00:00:00
all right all righty so in today's video
00:00:02
I'm going to show you the entries and
00:00:04
exits for credit spreads I'm going to
00:00:06
show you exactly how to enter into a
00:00:09
credit spread and also when to exit
00:00:11
right so basically what we want to see
00:00:12
on the chart before we get into a credit
00:00:16
spread so for this I'm going to be using
00:00:18
the think of swim web platform so as you
00:00:20
can see down here it says think of swim
00:00:22
web so through this think of s web
00:00:24
platform we're going to start to
00:00:26
construct our uh credit spreads at the
00:00:28
same time we're also going to look at a
00:00:30
few charts to take a look to see you
00:00:32
know which are the ones that you know
00:00:33
has an opportunity for us to put on a
00:00:36
credit spread so first off you need to
00:00:38
have like a watch list right a watch
00:00:40
list of a number of stocks now how many
00:00:42
stocks you want that's totally up to you
00:00:44
and what kind of stocks that you want to
00:00:45
go for up to you again all right I have
00:00:47
already created you know a number of
00:00:49
videos to share you know what I'm
00:00:50
looking for when it terms of uh stock
00:00:53
selection for trading options and
00:00:56
generally uh when I'm trading credit
00:00:58
spreads especially for the bput spread I
00:01:00
like to find stocks that are
00:01:02
fundamentally strong right so uh you can
00:01:05
go through to some of my other videos on
00:01:06
my channel where I talk about it already
00:01:09
so for this video right so the very
00:01:10
first thing we want to go through is to
00:01:13
the charts right so you want to go to
00:01:14
the charts and of course you want to
00:01:16
cycle through all the different you know
00:01:19
stocks that you have in your watch list
00:01:21
so for this example uh is on Tesla right
00:01:24
so as you can see down here Tesla on the
00:01:26
right hand side uh the stock has
00:01:28
actually been selling off quite a bit
00:01:30
over the couple of last few weeks so as
00:01:33
you can see the market has been selling
00:01:35
off down here now uh the thing that I
00:01:38
want to look out for when it comes to
00:01:41
trading credit spreads uh whether I want
00:01:43
to put on the bull put spread of or the
00:01:45
bare call spread for individual stocks
00:01:47
well one thing that you know you can use
00:01:50
would be the stochastics right so for
00:01:52
this is the slow stastics now you can
00:01:55
use the RSI if you want to as well so
00:01:58
basically what the sto STC does is that
00:02:01
it tracks whether the market is in an
00:02:04
overbought or oversold situation right
00:02:07
so naturally if we want to get into a
00:02:09
bull put spread we definitely want to
00:02:10
find you know a stock where you know at
00:02:13
least it is oversold right so if it's
00:02:15
oversold then there is a you know a
00:02:18
higher probability that the market can
00:02:19
go up rather than it come down right
00:02:22
because you know imagine the market
00:02:24
keeps going up and then you want to put
00:02:25
on a bull spread right that doesn't
00:02:27
sound too strategic right so as much as
00:02:30
possible we want to put all the odds in
00:02:32
our favor so the first thing that I will
00:02:34
look at down here would be the
00:02:36
stochastics so the stochastics as you
00:02:38
can see it's already oversold right so
00:02:40
if it's oversold now the next thing we
00:02:43
want to take a look at is possible areas
00:02:46
that we can actually sell our bull put
00:02:48
spread right so in this case it's
00:02:50
oversold we want to go for the bullish
00:02:51
credit spread which is the put credit
00:02:53
spread also known as the buut spread so
00:02:56
first thing is I want to try and look
00:02:57
for you know support areas so as you can
00:03:00
see down here there are you know
00:03:02
previously two lows so to speak where
00:03:05
you know prices have bounced off right
00:03:07
one is down here and the other one is
00:03:09
the one right at the bottom so what I'm
00:03:11
going to do is I'm going to draw a line
00:03:13
across right so I'm going to go to the
00:03:15
drawing tools down here click on trend
00:03:18
line then I'm going to click on this
00:03:20
down here and then just draw a line
00:03:22
across so this way will give me you know
00:03:24
an idea let me know you know where was
00:03:27
the last support place right so as you
00:03:29
can see the last support place was
00:03:30
somewhere around 205 and then the one at
00:03:33
the bottom we want to draw another trend
00:03:36
line as well so I'm going to draw this
00:03:38
trend line as well I'm going to stretch
00:03:39
it across so for this trend line it is
00:03:43
somewhere around
00:03:46
13.25 somewhere around here right so
00:03:49
