All right, that's the thing. Can everyone hear me? That's the thing. Can everyone hear me? I will just give me a moment here while I get set up, sorry for the delay, guys. I got logged out of our xTrace Twitch account and had to figure out some workarounds in order to get back in. So it was the last minute fiddling around with settings here. Also, I am streaming from my personal account onto xTrace using a key. I didn't even realize you could do that. But that's what I'm doing, trying to set up now and get everything back into order. So we're not gonna have chat show up on the screen or anything or any of the other fancy settings. But just give me a moment here and we'll get started in a couple of minutes. Thanks for your patience, guys. All right, I'm ready to get started. Let me check on the chat real quick here. Where's the fud at? No fud today. I think we passed the stimulus bill. I'll probably have to get passed back to the house since I think the Senate did some modifications or revisions to the bill, the stimulus bill. But it looks like it's, I'm pretty sure it's gonna pass regardless. I mean, Congress is basically Democrat run right now. They have the majority, so they should be able to pass anything with relative ease. It's just gonna be a matter of time. Who is this? WHU. You should archive, couldn't find your first one. So our first seminar was on the ER calendar spreads. So Twitch actually removes our archive after two weeks. I think that's just related to our status as a Twitch, I think we're a Twitch partner now. So we're solely making our ways up the ranks for Twitch streaming. But our videos are only archived for two weeks and I happen to only do these seminars every two weeks. So basically, if you wanna watch, you have to watch before I start broadcasting the next one. They will be, I do plan on like uploading them eventually, but I just haven't had time to edit them and modify them to upload them to YouTube. And YouTube has like a limit or a cap on the size and length as well. And the first video was three hours. So I just haven't had time to go through it and like edit it yet. I also think that another option would be that I would, I could possibly just redo the webinars. And I think that's, there's an advantage to that since it's live, you guys can ask questions during it and I can answer those as we go. And also the first seminar was a little bit of a mess as well. So I think it will get better as I quote unquote, redo it, right? So that's what I'm thinking about for that. But I will, I do plan on getting them up to YouTube. Once I get a chance to like edit and cut down those video sizes. Okay. Yes. So this is Timehawk. Normally it's 007 who's on here on the weekdays and he does the ERs after hours. So he goes over to ERs and he does chart requests. And then I do the seminars on here on the weekends. Oh, awesome. Thanks for the offer for the editing. I'll check up on that in a bit. Now actually Profit, the last seminar was also by me but I know JTW helped out a lot in the chat. So I'm going to get started here. Now that I'm all caught up with you guys in chat, I'll do my best to keep up with the chat but we do got a few folks in the chat to help out who are quite knowledgeable. So I know we got JTW here, 007 is probably here as well. And then we have our moderator team as well. So thanks to you guys, young bowl, red, black. I think there's probably a few others in here as well but let's get started with today's seminar. Today's seminar is going to be on vertical spreads. And originally I was going to do credit and debit spreads like all of it, which is what vertical spreads are. But as I was doing it, I realized that if I wanted to cover everything in detail, it was probably going to take more than two hours, right? So I'm going to talk about everything today. I'm going to talk about both credit and debit spreads but I'll be mostly be focusing on debit spreads. And then on a future session, I'll go more into detail on credit spreads but I will still go over both of them today and as well as the pros and cons of each. So yep, well, let's get started here. You just started following my alerts and I started moving into spreads. Well, hopefully, you know, these sessions can help you learn more about the spreads. Personally, I think spreads are the way to go for playing options. There's definitely advantages to playing just, you know, straight up calls and puts but spreads offer you a lot more flexibility, right? So that's the purpose of these courses to explain why we even have these advanced strategies and the advantages of them, right? There are of course times where you are going to want to just play straight up calls and puts but, you know, having the strategies basically in your arsenal is going to easily give you more profitable trades over time because you're going to be able to use different strategies depending on the market conditions, right? Okay, anyways, introduction, who am I? Timehawk, I am a top analyst with Xtrade which is our trading community. We run off of Discord right now but we do have plans for a website. The website is actually already created and it is in beta. I think quite a few of our members have access to it. We also have our own mobile app where we push out alerts and notifications on the markets, on ticker to trade, et cetera. But our website is looking real sleek right now. It's an amazing website. It is a great place to be able to share trade ideas, vote for people that you think are good and I just think that, you know, if you need anybody to talk to you about trading or learn more about trading or just to bounce ideas off of or learn the tricks of the trade, you know, come and join us at Xtrades. The link is on here. I was going to paste it into the chat but I actually don't have access to the chat since I'm streaming from my personal account right now. But I know that the bot, oh, there it is. So the bot puts it in there, so come and join us. But I've been trading for seven years and I've been with Xtrades for about four and a half to five years now. Probably even six years because I just saw that I got a change in one of my, what do you call those, roles in Discord? And it says enhanced investor OG 2015. So it's been about six years now. But I focus primarily on swing trading and I do scalp and day trade but that's only when I watch the charts. So what is this course for? We're gonna teach you everything about options from basics to advanced strategies. For today's particular lesson, you know, we're gonna be focusing on spreads which I think are, sorry, vertical spreads which I think are more of the basic, one of the more basic strategies you can use in options. But nevertheless, it is a powerful tool in order to give you better flexibility and risk management of your trading portfolio. Oh, and that Bulbasaur is my profile icon on Discord. So if you see that, that's me. Table of contents for today. I'm just gonna do a quick recap of the previous seminar which was on our income strategy series on covered calls just to recap like what I did last time and see how those plays turned out just so you can see where the pros and cons of those plays. And so that's kind of what I plan on doing with every seminar. I'll always try to use real examples of things I did that week and then I'll follow up on them on the next seminar so you can actually see what happens with those strategies, right? Of course, feel free to definitely feel free to try them out on your own and paper trade them if you don't feel comfortable with it yet. But all of these things are for your educational purposes just to enhance your trading, right? After that, we're gonna go over vertical spreads or what are they? And then we'll go over and break them down into credit and debit spreads which are the two different types of vertical spreads. And then lastly, we'll go over broker management, how your brokerage is going to manage your spreads because when you come up to expiration dates on your options or even before expiration date, when you have a spread, it means that you're selling an option, right? And if you're just buying an option, that means you're buying the right to do something, right? So for calls, you're buying the right to buy the stock or the underlying asset at the strike price that you bought, right, for that call. So for example, if you got Apple 150C for, I don't know, 319, March 19th, that means that you have the right to buy Apple at $150 per share, 100 shares of that by March 19th. Of course, you're not gonna exercise that and that's what exercising means is you're gonna use that, your right, exercise options contract to buy those shares, right? But this will never, you won't do this unless Apple is over $150, right? Because why would you pay $150 per share when Apple is at, say, $120 per share? Doesn't make sense, right? So normally when you're just buying calls or buying puts and with puts you're just buying the right to sell at the same price, right? You're not gonna exercise those calls unless they are in the money, right? But if they're out of the money, they won't be exercised. And saying that if you're on the other side of the trade, meaning if you're in a spread or your naked put selling or whatever, then that means that the person on the other end of the trade can exercise that contract if it is in the money. If it's out of the money, they're not gonna exercise it, right? But if they're in the money, they will exercise it, especially when it's closer to expiration and that's what we call assignments. So then you have the obligation to deliver 100 shares or times however many contracts you have of the asset at the price for that strike. So for example, if I instead sold Apple 120C 319 and on March 19th, Apple was at $125 and let's say that I don't have any shares, right? I don't own any shares of Apple. That means I am going to be eating a $500 loss, right? Because I have to buy Apple at 125 and then I have to sell it to the person who exercised those strikes at 120. So that's what assignment is. There is that risk when you sell options. What spreads that risk is minimized, but I'll go more over that in detail at the very end after we cover all the other details of this risk today. And then finally at the very, very end, after we go over all the material for today, I will have a question and answer session. I can take some chart requests or talk about anything you guys want to learn about. So I left some of the definitions in here. This is just from the previous lessons, just so you don't have a basic understanding of options. I'm gonna assume that you have some basic understanding of options already. If you don't, these are here for you too, so you can review again. And I think the previous seminar video has already expired, but I do plan on having those uploaded at some point as I mentioned. So I'm just gonna quickly skip through these if you need to read them or want to know more about them, you can recheck the video again later. So a recap of the previous seminar. So last time again, we talked about income strategies. And so this is where we are selling or writing options at. So for income strategies, the main benefit is data. Data is on your side and data is time. But normally when you own options contracts, data eats into your profits because as time passes on, the probability of your contract going in the money decreases or having the contract go more in the money if it's already in the money. And so because of that, the probability of gains decreases, right? And that's why data is eating away at your profits because every single day, you will lose the amount of data from the premium of your contract.  But data is the value that you would expect it to drop on a one day basis. So that's what that variable is, right? So for income strategies, it's different because data is actually on your side because you're selling the contract. So we want time to burn away those contracts until it expires worthless. So we hit max profits, right? So the examples of those income strategies that we mentioned last time were covered calls, cash secured puts, credit spreads and calendar spreads. We already talked about two of these now. We just need to talk about cash secured puts and credit spreads, which we will briefly go over credit spreads today. So last time we talked about covered calls. So for covered calls, it's a relatively safe play because you own 100 shares and then you're selling, or you own multiples of 100 shares and you're selling those contracts.   