a call spread against this with 17 days to go. You just won't collect enough premium if you go a strike or two below…
Katie: What do you mean, selling a call spread against a call spread?
Tony: Oh sorry. Did I say a call spread? Selling a put spread against this call spread.
Katie: Oh okay.
Tony: Below your short call strike on the 455.
Katie: Okay.
Tony: You don't have to make it into an iron condor.
Katie: Right.
Tony: We sit with that. We do have the option to roll it into the following month, rolling it into March, which is something we might look at if we have a moment on the show. Okay?
Katie: Okay.
Tony: We close up Netflix. Going down just my eyes. I don't care about TBT right now because it's a profit. I'm looking at the losses, since we don't have any gains today. Same thing with TLT. I go down to the bottom at XLE and this is one of the trades that you made an adjustment in. In XLE we rolled the puts again, from 75 puts to 77. We're down $13 here today this over. I'm going to go down the XLE chart for a moment. I'm really disappointed that we were up about $80 in Excel and I wanted to close this for a full dollar profit on the show. I think we're trying to get a strangle for $1.63. We never get filled on it. Just because volatility hadn't contracted enough, it got down to around that 50 range, but it never went a little bit lower for us to be able to close for profit.
Katie: Right.
Tony: We're rolling up, rolling up, rolling up. It's a day-to-day kind of thing. We're scratching there, down 10 cents right now, or $10. It's scratching there right now. We went from being a little bit bullish in oil to being a little bit more neutral in oil. You do have a slightly bullish. You can take the download back to the trade page, the monitored page. You do have a slightly bullish position on in USO. I'm looking at those two to kind of all set each other. That's the way I'm looking at the overall portfolio.
Katie: Okay.
Tony: All right. You go the Filled Orders for a moment. You closed finally FXE, something that we've had on for months and months and months. We're taking about a $500 loss. Maybe even a little bit more from the original trade, but about $522 loss from this year in FXE. We closed our trade at $10.58 because we inverted. I'm sorry. Open up FXE. You'll see that the stock is trading around 112 in change. It's 112.81. Since you're short at $10 wide. I know you inverted but since you're short at $10 wide spread, the 111, 121. If the stock stays in-between there
Katie: Right.
Tony: It can only be worth $10.
Katie: Right.
Tony: We had $58 more to make over the next 17 days, on something that's been a thorn in both of our sides for a long time, tying up $3,000 worth of buying power.
Katie: Right. Just close it out and redeploy it somewhere else.
Tony: Which is what you wanted to do when we sold down the 111 calls for I think around $1.50 or something like that. We sold down the 111 call. I think you collected around $1.50.
Katie: $1.55, $1.53.
Tony: $1.55. The roll down costs us about 70 cents. In the scheme of things, it was the absolute right thing to do. You wanted to get out. You got out at a better price. We sold the 111 calls from the stock list trading right out around 111. Actually just below it. We got out at a higher price than if we had just puked on that day.
Katie: Right.
Tony: Win-win for a bad situation.
Katie: Yeah.
Tony: Makes sense?
Katie: Absolutely.
Tony: Now we don't have to look anymore. Close up FXE. (laughs) That brings us into today. I wanted to look at a trade in silver which you've had on for a long time.
Katie: Okay.
Tony: We've got back to almost about… I think we've got even on, and we've lost 10 cents or made 10 cents on the overall trade. But there's just not enough premium in there for me. Even though SLV has a high premium. I didn't know what to do in there. I don't want to just buy a call spread in SLV. I looked at a Jade Lizard. It just didn't kind of work, but it brought me to GLD. Just another metal. We have no real metal positions on. Let's take a look at the chart of GLD for a moment. GLD is down today. Down around $1.40. We were bearish on GLD. We had a nice profitable trade on GLD. We actually did a strangle, and we bought a put spread
Katie: Correct.
Tony: In GLD. I'm not, I mean, listen. With the stock coming down 3.5%, 3.3%, I'm still kind of neutral to bearish on GLD. I want to look for a neutral trade. I don't want to look for one that would really benefit from a bearish side. I came up with 2 things. I thought maybe we would look at either a jade lizard type trade, which would a slightly bullish trade.
Katie: Right.
Tony: Because we'd be selling up call spread and selling a naked put, uses about $1,800 in buying power. We've put on a few iron condors ready, so I was trying to do something different. Or take a look at a broken wing butterfly, buying a call that's close to or at-the-money and then selling, buying a call spread that's close to or at-the-money. Call spread. And then selling a call spread that's wider and further away for small credit. Let's go into TOS because we've only got about 5 or 6 minutes left. Okay. I want to be in March. Since I don't want to necessarily use $1,800 in GLD because I don't have a strong opinion on it. Unless you do, one way or the other.
Katie: Do not.
Tony: A Jade Lizard is, it's better for an IRA type account.
Katie: Okay.
Tony: Because the put has to be fully margined.
Katie: Right.
Tony: In an IRA account anyway. It's more of an IRA type trade.
Katie: Okay.
Tony: Let's look at something that we could in GLD that would be IRA compatible, but give us an opportunity to make more money. What I mean by the Jade Lizard is let's just click on the, what are my notes here. Let's sell the 123, 124 call spread just so I can show you. It's this one. I'm late, I'm sorry. Let's sell the 115 put. Okay. You're collecting $1.43. If the stock stays anywhere in-between 115 and 123, you make $1.43.