right now we have two support areas so
00:03:51
ideally what we want is to have our buo
00:03:54
put spread below this uh support lines
00:03:58
right so where is it going to be is it
00:03:59
going to be below this first one or
00:04:01
below the second one now this really
00:04:03
depends also on you know the option
00:04:06
chain right what kind of uh uh credit
00:04:08
I'm able to get when I put on the buut
00:04:11
spread but generally you know I like to
00:04:13
put the one that is right at the bottom
00:04:16
right I would suggest the one right at
00:04:18
the bottom because this seems to hold
00:04:21
generally this seems to be more of a
00:04:23
stronger support than this one right at
00:04:25
least because it seems like you know the
00:04:26
market has just gone straight through
00:04:28
down here whereas this is where the last
00:04:30
real bounce off is so from here the next
00:04:34
thing I will do is that I will go over
00:04:36
to the trade tab down here so you can
00:04:38
see the trade tab so the trade tab I
00:04:40
want to do is I want to pull out the
00:04:42
option chain right so as you can see
00:04:44
down here the option chain there are
00:04:45
quite a number of DTE now I've gone
00:04:48
through also you know why I chose
00:04:50
certain DTE but some people you know
00:04:52
they like to go for the uh shorter term
00:04:54
DTE well generally I like to go for
00:04:56
somewhere around 45 DTE right so as you
00:04:59
can see see down here uh there's the 43
00:05:02
and the 57 so I think both of them are
00:05:05
pretty fine pretty okay now you can see
00:05:07
the next thing I want to look at is
00:05:09
pretty much the volatility right I want
00:05:11
to make sure that this IV down here on
00:05:13
the right hand side is pretty similar
00:05:15
with each other especially you know
00:05:17
sometimes when they exchange they
00:05:19
release new weekly options right now as
00:05:22
you can see down here this most likely
00:05:23
is not newly released and how do I know
00:05:26
that is because generally when they
00:05:28
newly release one of those uh options
00:05:31
right for the new DTE the volatility the
00:05:34
IV down here generally will tend to be
00:05:36
lesser than the one surrounding it right
00:05:38
so let's say for example the one above
00:05:39
and below this weekly one down here is
00:05:42
at around 50% right 5050 51% so
00:05:46
sometimes when the newly released one
00:05:47
just comes out this could be around 40
00:05:49
something per right maybe 45% 46% then
00:05:52
in that case I might just want to avoid
00:05:54
it because you don't want to Short
00:05:55
Change yourself right if you're going to
00:05:57
have you know lower IV it means your
00:05:58
premium is not going to going to be you
00:06:00
know that high compared to what it
00:06:02
should be and also your Deltas are going
00:06:04
to be closer to where the current market
00:06:06
price is that means to say if you're
00:06:08
going to play something at 30 Delta it's
00:06:10
going to be nearer to where the market
00:06:11
is so is generally it kind of slightly
00:06:14
increases the risk by a little so that
00:06:16
is why you know I want to take a look at
00:06:18
IV first in this case now as for what is
00:06:20
the IV range I'm looking for I generally
00:06:22
do not have a preference right as long
00:06:24
it's not few 100% right because if you
00:06:26
go for stocks like AMC uh game stop
00:06:29
those kind of uh stocks where they give
00:06:31
you know a few 100% i' be very wary of
00:06:34
that because it also means that you know
00:06:36
the market expects a very very very huge
00:06:39
move right so I don't like to see
00:06:40
something above 100 over per whereas for
00:06:43
this around 50% even 30% right for
00:06:45
example Google will be 20 something per
00:06:47
even 30% and I think those are fine as
00:06:50
well right so for this let's just use
00:06:52
the March 2 one 43 days as an example
00:06:56
right so what we're going to do is we're
00:06:58
going to go to the put side right so
00:06:59
we're going to click this down here
00:07:01
click more until we have all the uh
00:07:04
option change uh sorry the option
00:07:07
strikes that comes out that you know
00:07:10
that we might want to choose so the
00:07:12
first thing that we want to look out for
00:07:13
is at the Delta down here right so as
00:07:16
you can see down here this Delta column
00:07:18
this is where we will decide what our
00:07:20
short strike is right so the very first
00:07:22
thing we want to choose is based on our
00:07:24
short strike so how do you want to
00:07:26
decide what is the short strike so there
00:07:29
is no hard and fast rule as to what is
00:07:32
the Delta that you definitely want to
00:07:34
but it also really depends you know how
00:07:37
bullish you are on the underline right