And I'll just go over the actual example I used last time. These are just some slides on data, basically data decay increases, the closer you get to expiration, right? So we talked about this last time, so I'm gonna skip over these slides again, but they are here for you to reference. So the actual example I used last time was Ebon, so that was, or E-B-O-N, it's a crypto related ticker. And actually before I get into this, I'm gonna check with the chat real quick to see if there's anything new. All right, so I see somebody was asking about, well, this covered Greeks. So I'm not gonna be covering Greeks in depth, but I will like kind of quickly, like briefly try to explain what it is as I go through the lesson. I did talk about Greeks more in my first session. But you know, if you still have questions about Greeks at the very end, you can ask me in the Q&A session, or I'm sure some of the folks in chat can help you out too. It's buffering a lot. I am streaming from a very potato laptop. So if it's, I don't know if it's lagging or something, it might be that, but chances are it's probably more just from streaming in general. But yeah, I am on a potato laptop, so there's not really much I can do on my end. It's not like I have that much open. But hopefully that, you know, that resolves for you and doesn't buffer as much later. So, okay, going to the example here, Ebon. So this was a crypto related ticker. And this lesson was on cover calls was two weeks ago. So, you know, during that time, there was a lot of hype on crypto, right? BTC was hitting new highs, Bitcoin went up to like 58,000, right? So now I think it's sitting at about 48,000 last time I saw this morning, right? So it's scaled back quite a bit. And actually, you might notice that crypto and the regular stock markets have a high correlation. It didn't used to be that way, but now I notice that they pretty much follow each other. Anyways, Ebon is in that crypto business. They're a little bit of a not proven company. So it's really a hype ticker and just full disclosure. Anything I mentioned in this seminar is, you know, for educational purposes, only not really a buy and sell recommendation. I will share what I'm doing, but it's just what I think and, you know, do your own research, right? I took this play because I was betting on the crypto hype and not so much on the actual fundamentals of the company. Like, you know, if the things happened that they are announcing workout, it could make turn out a profit, right? But chances are this is just a big hype, hype kind of ticker, right? And so I was just trying to play that. And at that time I decided, you know, it was worth risking a little bit. So I took 200 shares of it. And the price of that was, as you see here, $2,337 in this top, top box right here, right? So this was from two or two and a half weeks ago. That's when I took this play. So, and then I sold the March 19th, 15 calls, right? So this is what it means by covered call. It's covered because I own shares. And I sold these calls, which means I have to deliver these shares if it hits this strike and someone exercises it, right? So it cost me $2,300 to own these 200 shares. And I sold the $15 calls strike and I gained about $750 for it, right? Because I sold these 15 C of March 19th at $375 each, approximately. So I reduced my total cost of the play to $1,589, right? So at that time, when I did the lesson, I was green on this trade by about $266. So it was great at the time, right? Cause at that time crypto was still going up. So with the market downtrading, this play has turned quite red, but this covered call position helped to reduce my loss in the play overall. So if I had just owned instead, if I had been bullish and aggressive and I had just owned this 15 call strike, these 15 call strikes are pretty much worthless now, right? Cause right now Ebon is trading at about $5 to $6. I think, let's see, what does it say here? Okay, so it's trading at 540. So I took the screenshot this morning and I have these 200 shares and now they are worth 540. So the total value of the play is $1,222, right? So you see, I actually bought back these calls already cause they were pretty much worthless. I think I bought them back for like maybe like $50 each or something like that. I already collected about $600, $700 of profit here on this. So if I hadn't done this and covered calls and I had instead owned calls or if I had just owned shares, I would be a lot more red right now. I would be down $1,100, but instead cause I collected this premium and I covered it at about $100. I'm actually only down about maybe $300 to $400 instead of $1,100. So obviously the trade is still down, not a great play, right? But the thing is it shares, if crypto pops up, I still have a chance to make profit and I don't have a time limit on that, right? But it was a risky trade. It didn't turn out the best, but because I had covered call position, my cost of the play is significantly reduced and I didn't eat as much of a loss. So far, if the stock goes back up, then I'll be fine. And I would have reduced the cost of my play. This would have been peer profit, right? Because I sold these and I bottomed back for less. So that's the advantage of covered calls. And the reason, you might be wondering like why did we even go over covered calls two weeks ago? I don't know if you've noticed but in the past two weeks or so, especially this past week, the markets have been moving down a lot. We had a pullback, right? And Nasdaq actually had a correction. It was over a 10% drop on Nasdaq. S&P 500, less. It was closer to like five or 6%, I think. So that's more of a pullback, right? But the reason why we went over these last time, these cover calls is because they can help reduce your potential loss. We went over them last time because they give you additional downside protection. And in the event the stock goes up, you're saying that I am going to sell whatever stock you own, I'm gonna sell it at this strike price, which is still above, right? Above what it is currently at. When you take those covered calls, you're gonna be selling out of the money's call strikes. So you're collecting this premium, right? In this case, it was $750 for me. If it goes up to this price, I have to sell at $15. But at that time, Ebon was $12, right? I still would have profited an additional 280-ish per share. And I collected this premium of $750. So in reality, it would be like me selling it at, sorry, I forgot to divide this by two, but it would be like I sold Ebon at $18 if this went into the money. But if it didn't go to money, this acts as protection. So I got more downside protection. And that's why we went over covered calls last time because you have to be able to adapt to the situation in the market, be able to cover yourself essentially, protect your profits, and still have the ability to earn in case of upside. So cover calls, excellent strategy to use, better to use when it is in a neutral bullish situation. So in reality, we still want this to trend ideal situation is the calls expire worthless at $15, exact on March 19th, because that means our shares went up by $2 or something and the calls expire at $0, and then we would collect that extra premium, right? And then we would just get, sell another strike, another further strike out, say April 16th calls for 18C or something like that, right? But this is the point of cover calls, you just keep collecting that profit and then you protect yourself from additional downside, best to use it when we are in a neutral, slightly bullish situation. But if we end up in some downside, it offers a little bit of protection as well. So I was protected on this up to about $7. We obviously went below that, so that's why this play is no longer profitable. But yeah, it did provide me with that extra additional protection and I highly encourage you guys to take a look more at cover calls in the future if you guys need to. But hopefully everyone survived this past week and are doing fine. I do think that this bull market isn't over, it's just a lot of flood right now about yields and everything like that. But at the same time, be careful about buying every bounce because markets did bounce back up yesterday and we did pass the stimulus bill, but I believe that we already kind of knew that the stimulus bill was going to be passed. Like it's nothing new. Like we've been moving up on stimulus news this whole time, right? So that's why I think that, it's best to play safe right now, more scalping, more safe place. If you're gonna take place, do spreads or something like that, right? And that's what we're gonna talk about today. So what are vertical spreads getting into the actual meat of today's lesson? I think I spent a little bit too much time covering calls, but hopefully that was explained why I would be talked about that last time. And so there's always a reason why we're talking about what we talk about. So vertical spreads is when you buy and sell two different strikes on the same expiration date. I'll go over some examples later, but they can be either calls or puts. And the two main types of vertical spreads are gonna be your debit and your credit spreads. And then due to time constraints, I think I mentioned this earlier, but we're primarily gonna be focusing on debit spreads today. And then we'll touch lightly on credit spreads, but we'll go over credit spreads in more detail in a future session. I'll still talk about them today, just that we won't be like going over examples and how to find them and what the best ideal situations to use them are. I think I'll jump with chat here real quick. Okay, so just to add on to, I see there's some questions about buying back or discussion about buying back and whatnot. I could have expired worthless, but what I did was I actually rolled it. So I bought it back at $100, about $100, so about $50 each. And then I actually sold a closer strike, right? So I was still feeling really, really bearish. And I was like, there's not that much value left in these 15 strikes. So I actually went and sold a closer dated, closer strike on the play. And that's why I actually closed that out. So in reality, in normal situation, most of the time your policy is gonna let it go all the way to expiration and expire worthless because you collect a full premium on that. But for me, I decided to roll it closer to a closer strike and a closer expiration date because I felt like the premium on the 15C was basically already almost max profit, right? So that's what I did on that. But you have to assess the situation and constantly see what the market conditions are to determine what the best plan for this trade is. Like another reason to possibly close out the credit spread, if it's almost worthless, for example, like say it lost 90% of its value already since you opened it. Say you expected the underlying asset to bounce up again, that it's hit support already and that the premium is probably already at the lowest, then that would be another time where you could consider doing that, right? Because basically you're going long on the stock again by selling like full long, by selling or not selling, buying back those contracts. But it's just something that you have to assess on a stock to stock basis.  And that's a real income strategy. And then the other strategy is the selling the high IVs, which of course with you have a high IV that means the stock is very volatile, it might be in a parabolic motion. So that means it has a chance to drop quickly as well. And that's what happened with EBON, right? So there's two different play styles. It's really up to the individual to decide which style they want to go for in place, right? So there's usually no real right or wrong in option strategies. It's just a matter of your risk tolerance, your risk profile, and what you think is the current play going in. Yes, so horizontal spreads are calendar spreads. And we went over that in the first seminar, but there are definitely a lot of other types of spreads, right? But I'm only specifically going to be going over vertical spreads today. And for vertical spreads, there's going to be debit and credit spreads. Eventually the plan is over time, we're going to go over pretty much every single option strategy there is out there. I'm not sure how long that will take, but that's the plan. Okay, so next, going over debit spreads. So debit spreads are directional option plays, right? So for these, you are going to be buying a closer strike, and then you're going to be selling a further strike on the same expiration date. And closer and further are relative to what the current price is, right? But the thing is that why it's called debit spread is because there's a net capital outlay, meaning that you're paying for the play. So there's a debit to your account because you're paying for it. The direction whether it's up or down, bull or bear, right? Depends on whether you're getting calls or puts. So if you're in a call debit spread, that means you're bullish. If you're in a put debit spread, that means you're bearish. And you can essentially think of them as a cheaper, less risky, and generally higher probably play than just having straight up calls or straight up puts. And we'll go over a little bit more in detail in a few slides later. But the primary advantages of a debit spread is again, it's cheaper to play because you're offsetting the cost of the play by selling a further out of the money option. So by selling that further out of the money option, you're collecting that credit, right? So then that means your total cost of the play is less. So generally speaking, there's less risk because you're putting less money into the market. But the disadvantage of that is that you're limiting profit, right?  