Katie: Right.
Tony: Now that sounds great on $1,800 worth of risk, which we would look to close at 50% of all that. We're collecting more than a dollar, which is what we like to do when we're using that type of strangle margin of around $1,800 on just about everything that we look at. Seems to be about the same.
Katie: Right.
Tony: You're probability of success is nice on the trade. It looks like it's around 80% or so, 78%, 76% on the overall trade. If the stock goes higher you only make 43 cents. And we're never going to have a chance to close that. We're going to end up holding this trade for 45 days.
Katie: Okay.
Tony: Does that make sense to you? I want to look at something that gives me an opportunity to make more money quicker. In an IRA account, where I'm looking at things for 45 days, I'm kind of holding them a little bit longer. I'm trying to maximize my return. This is a decent strategy.
Katie: Okay.
Tony: You could also buy a put below [crosstalk 00:10:16] that would use a lot less buying power.
Katie: Right.
Tony: Matter of fact, let's just take a look at the, go to the 105 puts and see that'll be $1,000 versus $1,800. The 105 puts trade for around 16 cents. Just click on buying one of those. Even if I was looking to do this trade in an IRA account, I might give up the extra 15, 16 cents. Use $800 less buying power, only collect $1.27, $1.28. I think it's a better use of capital, doing something like this. I might try to find something a little bit better, because I'm not bearish on GLD, I'm not bullish on GLD. I want to do something a little bit more neutral.
Katie: Okay.
Tony: Okay, and have the potential for more profit.
Katie: Yup. Got it.
Tony: Now let's delete that for a moment. Since we only have about 3 minutes left, let's look at buying the, let's buy the 120, 125 call spread. I think that's the one 123. Okay. Yup. Maybe I'm right, 122, 125. Awesome. Now excuse me. Hold down your curvesm I'm selling another 125 call. Because I'll make it a 1 by 2. Now let's define our risk. Typically, a normal butterfly would be $3 wide. Let's go $6 wide. Let's go to the 131. Now we're going double the width, because I want to, I look at it as, that's a small mess even. I look at this as… Why do I go $6 wide? I want to be able to do something where I'm kind of risking 1 to make 1. I could make $3. Hit Confirm and Send one time. My max profit on this trade is $300. My max loss on this trade is $300. I'm risking 1 to make 1.
Katie: Okay.
Tony: With a much better than 50/50 probability of success. Because you'll notice that my break even on the stock on the way up is all the way up to 128.
Katie: Okay.
Tony: Break even on the way down says 122 because it must've switched to
Katie: Small debit.
Tony: Yeah, small debit or for even or something like that. If you make it for 1 side credit you'll have no risk. Now If I close that up for a moment. Leave it and lock it and once send credit. Now hit Confirm and Send. Does that make sense? Your break even point is at 120 but you're trading about 1 penny.
Katie: Okay.
Tony: Does that make sense? We've done some iron condors again, I'm just going through the overall. We've done some strangles, in the account. We have plenty of capital now. We just freed up $3,000. If volatility was expanding today, volatility was actually contracting a little bit today, butterfly's VX is unchanged or down 15 cents at 19.80. It's not expanding. If it expands later in the day, we'll look to do something where we do a strangle or iron condor or something like that.
Katie: Okay.
Tony: But for here, high implied volatility.
Katie: So you can buy a butterfly because they trade cheaper.
Tony: Call spreads. We can sell if you're a little bit bearish because you have a high implied volatility. Combining the two you have an embedded call spread in here. Check. High implied volatility, and you're buying a butterfly. Check. It's kind of a, I don't want to say. It's really non-aggressive way of having a slightly bullish play in GLD that benefits from any move down also in GLD.
Katie: Then, I mean if we're collecting a credit in Jade Lizard then, I get the capital requirement thing. I totally do.
Tony: Yeah. It's $8000 vs. $300.
Katie: With the Jade. Right. Okay.
Tony: It's significant.
Katie: That's why even though you're like oh well, I mean on the upside to the Jade Lizard you can collect 43 cents, whereas here on the downside we can't. We collect 1 cent, but you're okay with that.
Tony: I am because I'm not crazy bullish in GLD. And the IV rank's not 78, 90 or 100.
Katie: Right. It's 60 something.
Tony: I think it's actually less than that. Is it? Is it in the 50s in GLD? I could be wrong.
Katie: 62
Tony: 62. That's not as bad as I thought. That would be, actually a little bit better.
Katie: Okay.
Tony: I mean a little bit worse. Makes sense?
Katie: Yup.
Tony: All right, let's do that trade and let's try to do it for even.
Katie: Perfect.
Tony: You'll put that
Katie: You'll be on DOM.
Tony: You'll put that in here after the show?
Katie: Of course.
Tony: Awesome. You could do it now. Do it for say, one send credit?
Katie: I think we just locked it in there.
Tony: Let's see if we can get one send credit. Let's see what happens. We can always change it later on. Awesome.
Katie: All right.
Tony: Good job buddy. Who comes up next?
Katie: Liz and Jenny.
Tony: They are in the studios, and they're ready to go.
Katie: All right.
Tony: What do I normally say?
Katie: Peace.
Tony: Peace.