00:07:39
so let's say for example if you very
00:07:41
very bullish then you want to go for
00:07:43
slightly higher Delta right maybe even
00:07:44
35 or even 40 Deltas right so let's say
00:07:48
for example you go for the 40 Delta so
00:07:50
what you want to do is you click on this
00:07:52
and then you click on the 205 so let's
00:07:54
say for example your risk is somewhere
00:07:56
around you know $500 thereabouts right
00:07:59
so in this case uh if we have a five
00:08:02
point WID spread that means our risk is
00:08:04
roughly around maybe
00:08:06
$300 in this case because the max race
00:08:09
is simply the width of the spread right
00:08:12
minus of the credit that you receive so
00:08:14
as you can see in this case the width of
00:08:15
this spread is Five Points we minus off
00:08:17
the credit which is around 1.95 now if
00:08:20
you want to clarify and double check
00:08:22
what exactly is the risk all you have to
00:08:24
do is just click this review down here
00:08:26
right so as you can see down here review
00:08:28
it says 300 $16 right so if you have
00:08:31
slightly more risk right that you want
00:08:34
to allocate to the trade then you can
00:08:35
increase this right maybe you can go to
00:08:37
200 so now this is 10p point white uh
00:08:40
put credit spread so you can see down
00:08:42
here the credit you receive is about
00:08:43
$3.65 which is about 365 right less the
00:08:47
uh uh commissions all right around
00:08:49
$363 or so now you can see the buying
00:08:52
power effect down here 636 so for defin
00:08:55
risk strategies buying power effect or
00:08:58
in this case down here the buying power
00:09:00
effect is basically the max loss that
00:09:02
you will experience on the trade right
00:09:04
so this is very different compared to
00:09:06
undefined risk strategies like the short
00:09:08
putut or even the strangle right for
00:09:11
that I will not go into that for this
00:09:12
video so for this you just need to know
00:09:14
that your buying power effect is the
00:09:16
same as your max loss right so as you
00:09:18
can see down here we constructed one
00:09:20
that's around 41 uh what do you call
00:09:22
that 41 Delta now if you have this 41
00:09:25
Delta yes you're going to have you know
00:09:27
quite a bit of a credit as you can see
00:09:29
$3.65 for for the credit is pretty good
00:09:32
but the thing is that you're going to
00:09:33
give up in terms of your win rate right
00:09:35
so your win rate is going to be slightly
00:09:37
lesser right so how do you tell what's
00:09:39
the win rate so win rate generally you
00:09:42
can use the Delta as an indication right
00:09:44
so if the Delta is around 40 then it
00:09:47
just means that you know you take 100%
00:09:49
minus 41% right so 41 is just an
00:09:52
indication of 41 Delta is the indication
00:09:55
that you know it will be there will be a
00:09:57
41% chance that this strike will will be
00:09:59
in the money at expiration right so this
00:10:01
is just a very rough calculation right
00:10:03
so you take 100 minus around 41 what you
00:10:05
get is around a 60% win rate right
00:10:08
around 59% so you get 59% win rate which
00:10:11
is not that high now if you want to get
00:10:14
a higher win rate then what you want to
00:10:16
do is you want to go for slightly lower
00:10:18
Delta right so maybe you might want to
00:10:20
go for a 30 Delta so if you go for a 30
00:10:22
Delta and let's go for 10o WID spread
00:10:25
right so let's say for example for this
00:10:27
this 10o wide spread that you have down
00:10:29
here your credit you notice is
00:10:32
$257 so this is about you know about a
00:10:35
dollar or so lesser than the one at the
00:10:37
41 Delta so this is the trade-off right
00:10:40
as you can see right if you want to have
00:10:42
a higher win rate you go for a lower
00:10:45
Delta for your short putut but at the
00:10:47
same time if you have a lower Delta you
00:10:49
have a higher win rate you will have to
00:10:51
settle for lesser premiums right so this
00:10:53
is the trade-off now on the other end
00:10:56
the Very extreme one where you want very
00:10:58
very High win rate right let's say for
00:11:00
example you want 90% win rate if you
00:11:03
want to go for something like a 90% win
00:11:05
rate then you're looking at somewhere
00:11:06
around here right around 119 Deltas or
00:11:10
even lesser right if you want to go even
00:11:12
higher in terms of your win rate but
00:11:13
there is one problem down here is that
00:11:16
your win rate although it's going to be
00:11:17
very high the credit that you're going
00:11:19
to receive is you know it's going to be
00:11:21
very little right so as you can see down
00:11:23
here let's go for the 10p point WID
00:11:25
spread again so 175 165 now you only
00:11:29
only have 85 cents in terms of your