So once you hit a certain point, you're not gonna be able to generate any additional profit from that play. You're gonna be at max profit. And there's also the disadvantage of getting assigned on the play, meaning that you get closed out of your play early. But usually when that happens, it means that you're a max profit already, so it doesn't matter that much. But there's a chance of getting assigned. And then what are credit spreads? So credit spreads are also, again, directional option plays, right? So you're gonna to, yep, this is right, buy the further strike and you're gonna sell the closer strike on the same expiration dates. And this is where you're gonna have a net capital inflow or in other words, credit. So by buying the further strike, the further strike is always gonna be cheaper than the closer strike to the current price action, right? So that's gonna be cheaper. And then you're gonna sell the closer strike and that's closer strike is gonna be worth more because there's a higher chance for it to go in the money or if it's already in the money, then there's a higher chance for it to continue to be more deep in the money, right? So because of that, you're gonna have a net inflow of capital, so it's credit. So you're gonna pick up that premium money and basically it's the opposite of a debit spread, right? You're just playing the exact same thing except you're on the opposite end now. So the direction is the same thing based on whether it's a call or a put, but it's flipped in regards to a debit spread and this is a income-based strategy because data actually works to your advantage if your spread is near or in the money. And so over time, you will see that the value of the spread decreases, meaning that the cost for you to buy back the credit or essentially is buying back a debit spread, right? This is reverse, will be cheaper. So as time passes, the value of the spread decreases as long as it's out of the money, right? And then you'll collect that full premium or you have to pay back less depending on what happens. So this is just a table of all those spreads explaining each of the different ones just and when you would use them or when I would use them. So I split them between calls and puts. So first off, we have our bull called debit spreads. So for this, it's again, it's basically like owning just calls, right? Except that you're limiting your risk. So you use this when you're bullish on an asset but want to limit the capital out late. So you want to limit the cost of it as well as the risk of the play. So you use this mostly when you are quote, moderately bullish, right? Because if you're very bullish, so there's a lot of momentum in a particular asset and it's going up really fast, then usually you don't probably don't want to use a spread as much instead you can just get calls, right? Because if it's moving up really quickly, you can capture the most benefit from just straight up calls.  So the pros of it, again, cheap, well-defined risk, cons, limit profit, right? Compared to just straight up calls, data works against you still, but it's not as bad as just a straight up call and then you can get assigned. If someone executes or exercises the call that you sold, but again, this generally isn't a big deal because that means that your other play or the leg that you did buy is in the money, so you are agreeing on the play regardless. Now we're gonna talk about bear call credit spreads, right? So a call credit spread by its nature is bearish. I just put ball bear, I like put the full name of these spreads in here even though you won't see people normally call them like that, so everybody's clear on what they're called. But use these in high volatility situations when you are a neutral bearish. And so the reason why you use them in high volatility situations is because when the IV is high, that means the premium is high. And so there are actually some situations where you can get ridiculous prices or premiums on those credit spreads you're selling. I remember in back in January when GME was running up real crazy, there were some credit spreads that you could take where you would be able to get like 90% of the full width of that play. Like so for example, like if it was GME 100 to 110 C and you sold the 100 and you bought the 110, the max loss of that play is gonna be $10, because that's the width of your spread. And because of the high volatility situation, all the premiums were very high and very close together. And because the spread was so wide, if you got lucky, you could get filled for say like, just for example, $9 out of 10. So you'd get $900 to take on a risk of paying out 10. So that means your max loss was $100. And if GME closed below 109, you would be at anything else was extra. But yeah, in those high volatility situations, sometimes you can get really, really good deals essentially on selling these spreads, which is a credit spread. So the pros again for these strategies is the income strat.  And so that means that you're going to profit off of that data difference, right? And generally there's a higher probability of success for credit spreads. And the cons to it is that usually there's a small credit or a profit and you can also get a signed on it. So usually for credit spreads, it's unusual to see those situations where you can get profit on something that is reasonable to play like a reasonable price target because you can always adjust your strikes until you find something that gives you a lot of credit, right? But then it's maybe it's not as likely to play out or something like that, right? So compared to debit spreads, usually for credit spreads, it has a higher probability of success, but usually the gains relative is smaller. But it all balances out in the end, right? Debit and credit spreads are just two sides of the same coin. Really the most important thing is when you take these plays is you're assessing the chart, you're seeing where supporting resistance are and that's why you take the play. And both of them are great strategies to use. So moving on to bear put debit spread. So this is the same thing as like a bull call debit spread except that you're betting on downside. So you use it when bearish on an asset, but again, want to limit capital outlay or risk. Not going to go over the pros and cons because it's basically the same as a call debit spread. And then we have our bull put credit spreads. Why is it bullish? Because we're collecting premium value and we're hoping that the stock goes up, right? So we use it when we are neutral bullish on a stock in high volatility situations because we think that the stock is going to go up. So we're going to collect the full premium of the spread and we won't have to pay out on the spread, right? But same thing as the bear call credit spread except again, it's bullish, right? Because we're selling net selling on puts. So hopefully that wasn't too confusing. You might not have explained it that well. If you guys have questions, you have definitely feel free to ask. So yeah, on the assignment for the spreads because you own the other leg, you should never really matter. Like you can still get assigned on the spread, right? But the thing is your other leg offsets it so it doesn't matter. But it's still called an assignment and you can still get assigned on it. In the situation where you get assigned on the spread, I'll go over more over this later. I actually went and asked Robinhood support because I know most people are using Robinhood, what they do, and we'll go over that later. I have some slides on that. So we'll talk about that later. But yeah, basically what JTW is saying is correct. Usually it's not something you have to worry about. And even if it does happen, it's in the money, it doesn't matter. So how to play the best spreads. So you're going to buy the closer strike and sell the first strike. And then when to use it, anytime you will want to get a call or put on a play. So again, those just straight up calls or puts, but you want to limit the cost or the risk and also when the asset is not in a momentum move. Because if it is moving up real quick, real fast, you usually have some momentum play and you're just going to want to play a call or a put and you don't need to use a spread. And the other time you would use it is when you need to manage a portfolio with appropriate sizing and risk management in general. So say for example, you want to play Amazon calls and they cost, I don't know, $29 or something for something that's $100 out of the money in a week. That's probably not too unusual for Amazon because Amazon's expensive to play. So that's going to cost you like $2,900 for one contract. Now not everybody can play that, right? Or even if you can't, maybe you don't want to spend that much money on a play. And it just goes back into portfolio risk management, right? Like if your account size is say only $10,000, do you really want to put $3,000 or about one third of your portfolio into one play? Like sure you can do that if you want to, but I wouldn't recommend it because it's not very good. Sizing for your portfolio. So in these kinds of scenarios, that's where you would use a spread because by using a spread, you can reduce the capital of that play and allow you to size in more appropriately so you can play different stocks and different ticker so that you're not basically all in on one play. And if that goes down, you're out of the game. We want to reduce the chance of that happening. And so with these debit spreads, you reduce that cost of the play and you can still benefit from that upside. So for example, if anybody in, for example, if you're following someone in X trades and they play something really expensive and you can't follow them or you can follow them, but it's something that outsizes, your standard portfolio position size. For myself, I recommend, no more than 10% of your portfolio should be in one play. And this really depends on your portfolio size, right? Like really it should be less than that, but I know some folks probably don't have large portfolio sizes, so you can give it a little bit more leeway right there. But in those events, you can actually consider taking a debit spread instead of just taking whatever their play was. So in order to decide what strike you're selling though, you're gonna have to take a look at the chart and identify where support or resistance is depending on which side you're playing. If you're playing calls, you're gonna want to sell the strike that is at a strong resistance. So maybe not at price target one, but at price target two, you're gonna sell that strike. Cause when that hits that, maybe it rejects, right? And at that point, that's where you can maximize your debit spread, the advantages of a debit spread. Okay, so the Greeks mostly the similar with just regular calls or puts, right? So if it's calls that you're playing for a debit spread, it's gonna be positive delta and then for puts it's gonna be negative, right? And so the general guideline on spreads, so when you're gonna play these, you're gonna have a net delta, right? The general guideline for these, most commonly recommended is dirty delta. Again, these are just general guidelines. You're just gonna have the assesses based on your own play style, right?  And I think that's perfectly fine if you need to use those general guidelines. But once you have a good grasp on trading, the market charting, then you can really just base these positions off of where you identify support or resistance. And I'll probably go through a chart later to explain in detail like how I picked my place when I go over actual place I did take. And then data is negative as mentioned earlier and when to close. If it's in the money already before expiration, usually I just close it at 90 to 95% of profit. In reality, if you wait all the way up to expiration, you can get 100% of max profit, right? But you really rarely ever hit max theoretical profits. And you also run the risk of, say, the stock turning back down on you and then you're losing the max profit, right? You're not gonna hit the max profit. If it's really, really deep in the money, I mean, sure you could just wait, right? And then you let the spread exercise and all that. But usually for myself, if it's before the expiration dates and it's already in the money and it's around 90 to 95% of the profit, I just close it out because usually that means that I can just roll out that money into a different play to capture additional gains. Because at 90 to 95% profit, you're waiting and you have that risk of additional downside to your play for what? Just an additional 5 to 10% it's usually not worth it to me. But again, this is something that you have to decide on your own. Otherwise, if it's not in the money, then usually I close it when I see the trade is basically reversing. So it basically has hit a support or a resistance area and the trade is reversing, then I'm gonna close that spread. That's the same thing that you would do for regular, excuse me, regular calls or puts, right? The only difference between a regular call and put is here that I would close if it's in the money, if it's 90 to 95% in profit already. Because we have a defined max profit as well as a defined risk. So usually, again, use these when you're moderately bullish or bearish on the stock. If you are very bullish or bearish on the stock, that's when you just use calls or puts. So debit spreads, some definitions here. So spread width or strike differential. So that's the difference between the strike that you're buying and the strike that you're selling. So this is gonna be the max theoretical value of the play and your debit spread cost. So the cost it takes for you to open the play is gonna be your max loss of the play, right? You can't lose more than what you're putting into the play. That's how that works. So a bullish example here. Gas, oil has been bullish lately, XOM, CVX, USO, all of them have been very bullish. Commodities in general have been great, except for like gold. Even if you look at soybeans, that has been going up for the past, since March, basically last year, right? So anyways, that's why I have this example here. Let's say that you buy to open XOM 60C and you sell to open XOM 65C.  So the difference between that is $5. So that means the max value of that spread is $500. So your max profit is going to be 500 minus the cost of the debit spread, which is whatever you paid for that 60C minus that 65C, right? So just say for example, I don't know what the actual prices are right now, but say for example, the 60C is for March 19th is $1.70. And say that the 65C is, I don't know, 80 cents or something. That means that my net cost is gonna be 90 cents.  So that's a really, really good ratio, right? For something that is highly probable. Of course, I don't know if those are the actual numbers, but for example, and a bare example here, this was a play that I actually took. So if you buy to open Tesla 600P and then I put an at sign here, but it's actually specifically an sign, sell to open a Tesla 580P. So the max value of this play or the spread is gonna be 600 minus 580 or $20. So that's the difference between it, right? So that means if Tesla closes below 580, and I should have mentioned this earlier with XOM, that max profit is achieved when XOM is over 65 before, or buy at expiration, right? So for the Tesla example, if Tesla is below 580P at say 319, if that's the date I picked for my spread, then this is gonna be at max value, which is $20, and my max profit is gonna be $2,000. So same thing, it's just minus whatever the cost of that debit spread is for your max profit, your actual max profit, and your max loss is whatever you paid out for that play. And so you might be wondering, why would I take a spread instead of just say taking up, instead of saying, for example, in Tesla here, why would I sell the open to 580P when I could just hold the 600P long, right? Like what's the advantage of that? The real advantage here is because of, again, risk. So it costs less to play as well. And also if Tesla closes at exactly 580, at expiration, this play will be worth more, right? Because the 580, actually if it closes at 580P, so it'll be worth, your 600P will be worth $20, or $2,000, right? If Tesla closes at 580 at expiration. But you have reduced the cost of that play by selling to open to 580P. So say that it costs $10 to get that 600P now, but you sold the 580P at $5, right? So it costs you $5 for the play instead of $10. So the difference is gonna be in that profit, it's gonna be 20 minus 10, which is $10, versus 20 minus five, which is $15. So basically in a situation where you are only moderately bearish, or you expect that the stock isn't gonna go all the way down, you're always gonna find for bears, for a bear debit spread, or like a, was it a put debit spread, you're always gonna pick your sell to open at a support point that you don't think Tesla has a strong chance of passing, but maybe it'll pass it, right? So that's really the difference there, but also because you're reducing the cost of the play, say an example, it's $10 for 600P and $5 for the 580P, instead of owning just one 600P, you could instead own two, right? 600 to 580Ps, because that will cost you a total of $1,000 for that spread. And if Tesla closes it at exactly 580P, for example, then your play is gonna be total, the value of the spreads are gonna be worth $4,000, minus $1,000, so you're gonna have in that game $3,000 versus if you had just bought, say, 600P for $10, and you didn't sell the open to 580P, that would be $10, and the max value of that spreads, sorry, if it's a 580P, your 600P is gonna be worth $20, so that'll be 20 minus 10, so you only make $1,000, right? So the advantage here is that you can scale in more because it's cheaper, and the disadvantage is that if Tesla closes well below 580P, for example, at $500, or something, then in that situation, that's where your spread will lose out. But if you identify a good support, then this is where you would use that debit spread. Let's go into an actual example, so it's a little bit more clear. So this is the options chain on Tasty Works. This is an example of a Tesla vertical bear spread, or in other words, a bear put debit spread. And here I have picked the 600 and 580P. I probably should have just gone in here in the first place because there are actual numbers. But here you see that the net debit is about $8.75, right? See the limit price here. So this is taking the average between the bid and ask for both of these. So let's see here. Again, I don't think I'm gonna actually go over this again because it's the same thing, but basically your max value of this spread is $2,000 at expiration, right? So you're paying $8.75 for the potential to get back $2,000. So your max profit would be $11.25 or $1,125 if Tesla closes at or below 580 at expiration on March 19th, 2021, which is the expiration of these contracts. Now, look at how expensive these contracts are. A 600P right now costs about $42-ish, right? Like what if Tesla only goes down to 580 by 319 for some reason, right? Or it bounces back up, whatever, something like that happens. Then that means you're paying, you wouldn't even make any money on the plate because you'd be paying $4,200 and your 600P would only be worth $2,000 if Tesla is at 580. So that means you would lose $2,000, $2,200. So when you see these situations where something is really, really volatile, so Tesla has been moving a lot down a lot this past week. And so right now these premiums are probably a little bit shot up compared to normal. I mean, Tesla premiums are usually pretty high regardless, right? But this is where you would use a spread because it makes you a lot cheaper to play. $875 versus $4,200, right? $875 versus $4,200. If you're a super bearish on Tesla, then maybe you could consider a naked put, right? Or not a naked put, just a regular put, right? But chances are, probability are that a spread is usually gonna pay out better than just taking a regular call or put unless you are super bearish on it. So yeah, I mean, you can take it. And if Tesla, you know, tanks do 500 on Monday or something like that, you will probably make a money, a lot of money on that, and you can just sell it, right? You wouldn't wait till expiration. But if you're waiting for a longer term play, like a couple of week play, or you wanna swing something, I think spreads usually are a lot better. If you're just playing a momentum type play again, naked calls or non-naked calls, just straight up calls and puts are better. All right, so actual example from this week.  I've basically been rolling different puts on Tesla this whole time, but here's an example that I took on my Robinhood Challenge account. So I took, it says zero now, because I closed this out. So I got this spread for $1,025, and I sold it at $2,850 yesterday, right? So I profited $1,825 on this play, which is more than double, right? It's like 170, 180% win. If you look at how expensive these contracts are, my challenge account cannot afford these puts. At least not without over-sizing in the position, right? So that's another reason why I took these spreads, but what I did was I bought the 695p, and I sold the 665p. So my max profit here was $3,000, and that's why when, on Friday, when I had the opportunity to, I just closed it out at $2,850, because that's over 90%. In fact, I think this is exactly 95%. 950 times three is $2,700 plus 150, yeah, $2,850. So I closed it at exactly 95%. So I followed my rules here, I closed it out. In reality, Tesla did end up, I think it was below 600. So in reality, this could have been worth $3,000, right? So I missed out on the additional quote, unquote, 150, but at 90 to 95%, I consider that a good trade, and I am willing to close it out with the possibility that Tesla could bounce, because midday, I think on Tesla, early to midday on Tesla, and the rest of the market as well, they all drop real low in the morning, and they all start bouncing. So I just closed out the play, didn't wanna worry about it, I was already 90 to 95% max profit, there wasn't any reason for me to risk, possibility of it losing value for an additional $150, right? Like it's already a really, really good play. So I just took profits on that. So let's look at the actual charts to see why I did, why I did. Give me one second here, I'm gonna pull up my browser, and I will check out the chat. Yes, so for spreads, I always close them out at the same time. I see that JTW and 007 have been pretty much covering the chat here, so thank you for all the help. So let's get Tesla here on the charts to see why they, why I did, right? So you've probably all seen this chart already, I'm kind of bearish on Tesla, right? I think it's overpriced and overvalued, but I recognize also that it's bounced off of this trend line here, exact on the dot. This trend line when Tesla was consolidating before the S&P 500 inclusion news, right? So this consolidation triangle is right before the S&P 500 inclusion news, which caused this gap up from 413 to 433, and then since then it just kept going up and then it actually got added on December 21st somewhere over here, and the rest is history, right? And now I consider it extremely overvalued, and so it's starting to go down, and I think that it needs to fill this gap, but I mean, I don't know if that's gonna happen or not, but one interesting thing here is that it bounced perfectly, as you can see this huge wick right here, let's change to the four hours, I don't have that trend line on my four hour chart for some reason, but anyways, you can see that red wick here on Tesla right here, and it bounced perfectly off this trend line. So, and then printed a hammer, right? So I'm not really convinced that Tesla has done dropping yet, but