00:11:32
credit right the premium that you
00:11:33
receive is about $85 by the way if you
00:11:35
like this video so far Please Subscribe
00:11:37
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00:11:39
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00:11:41
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00:11:43
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00:11:49
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00:11:51
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00:11:53
options with davis.com blueprint all
00:11:55
right back to the video but your risk
00:11:57
down here is pretty high high right you
00:11:59
can see down here your risk is about
00:12:02
$916 so what you have effectively done
00:12:05
is that you have increased the win rate
00:12:07
but you have also you know change your
00:12:09
risk to reward ratio that you know in
00:12:12
order for you to let's say for example
00:12:15
you have one Max loser right now
00:12:18
generally if you manage it at around 21
00:12:20
DTE right like what I always mention in
00:12:22
a lot of my videos If you manage it
00:12:24
around 21 DTE days to expiration then
00:12:27
the chances of you actually realizing
00:12:29
this Max loss is not very high right
00:12:31
only if the market really you know goes
00:12:34
all the way down way past this uh even
00:12:36
this long put strike that you're down
00:12:38
here 165 if goes way below that then of
00:12:41
course yeah there's there's a
00:12:43
possibility that you're going to lose
00:12:44
you know the max loss but other than
00:12:46
that at 21 DTE there's still going to be
00:12:47
quite a bit of extrinsic value left so
00:12:50
you generally won't lose all of this but
00:12:52
one thing to take note down here is that
00:12:54
although you have a very high R rate
00:12:55
roughly about what 90% because this is
00:12:58
around 11 Delta but your win rate or
00:13:01
rather your risk reward ratio is about 1
00:13:03
is to 10 right you make about $83 and
00:13:06
you lose about $916 given that hey uh if
00:13:09
you do lose the max loss so this is one
00:13:11
thing that you want to take note of do
00:13:13
you want to always keep winning but
00:13:15
occasionally you have one of those you
00:13:17
know pretty big losers or do you want to
00:13:19
have on the other end the opposite end
00:13:22
you know very very high credit right and
00:13:24
your risk to re ratio is actually not so
00:13:27
bad right if you take a look at this
00:13:28
your risk ratio is about 1 is to two
00:13:31
right uh you're risking about 600 plus
00:13:35
to make about 300 plus so your risk is
00:13:37
two to make one and your win rate around
00:13:41
here would be somewhere around uh about
00:13:44
60% right because it's about 40 Deltas
00:13:47
all right so this is basically how you
00:13:49
decide you know where you want to place
00:13:51
your put credit spread so generally if
00:13:53
you want something you know that is well
00:13:56
balanced then I would suggest somewhere
00:13:58
around 30 dels right 30 35 dels that
00:14:00
would be pretty decent right so
00:14:02
somewhere around here now the other
00:14:04
thing that actually influences us where
00:14:07
we're going to choose our strikes also
00:14:08
is very dependent on you know where our
00:14:11
support area is right so as you can see
00:14:13
down here the support down here is
00:14:16
around 205 so if we construct the 2 191
00:14:21
so as you can see down here they already
00:14:22
put it on the chart for us to see we can
00:14:25
see immediately that we have already
00:14:26
placed the put credit spread you know
00:14:28
below this one down here right below
00:14:31
this 205 support area so you know if the
00:14:34
market comes down here and then it
00:14:36
bounces back up then that's good right
00:14:37
we have profited on this uh put credit
00:14:40
spread but if you want to be more
00:14:41
conservative and you want to play it
00:14:43
safer and you want to place it below
00:14:45
this bottom one then you want to look
00:14:47
for a strike below
00:14:49
13.25 right so in this case we have to
00:14:52
adjust it again so we have to go back to
00:14:54
our trade tab so let's go to our trade
00:14:58
tab open up the option chain again and
00:15:00
then let us go to the one that we were
00:15:02
choosing I believe it was the March I
00:15:04
2nd right so as you can see down here so
00:15:07
it was below 1 193 right so below 193 we
00:15:11
only have one that is uh uh closest is 1
00:15:14
190 right so let's try this so at 1 190
00:15:17
you notice that it's at 21 Deltas so 21
00:15:20
Deltas just mean that we have about an
00:15:21
80% win rate all right 80% win rate
00:15:24
let's do the 10o wide strike and see you
00:15:26
know what is the credit that we receive
00:15:28
so we can receive about