at the same time, it did hit a major support level and bounce off of it, and I closed out those spreads for this past week. But looking closely, so 15 minute chart here. So I opened these plays on, I think I opened them on the second, March 2nd, and I closed them out on the fourth. Let me take a look at the PowerPoint again. Yep, so second and the fourth, right? Today is the sixth, so that means I closed them out on Thursday, I didn't even close them out on Friday. So that's the real reason why I closed them out. So I closed them out on Thursday because I thought Friday, there was no point in holding for one extra day for that potential risk of, I don't know, say it bounces up or something, right? I think I was seeing that it was holding the support here around $600 on Thursday. So I thought maybe it might bounce the next day. And so I just closed out that spread for 90, 95% profit on Thursday instead of waiting an extra day for that extra $150 max profit on the potential that maybe just bounces up. So that's why I actually closed that play. So I opened Tesla, that Tesla spread on March 2nd. So here, I had this descending trend line going from a bit back. You can see that it kind of breaks up and over it and that mostly acts pretty solidly as resistance. And I think the reason why you can see this over, over this trend line is mostly during the pre-market after-hour times, which is this blue and yellow area. Blue is the after hours and yellow is the pre-market hours. So really, if we ignore all the extended hour information, in reality, Tesla has been following this trendline down this whole time. And so on March 2nd, I was, I was tired of having seen red on my portfolios, right? I was like, I need to short something. And I was like, you know, Tesla, I think it's overvalued, it looks weak. It's been downtrend for, how long has Tesla been in a downtrend actually? It's been in a downtrend for a whole month actually, right? Since February 4th. So in reality, we could have been shorting this for like a whole month already. And if somebody did that, man, that was, that's massive profits right there. But anyways, I was like, I was tired of seeing red on my portfolios, so I wanted to take some puts. And I mentioned last week to 007 that I was feeling bearish on Tesla and I wanted to short it again. I didn't short it at that time, but I should have. Instead, I shorted Neo, which also worked out great because you know, the EV sector in general. But anyways, I took that here because I saw that I was rejecting this trendline again. And I'm found the levels for Tesla. So I was looking at this, I'm gonna get rid of this extended data information. It's kind of in the way. So my identified levels here, so you can see now that it's more perfectly following this trendline down, right? So the first thing I did was I identified the support and resistance after I identified this trendline. So I know Tesla's in a trendline and that's why I wanted to play puts. Then I identified the support and resistance. So I saw this gap here in February 22nd. So I marked these two areas, the potential support and resistance areas, right? So that support gap is at 676 and this gap top is about 706 or 710. And so I was looking at this and I actually took 710 puts as well, 710 to 700 puts. But I was looking at this and I also saw that there was a pivot point right here at 660. And so that's why I picked what I did is because I was like, there's a possibility we go all the way back down here to 620 or so, which is where this initial gap down move went to. But we also bounced off, this is a major bounce off point, right? Around 660. And I was pretty confident that this gap top was now resistance because we had a resistance here on the spike here. And then we also hit this descending trendline and we met with this gap filled top here and it looked bearish. So I was like, okay, I am just gonna take puts and I picked 695 puts because at the time I took the play, Tesla was already at I think $700 or so. And I took 695 instead of taking 700, which is what I would more normally do because I prefer picking something like at the money for my leg one on my spreads. This is just my personal risk preference, right? I like doing that on Tesla and on spreads in general on highly volatile stocks because I feel more comfortable playing that way. Like I'm more comfortable feeling that, this is gonna hold versus not, right? So that is gonna be below 700. And so I picked 695 instead of 700, which is what I really wanted to play with 700. But I picked 695 because my account or my challenge account did not have enough extra funds in order to enter the play. So I did 695 and I sold 665 because I knew that 660 was a potential pivot point from before. So I did 665, which was a little bit higher than 660 because I didn't feel like the potential was fully there. Like I thought maybe I might just go up to 675, which was this gap I'm over here and I might hold this as support because it kind of did that over here too, right? So I took this play and it actually bounced off over that here as well on March 3rd. So on March 3rd, I was kind of like, man, maybe this bear play isn't gonna work out as well as I thought. I was still in profits obviously because we moved like $20 down from where I entered a position, but I saw this starting to bounce up over here off of this gap bottom. And so that's why I picked 665 because it was near or in between my price target areas that I felt like Tesla had a good chance of bouncing at. And so that's why I took that play and the rest is history once it broke under this pivot point, I was like, it's definitely going to 620. So my targets were 660 to 620 and I mentioned that in the options watch list. I also played this by taking March 19th put spreads, but for the purposes of the play that expired this week, at this point, once it broke down 660, basically that play was already almost max profit. If you had waited until expiration, as long as this would be low 665, that play would have been worth $3,000. But I just took profits on March 4th instead of waiting an extra day because I felt that maybe it might bounce from this 6200 level in a strong Friday reversal. And we did see a reversal on Friday, but it wasn't until after it had dropped even more. If you look at the regular markets, this is my crypto watch list, and you go back to my stock watch list here. If you look at the regular markets, you will see that both the S&P 500 as well as Nasdaq close green on the day. So I mean, they all had this drop, both the S&P 500 as well as Nasdaq close green on the day. That's what I thought was gonna happen with Tesla as well as that I was gonna close higher. But Tesla actually closed red, like down 3% versus the rest of the market, which is most of the market is closing green on the day. So experience the same trend, but it was definitely more bearish. And this is why I am still holding put spreads on Tesla for March 19th because it looks so much weaker compared to the rest of the market. And full disclosure, I do have ARC calls as well. I haven't been posting much about it because those plays are practically dead. But basically this Tesla put spread is my hedge against my ARC holdings. So that's what I'm doing here because ARC holds a ridiculous amount of Tesla. 9.99% the last time I checked. It used to be over 10% actually, but because Tesla dropped so much in value, it's only 9.99% right now. Which is their largest holding. So that's why I'm shorting Tesla because it looks weak compared to the rest of the market. It is considered, I consider overvalued my opinion, right? But yeah, that's why I did and how I picked it. Now, looking further, if I were to play another put spread on Tesla, I would be looking for it to reject from this level right here about 6.05 to 6.10, right? We have a pivot point right here. We see it balanced over here before off this level. And remember support and resistance signs are always more like zones, right? It's not exact, right? You have to have some leeway. So that's what we're looking at here is a rejection of 6.10 for further downside. You see that it kind of, these candles over here are basically poking at this level, but it doesn't wanna break out this level yet. And so this is what I would be looking for for additional further downside. If we don't break over this level, then I can see a high probability that we're gonna retest this level right here, which is 5.40. So if I were to play a put spread and I saw a rejection here at 6.10 or so, I'd probably play something like 6.10 to 5.40, right? Or if you were more aggressive, you could do something cheaper, which would be like 5.60, which is another resistance, or maybe you could use the VVAP, which is about 5.80, and then you would sell the 5.40p. Or if you wanted to be more conservative again, you can go a little bit higher, like 5.50. Or even this pivot point right here, where we had this engulfing bullish candle, right? So you could instead pick, you know, 5.50, and you could sell, or not sell, you can buy 5.80p, sell 5.50p, or something like that. And watch out for this 5.65 line to see if it acts as a potential resistance, right? But really we're looking at this trend line here. I think that's the real reason why we bounced. We hit this trend line, we bounced off of it. There was also, this is also the pivot point, the pivot high right here, is what I am looking for next. But yeah, I got some really, really aggressive with spreads, I picked 4.50 to 4.00p, I think, on Tesla. And there's a reason for that, and I'm going to talk about that now in the next slide. Yeah, in general for spreads, saw somebody was asking about expiration. Usually your expiration, you're just gonna pick it based on what you expect from the chart, right? That's how I play it. And then on top of that, I always add time to the play. So why did I pick March 19th? Because based on this trend, Tesla could easily just plunge to the depths in a week instead of two weeks, right? Like based on how it's been moving, right? That's because I'm just giving myself additional insurance or time for this play to play out in case it doesn't go 100% my way. Maybe it bounces up and then it goes down or something like giving myself time will allow me to more easily play that.  But yeah, it is definitely a risky play. Usually for plays, I like to pick monthly calls and I like to add one month to when, at least one month to when I expect a play to pan out. So that's my own personal preference but again, this is all based on risk tolerance and I think JTW mentioned this too. For credit spreads, usually people play shorter timeframes because they want data to burn away the premium of the closer contract so they make more money on that play faster. But yeah, you can pick something further out too and I would recommend doing monthly still but maybe instead of saying normally you would do like two or three months out, you only do one month out or something like that. And the reason for picking monthlies again is because there is higher liquidity in the options contract, right? So when you play weeklies, there's not as much volume or open interest in those contracts because institutions and stuff probably aren't playing those and even non-institutional people like me, for example, who's retail, we prefer to play monthly so you will always see more volume on the monthlies and that provides better liquidity which means that you will have better bid ask differences so you can get better fills on your place and so that's why we like to play monthlies, right? So other considerations, risk of assignment and exercise, right? So for debit spreads is not really a concern for the assignment stuff. For credit spreads, it could be a bit more of a concern depending on whether both legs are into money or those kinds of situations but I contacted Robin Hood support just to get an answer from them in regards to how they manage these spreads and what happens at expiration just so that you guys can know. But other considerations other than that would be ex-dividend dates. So whenever there's a dividend on a stock, that value of that dividend is usually gonna be taken out of that stock when that dividend is paid out, right? So for example, if I can't think of something with a dividend right now but I think Ford removed their dividend but let's just say they still had a dividend. Say they had a pay to that dividend of 25 cents or something like that per share and say Ford is trading at $10 then at the ex-dividend date normally you would expect the price of the stock to drop because that value is being taken out of the asset in very simple terms that's basically how you can think of that, right? So when that happens that's going to affect the profitability of your place. This applies to not just spreads but also just any play in general right for options but that's something that you wanna pay attention to because that can affect how likely your play is gonna be in the money or out of the money based on what strike you picked because maybe that ex-dividend is going to take that play out of the picture or something like that. ER and volatility events are another big thing. So whenever you have ER volatility events it may throw a wrench into your plans. We all know how volatile ER can be stocks go up 10% or down 10% I mean different stocks react differently to ERs usually but in general is always risky to play over those volatility events but if you really do wanna play over ER a spread is the way to go, right? Because otherwise you're going to have high IV so you're gonna negate part of the IV with a spread. My favorite way to play ERs is of course the calendar spread with high IV skew and that's because I'm just profiting off of basically somebody, a lot of interest in the close dated contracts so the premium is overly high compared to the expected movement from ER versus a further outstrike which has less volatility imply volatility to it because it's further away from the ER and most likely it's going to normalize by the time that play hits. So really all I'm doing is selling that excess premium on the closer dated contract and counting on the further contract to maintain relative value. And so that's why I like to do ER calendar plays. I know a few folks have been messaging me lately with their calendar spreads and so far I think people have been doing very well with them. Like even when I don't alert anything I've seen a lot of people DM me like plays where they go 30 to 50% up. Basically every other day of the week they send me something and I'm like that's really impressive. But yeah, anyways, going over assignment and exercise. So again, I emailed Robin Hood and I'm just gonna read this. So they said prior to expiration they will review the spread 60 to 90 minutes before market close on the spreads expiration date at that point a few different things can happen. So if both legs are in the money the short leg may be assigned and the long leg may be exercised to offset the assignment. So spreads can be assigned if they are in the money but the thing is because you have a long leg your broker may just exercise that for you to offset that assignment especially if you don't have the capital or the shares to pay out for that assignment depending on whatever it was a put or a call spread, right? If both legs are out of the money and not at risk of being in the money at expiration then both legs are gonna expire worthless which is great for a credit spread, right? And then if it's a debit spread then it's not that great because basically you're at max loss, right? You lost whatever you put into that play. And then if one leg is at risk or in the money and you do not maintain the buying power or necessary collateral to support the exercise or assignment, they will just close out the whole spread for you. And so again, you really don't have to worry about assignment because pretty much all brokerages have a system to manage them appropriately based on your risk. The only issue here is, and this applies to all brokers but they all apply, like they all have different rules on how they do it. For Robinhood specifically, again, you have that 60 to 90 minutes before close and they do that risk check. The problem with this is that they will automatically sell your spread 60 to 90 minutes before close and sometimes that means that you're gonna be missing out on profits or losing out on profits that you did have. I can give you a good example for myself, for example. I had a calendar spread on, I don't know what it was. I think it was chewy, but I had a calendar spread a while back last year and it wasn't in the money. It was, they were both out of the money, right? The trade was green, but I had bought, I think it was like 100 C or something like that and I sold 100 C that was closer dated. So say it was, I don't know, September or something and then my further leg was in November. So I had planned on just letting the closer leg, which was a September one, expire out worthless. That was my plan. I just wanted to expire worthless to be worth $0 so I collect the full premium of that play, right? While chewy continues to slowly make its way up, right? But during the middle of the day, I saw that the contract for that was, were basically worth one cent, right? It was basically worthless because it was so far out of the money and I originally sold it for, I think like, maybe 35 to 40 cents somewhere around there. So it's not like I made a lot from it. It was just like $35 for the contract, but it was a way for me to offset my calendar spread cost, right? My longer leap, right? So I was like, I'm already in green and I can close it out now, but then I looked at the bid-ask spread and they only do it in increments of five cents. So basically I had to either buy back the contract at zero cents and no one's gonna sell it at zero cents or I had to buy it at five cents. So I was like, you know, whatever, I'm just gonna let it expire worthless instead of try to close it out at one cent because I can't close it out at one cent because they have an increment of five cents. So with that said, I just waited throughout the day and it turned out at the end of the day, basically this risk check happened. They were like, well, I don't know why they did it that way. I think it's because my calendar spread, I opened each leg separately. So that's probably why I didn't handle it very well too, but basically they tried to close that leg out even though it was out of the money and they should just expire worthless, but they closed it out and they bought it back at nine cents and I was just livid because I was like, basically I lost out on $4, which is not a big deal, right? But I was just like, dude, why didn't you just let it expire worthless? Why did you have to buy it back? And you bought it back, they probably just hit the bid to close it out, which was, I don't know, nine cents or whatever at the time. And I was like, I could have closed it out earlier in the day for four, five, because there were people selling it for five cents, which is $5, right? So anyways, that is a risk factor and it depends on your broker, how they manage those things. But that's also why, if you have the chance to close out of spread, it's deep into money or whatever, this is why I closed it out at 90, 95% now because I don't want to risk the chance that Robinhood automatically decides on their own how to sell my spread or exercise it or something like that, and they give me a worse price than what I could have gotten, right? That's why I do that now, whenever I hit 90, 95% of max profits on debit spreads, I will close it out because of this experience. I don't want to experience that again and lose out on profits. I'm not really too mad about it because it was a green trade, right? I sold that 30 something cents and then it bought back at nine cents. But the thing is if you had a lot of contracts or something like that, it could add up over time, right? Or if for other players are more expensive, that could be a detriment to your portfolio. But just something I want you guys to be aware about on how that works, specifically for Robinhood here, other brokers have similar risk assessments and they all have their own rules on how they do that, but this is generally how most brokerages handle it. Okay, I'm gonna catch up with chat real quick here. Yeah, what Bull Throttle was saying about the play less and cost cap profits, so you know, cost less, limit profits, and it makes more sense on longer plays is completely true because the only time you are not going to want to use a debit spread is for a shorter term, momentum play, right? And that's what I keep saying. Basically, if you plan on swinging spreads are usually a good idea. If you're just day trading or something like that, that means you're just scalping momentum. At that point, you would just take calls or puts, right? Of course, if you want to be less risky, you can still make it a spread. You'll still make money. But just generally speaking, the advantages of just calls or puts during a momentum play or day trade is much more favorable for that instead of spreads. And I saw somebody ask me why 695 and 665 for my strikes. A lot of that has to do with the size of my portfolio on that challenge account. So it would have been more expensive for me to play 660. Also, I saw that there was potential that it could bounce before hitting 660, and that's just why I picked that. But it's really just a matter of risk tolerance. Like for example, usually when I have price targets set up on my screen, say that, I don't know, say I think Apple is going up to 150C or something, I'm not gonna pick 150C for my spread, like this myself. I usually pick something a little bit closer, like a closer price target that I have because I don't know for a fact if Apple is going all the way up to 150. Like maybe there was previous resistance there, but maybe it doesn't go all the way. And so this is just a matter of risk tolerance, right? So I usually pick something one strike in or a closer price target level that I feel comfortable with. And this is just for me to manage my risk. And for people asking about, I see a lot of talk about brokerages here. So all the brokerages are pretty good for like, they all have their pros and cons, right? So Robinhood, obviously it's free, but there are some issues with it. You don't usually get very good fills on it. I do use Robinhood, but I also use other platforms as well. For example, I use Webull and I also use Tasty Works. And Tasty Works is my favorite platform actually for options trading. But Tasty Works costs money, not that expensive actually, it's only, they only charge you to open the play, they don't charge you to close the plays, things like that, but it's not really that expensive, but I mostly just use different accounts to manage different types of portfolios or to manage different types of strategies in order for me to arrange my stuff. But yeah, with Tasty Works, you might have to pay for it, but it actually pays back in value because I always get a better value from using Tasty Works on opening positions than when I use Robinhood. For Robinhood, I like I open a position and I wait there and like it doesn't fill for like 10 minutes or something. And then I end up going, okay, play is probably gonna move soon, so I'm just gonna have to increase my midpoint up, right? I'm gonna have to go closer to the ask or sometimes maybe even hit the ask on a momentum play.  And Robinhood is basically the bottom of the pecking order for I forgot what it's called, but basically people who process the orders, right? And on top of that, we all know that Robinhood sells your data, your options, or not your options, just the order flow data to folks and institutions, right? So that's, I've known about that for a long time already, but there's no such thing as, there's no free lunch, right? There's always some kind of cost. So, but yeah, I still do use Robinhood because they're still great for certain things, but I use it more for like, more like sculpt type plays usually, just because with those kinds of quick in and outs, the fees add up more quickly. But at the same time, I use all the, my brokerage is pretty equally, it just depends on what my particular strategy is. So Robinhood I usually use for my challenge account for this, because I don't like to put too much money in Robinhood. And then Tasty Works, I have a few accounts with Tasty Works actually, but basically I have an account depending on the strategy for that account. Like I have a long-term portfolio, then I have another account for just calendar spread, ER calendar spread place, and this allows me to better manage my risk and also to see how a certain strategy is working out. Sorry for all this extra information about brokerages here, just felt like I would touch on that a bit. Is it worth saying lowball ask for the spread? Yes, I see 007 and JTW both agree with that. And I definitely agree with that, because sometimes you do get those crazy good fills and basically it increases the probability of success of the play significantly, right? And it does happen. So I always put lowball bids in there. It's the same thing with crypto actually, if anybody's spending crypto and you've probably seen or heard of like, you know, Ethereum flash crash or whatever back in like the older days of crypto trading. And ever since that happened, I always have a lowball bid of like, you know, a dollar or a cent or whatever on Bitcoin and Ethereum, because I was like, man, these guys got filled for cheap. I like, I forgot how low it got actually on Ethereum flash crash, but it got really low. And then it basically bounced right back up. And the reason why it got that low is just because of low liquidity. And then, you know, people stop losses hit, right? But then it instantly bounced back up and those people made, you know, thousands, if not more than that, right? Instantly. So I always set low as lowball bids now because of that.  Or if someone is just hitting the ask suddenly because they want to get into play really bad, then there's a chance that your lowball bid will fill. And so that's definitely always do that, right? Set those limits when you buy. For max profit on spreads, yes, you do want the sold leg to, I mean, you hit max profit if both legs are in the money for debit spreads. So you either want it to be, you know, right on the dot or even further in the money. And if it's further in the money, you basically hit max profits, right? So the biggest hurdle for beginner into spreads is the requirement for a margin account. That is a point there. So that's why with, you know, but on Robinhood, which is what I think most, a lot of beginner traders use, it pretty much starts off as a margin account. Like I don't think they even ask you. Like most people don't even know what a cash account is until they realize that there's another service called the Weeple and it asks you if you want to do a cash account or a margin account. You can actually go cash on Robinhood as well, but you have to specifically ask them to disable margin. But yes, I assume most people have access to a margin account because it's pretty easy to apply for and get these days compared to before. Before it used to be a lot harder to get these margin, margin accounts. Now you need a lot less to open one.  Do you plan on time to spend, or sorry, for that backwards, do you plan on to spend time on how and when we close slash stop spreads when it's not going the way we anticipated? Say for example, simple calls, we can have 30% as stop loss. Do you have any guidelines for spreads? So good question. So when a spread doesn't go your way, right? And I'm gonna answer this question real quick and then I'm going to move on with the presentation because I actually do have some other things I want to talk about as well. So for expiration, sorry, not expiration, for stop loss when a call doesn't go your way, usually I don't really like to set percentages. I like to base it off of the chart and you can set percentages, but usually the time I set percentages is when my call is already in the money, or not in the money, but it's green on the plate, right?  Because the value of your play can instantly go against you in a small move when you're leveraged, right? So we usually like to set that stop loss in the green. And so that's what I do with my plays as well. My personal rules for credit spreads, I mean, not credit spreads, debit spreads is again, 90 to 95% if it's in the money, right? That's when I like to close, but if that's not the case, right? If it's just up say, it goes up say 50% or something, I would usually consider closing out, right? If it's especially if it's at a resistance, if it's say a bull spread or a call spread, right? So my rule for that though is if the play is green, say it goes up 50% or more than 50% say it goes up 80%, my rule is if it pulls back half of what it's gained, at that point, that's where I would stop out. So you can consider doing a trailing stop loss essentially, right? So for myself, this rule applies to just basic calls and puts as well, not just spreads. And it's usually where I apply this rule. If my play goes up 100%, always sell half, right? You're really familiar with that rule because Guru always talks about it. But my other rule is that if I hold runners, right? They're up 100%, if it goes to retraces back 50% of the value from its peak, that's also when I sell out. So for example, if it goes up 200% for example, and it goes all the way back down to 100%, I will stop out there, no matter what. It doesn't matter if I feel how I feel about the play, it's just how I manage that risk, right? And the only reason why I set that rule is because I've had times where I was like, it goes back 100%, down to 100% from being up more than 200% for example.  That kind of psychology, right? In my early days of trading, I was very susceptible to this. Now, when something goes up a lot, you get euphoric. And that's true for everybody, right? We learned to manage those emotions over time. And then it ended up going down from 100% up to down 50% up and I'm like, oh, it's back close to that first support where I first bought in or something. And then it just keeps going down and it ends up being a red play when it was originally up say 200% for example. And this happened a lot for me when I was starting out. And that's why I have this rule now where basically if it's over 100% for just calls or puts, anytime every trace is back 50% of the gains, I am going to have a trailing stop loss there and I will stop out, that's it, no more. I'm out of the play, it doesn't matter if it goes up after that, but I am gonna close the trade green, I am not going to risk it going red. And really any green trade is a good trade, right? We all know that. Like even if you're only going up 1% a day, if you think about it 1% a day for, I don't know, 100 days is more than 100% because it's compounding, but anyways, you basically, a green trade is good and that's why we have those rules. For spread specifically though, because you can't go over a certain percentage, usually what I do is I will assess it on option strats, right? This is how I assess plays. So you'll see your option strats, one of my favorite tools to use, right? So say that I'm getting a bear put spread right here and say it's Tesla because that's what I've been talking about today and say that I got March 19th, Tesla put spread and say that we're getting 600 to, I think at the end of this back, we're 600 to 580p, okay. So the way I assess this here is basically based on this table, right? You can change this here to percent of entry cost and that's what you would use if you weren't wanting to assess that. Based on a percentage. So for myself, the way I assess this is basically if, I'm getting close to max profit, which is $1,050 on display. So if I hit 90, 95% that's one hour close on 950 hour close out here, right? So over time, your profit profile changes, right? Because there is the factor of data. Also, our factors to think about will be IV, right? But we can't control that. So that's not something that we can assess from a top down level. We just have to assess that on a day-to-day basis. So usually I just, once I see this and I hit this area, anything in this darker green area is like take profits on that day, that's when I take profits. So if I hit this and it's 950 on the 11th, that's where I take profits, right? If it didn't hit that and it hit 9 to 72, I would take profits there. So this is my automatic take profit areas, right? Like I will automatically take profits whenever I see this happen, which is basically when you're getting close to max profits, right? For loss system, that's a little bit harder to manage for spreads in general, right? So I don't really set a percent loss for spreads. And I don't do that for calls or puts either. In general, I don't set rules for myself for stopping out based on the profit loss of the play. I always base it off of the chart. The only exception to this is if I'm very close to expiration. If I am very close to expiration, I will consider closing out the play because there is not enough time for the play to recover regardless of what I think on the chart, right? So if I'm playing, for example, April 16th or something like that, then if it's two weeks out, say April 1st, this is starting when I would start considering, hey, maybe I need to roll out my play or close out this play at a loss if I don't have faith in the play anymore, right? Usually I go up to two to one weeks before the expiration depending on what the charts say, right? So for example, for Tesla here, say that I'm in the bear spread, right? Or I put debit spread. This line right here is a major support zone area for me. Why? This is a 0.5 retrace from the run of S&P 500 inclusion news, right? This is before S&P 500 inclusion and this is the peak of S&P 500 inclusion news. So this was the 50% of that play and that's why I have this line here for this fit. And also this is a pivot point, right?  So I think that there's a good chance that this area would act as support and you see it lined up perfectly with this trend line here, right? So if I was playing put spreads and I saw it bounce off of here, that's probably where I would close out my play, right? Because they're already bounced off here actually. And then same thing for like on the bowler side, if you're hitting a resistance and you're rejecting off of it, that's where I'll take a play. And so in the case of a red play, so in other words a play, when you first took the play, the play was already moving against you, like it was never green, right? So for example, if I played both side on Tesla and I see this bounce off of here and so I decided to enter calls on Tesla, right? Because it bounced strongly off of this major support area with lots of confluence, right? So we got this horizontal support for a pivot, it's a 0.5 fib and it's trend line from the consolidation zone. So it's a great area to go along, right? So say I went along here and say that instead it broke down, it didn't hold this area. So say that next week it goes down here again and I decided to go on calls because it bounced off of here previously and instead it breaks, right? So say it breaks down and now the play is red. So what I would always do is I would assess where your next support level is for me and for me that would be this zone right here which is a 0.382 fib and also the pivot top of the consolidation zone of Tesla before S&P 500 inclusion news. I think this area is probably a good support area. So that's what I would look for, right? So I would look for it to bounce off of the next major support which is down here at 512. And so of course there's quite a bit of downside to this. So basically I'll be buying at 540-ish and my downside would be like about $40 down to this area of about $500 right here. 510 to 500 is the zone. So there's quite a bit of downside on those calls but that's what I'll be looking for. Like if I entered here, I always look for where my next support level is, the major support level on the trade and if it doesn't hold that support, that's where I would bail out. Another way to do this depending again, this just completely depends on your risk tolerances. If you are trying to buy at support and it doesn't hold that support, then that play is not valid, right? So that's in a completely red situation in which case you would just set a tight stop loss on this play. So just for example here, okay? So we see that we bounced pretty much perfectly off this area at about 540 or so, 540 and say that we go down over here to this trendline, 540 again, then maybe I would only wait for one or two or candles below this and then I would stop out if I was trying to be very, very conservative on the play. At that point, you can probably, you can set a stop loss maybe 10% down or something like that, right? Because you're trying to capture this balance and if it's not bouncing off of it, that means the play isn't valid. But the thing is, for this, it's probably not that good to use the next support because it's so far down, especially on this kind of analysis, my analysis. But usually if there's a closer support, that's what I would use as reference point. But the thing is Tesla moves so volatility that if you're setting a stop loss like that, you can just, you're basically gonna get stopped out and then it can still bounce, right? And I think JTW had a really, really good video education on waiting for confirmations or trend breaks and stuff. So if you need ideas on that and how to do that, I would definitely refer to that video. It's in our Xtrades Discord server in the education section. Now that's probably not the risk management you wanted to hear, but that is how I manage my plays is I always base the office support and resistance level rather than just a strict percent of stop out or stop loss. The only time I use percent to manage my plays is for green plays because that's to prevent myself from basically eating losses when I was already in green. So losses I like to manage strictly based off of my own analysis instead of using percentages. Thanks to Bo7, I think he's gone already. The Bo7 is gonna be back on Monday to talk about ERs and charts. So if you need any of that, check that out. Monday through Friday, right? On how to open a spread on Robinhood, I actually have a PDF file with pictures of how to do spreads. It's actually a guide on how to get around day trades using different legs of options, right? You're essentially opening a spread to get around day trading if you really need to close out a position. But in that, I have pictures and using that you can basically know how to open a spread. But I'll consider making a video for that probably later this month or something and upload that as well. So 3D Snoop, that PDF is actually in education section already for BEB positive. I'm not sure if I'm reading your name right, sorry. But for back to the previous question on the data, yes, the closer you get to data, I mean, sorry, I think the session has been a little bit long but the closer you get to expiration, the easier it is to hit max profit because there is that less volatility in the spread play. Because you hit max profits at expiration if the whole play is in the money, right? Before expiration, even though you are in the money, like deep in the money in the play, right, so you can see that it closely trends up over time. And same thing with here on the negative side, right? Is because there's a possibility that your play can turn around, right? So that's where you have intrinsic and extrinsic value of your options contract and where you're two, because you have two options contracts where one of them has the potential to make more money than the other one. And so because of that over time, you get more value out of your play because that probability of it falling within that range that for example, if it's already below 580, the probability that it say bounces back over 600 or over 580 decreases. So your profitability increases over time in terms of how close you are to the strike. So that's why when you are really far away from the expiration because there's a chance for the play to reverse, like go in the opposite direction of what you want, you need to be more deep in the money in order to make the same profit as if it was just say one or two dates out. Hope that explains that a little bit. Essentially, that's what it's doing. But if you look at the Greeks, that is what is really happening. But basically you're looking at the probability of the play reversing on you, essentially. So yeah, the lig that you're selling, the second lig is always gonna be a support resistance area that you've identified depending on which way you're playing, right? Or you can go a little bit closer and that's what I usually do because there's less risk that way. Because sometimes you see like their support, for example over here, identify support was over here, at 800 on Tesla, and you see that it never hit that support again, right? Until a long time later and it did hit that again and then it broke. But basically, I set that target to always be a little bit closer than where I identify a pivot area just to give myself a little bit more leeway on place. All right, I am just gonna go over bar charts right now real quick for you guys. This is the other, that's been the wrong address, I did, barchart.com, there we go. So we've already been talking about this. On barchart.com, there's two ways you can identify a debit play. One is when you go over here, you can use a bar chart screener, right? So they have something called a bull call debit spread and they have basically all the plays they have screeners for them. And so we're looking at debit spreads right now. So I'm just gonna look at bull call debit spreads screener just to quickly go over how to use it. You've probably, if you've been to previous seminars you've already seen this. So just bear with me here. Basically, probability is the percent chance that a play will work out, like go green, right? And this probability is just based on the Greeks, right? There's a complicated formula for options and it's gonna be based around the Greeks and other factors, right? But that's how this is calculated. So this is just a probability based strictly on statistics, essentially. Now, after we identify that kind of aspect of the play you wanna identify on the charts if the play is valid or not. Is there support or resistance there? Is it possible for Tesla to go up to say $900 in two weeks or something? Because if it doesn't happen and that's the play you're taking based off of this calculator or not calculator screener then that's probably not something you wanna play, right? So you can use this tool to help you identify those just based on statistics alone but always fact check with your chart identify your support and resistance to determine how to play it. Here you can see the max profits and that shows as a percent as well as the max loss. So you see that this play only costs 35 cents to play but you can gain $5 and that's because the spread width is not spread width. The strike differential rate is $5 because you have $10 strike and you have a $15 strike. So 15 minus 10 is five and then you have your leg one and your leg two, 50 cents and 15 cents costing 35 cents total. So your break even is 10, 35. So then if you don't know the company you can bring this up, pull it up and see what is going on here. And you're like, well, maybe it's basing out here. Maybe this might be a good risk reward play. I'm risking 35 cents to make $4 and 65 cents. Maybe that's a good deal. So now that I've looked at that, I'm gonna go, okay. SOAC, let's pull it up on the chart and see what's going on, right? So I see that this is an acquisition. So this is like a SPAC, right? So I see what's going on here. Basically, it's skyrocketed and it tanked, right? I think SPACs have been a little bit hit lately. Personally, I don't really play SPACs myself. And a lot of people are probably playing like CCIV and stuff like that. I don't play as many of those. So we see that a SPAC usually has good support around $10, right? So I think that's why this play is actually very reasonable if you think that it's gonna be bullish. So personally, I think the spread is too wide because it's never been up to $15. More likely you're just, I think 10 is actually a good support, right? So the first leg of this play on this screener is probably not bad, but 15 is really far out and here feels like a lot of at this point. But there's a good chance it bounces around this area around $970 to $10. So maybe that's something folks can consider, but I'd probably make this strike a little bit closer here. But this is how you use this scanner. You can use filters as well to change what you're looking at. You can pick ETF or stocks, et cetera. Let's see. There's also a filter for sector, I think. Right, sector. So for example, if I am bearish on tech right now because tech has been not performing very well relative to the rest of the market, so they're underperforming, then maybe I wanna play a different sector. Like maybe I wanna play, I don't know, consumer staples or something because I think those have a better chance of recovery than this is how I would use this to filter out for those things. But yeah, this is one way to identify a possible place on that you can also use option strat to figure out those plays because it also tells you the chance of profit here and it gives you the variables. You can visualize it on a table or a graph to see where you make profits, how many days from expiration, right? So this is one way to identify it by using screeners and tools like this. And of course, the way I usually do it, of course, is you have a trade that you already want to play and you identify that set up there, right? But if you need ideas, this is a great way to find them because it gives you the actual statistics of it happening, right? So this could be a good way to screen for new tickers that you might never have noticed were really popular or are popping up right now and have a high probability based on statistics. But you just always wanna make sure you're double checking on the chart to see if it's actually a reasonable play or not or if you tweak that play a little bit to make it a better play, right? So this is just a good way to get those ideas. But yep, I think I'm gonna close a session today here in regards to the actual seminar. If you guys have any questions, be happy to answer them now or if you guys want me to do some quick charting, I could do a few, probably for like another 10 minutes or so and then I have to get going too. But yeah, hope you guys found this seminar helpful. I wanna thank JTW and Double 7 for answering a lot of questions as well as Young Bull and Red Black for helping moderating the chat. But yep, thanks again for joining us this weekend. And if you need some guidance or you wanna talk more with people with trade ideas, find good plays, come and join us on Xtrades if you are not already a part of it. And next video, next seminar, not sure when that's gonna be, probably in about two weeks, but I think I'm busy next couple weekends. So it might be actually the end of the month, but I'll update you guys in the Discord and make an announcement when we have that next seminar video. But these videos are gonna be up for two weeks and I will try to get them up on YouTube. Yep, thanks again everyone for coming to join us. Now any questions gonna go over the chat here. Yeah, money-ness is how close basically the play is to being in the money. That's all it really means. So it's measuring a difference between the current price and like the legs. And yes, as JTW mentioned, you can open up spreads separately if you want to. And I do that a lot actually, because whenever I'm trying to capture a momentum play on a stock, I will take the leg first. And then once I notice momentum is starting to die or something, then I might convert it to a spread so I can swing it because I'm still biased in that direction, but I feel like maybe it might bounce or something. So basically it's a way for me to lower my risk and allow me to swing safely and still collect profits if the play continues to move in that direction. So I do open up spreads a lot of times as separate legs, but it just depends on the stock. If it's a big, fast mover right now, then I'm probably gonna be opening it separately. All right, anybody have any chart requests or other questions they wanna talk about? If not, I will bounce out of here. I will be uploading my weekend report tomorrow. So if you want some tickers analyzed or have some ideas, be sure to vote on that weekend report ticker form. So I can take a look at those for you guys if you want anything analyzed. And I'll include in that report, my usual market analysis, what's going on and what I think about what's gonna happen with it. Currently, I think the markets are wanting to bounce, right? We have this stimulus news over the weekend, but I'm not convinced yet that we are going to bounce straight up from here. I feel like it could just be a temporary bounce and that there might be more downside, but that's just my opinion right now, but I'll explain a little bit more about other indicators and things I'm looking at, such as Dex and Gex in that report. All right, well, I hope you guys all have a wonderful weekend and good luck trading next week. This is a fun time to trade actually because there's a lot of volatility on the markets and there are still opportunities out there, but it's good to play safe. So stick with UC spreads to your advantage. I feel like the markets are really volatile, spreads help to minimize that risk potentially, but of course, in this volatile situation, there's also a lot of opportunities for quick momentum scalps, right? And in those, you can just do regular calls and puts, but yeah, stay safe out there and until next week, signing out.