00:15:31
.73 and let's take a look at our you
00:15:33
know sort of the max risk reward ratio
00:15:36
by the way guys this is only the max
00:15:38
risk to the max reward right many times
00:15:41
you may not necessarily get the max risk
00:15:43
like I mentioned because you're going to
00:15:44
exit early but also you may not also
00:15:47
necessarily get the max credit if you do
00:15:49
not want to hold all the way to
00:15:50
expiration so if you're planning to
00:15:52
calculate you know like the expectancy
00:15:54
what a lot of people like to calculate
00:15:55
based on you know the average win rate
00:15:58
times the average uh win minus of the
00:16:01
average loss rate times the average loss
00:16:04
that you incur that's the expectancy
00:16:06
that they will give you but you cannot
00:16:08
use that on this uh actual uh
00:16:10
probability which they give you down
00:16:12
here because not all the time you're
00:16:13
going to get a Max loss not all the time
00:16:15
you're going to get a Max winner right
00:16:16
there'll be times where that's in
00:16:17
between and if you were to get it out
00:16:20
earlier right let's say around 21 tte
00:16:22
you have a different result again so
00:16:24
again you cannot calculate the
00:16:25
expectancy just based off of whatever is
00:16:28
given to you by default right so you
00:16:30
have to actually use the results based
00:16:32
on your trading your trading results to
00:16:34
actually calculate that now getting back
00:16:36
to our put credit spread down here you
00:16:38
can see down here it's 190 to 180 and
00:16:41
it's about 80% win rate based on this 21
00:16:44
and then you can see right you make 171
00:16:46
in terms of the max profit and then
00:16:48
buying power is 8 to8 so it's actually
00:16:50
not too bad if you want to go with this
00:16:52
if you are actually okay with this then
00:16:54
what you want to do is just go ahead and
00:16:56
send this uh put credit spread trade in
00:16:59
now let's say for example you don't
00:17:01
really like that it's so far away right
00:17:04
although you have a very high wind rate
00:17:05
you're not very satisfied with this kind
00:17:07
of uh what do you call the risk reot
00:17:09
ratio so instead what you want to do is
00:17:12
you want to First wait for the price let
00:17:14
me just go back to the Chart again so
00:17:16
what you want to do is that you want to
00:17:18
go back to the chart and then you want
00:17:21
to see that this price down here
00:17:23
actually trades a little bit lower first
00:17:25
right if it trades a little bit lower
00:17:28
then in this case we are able to get a a
00:17:32
put credit spread with a higher credit
00:17:34
better risk ratio below down here right
00:17:37
so let me try and adjust the chart down
00:17:39
here let me just close this off and see
00:17:41
whether we actually get it all right
00:17:43
there you go so down here you can see
00:17:45
that this is already below where our
00:17:47
support line is which is actually good
00:17:49
right but at the moment if you're not
00:17:50
satisfied with the credit wait for this
00:17:52
to go a little bit lower then you enter
00:17:54
into the credit spread because at this
00:17:56
point of time if you enter into the
00:17:57
credit spread chances are that this 20
00:18:00
Delta over here let me just reopen up
00:18:02
the option chain again is this one down
00:18:05
here so as the market actually starts to
00:18:08
go lower this Delta starts to increase
00:18:11
as well right everything starts to
00:18:12
increase right that means this one may
00:18:14
start to become in the money or at the
00:18:16
money so as the market goes lower when
00:18:19
this becomes maybe at 30 or 35 Delta
00:18:22
then you can start to enter into the
00:18:24
trade right because we already know
00:18:25
roughly what is the kind of risk to
00:18:27
reward based on the 30 to 35 Delta kind
00:18:29
of a put spread right so if you were to
00:18:31
reconstruct the 30 to 35 one let's say
00:18:33
the 35 uh Delta short strike we know
00:18:36
we'll be getting roughly about $310
00:18:39
right so what we can actually do is that
00:18:42
we can wait until this one gets down
00:18:45
near somewhere around here whereby this
00:18:47
becomes around 35 Delta and then we take
00:18:50
a look at the credit right if the credit
00:18:52
is somewhere around $3 something as well
00:18:53
then we can enter into a trade right so
00:18:57
this is for the the put credit spread
00:19:00
now what about the call Credit spread so
00:19:02
the call Credit spread is simply the
00:19:04
opposite so let's go back to the Chart
00:19:06
again down here so as you can see for
00:19:08
this down here what I'm looking for
00:19:10
before placing the call Credit spread in
00:19:12
this case is we want the price to
00:19:14
actually trade up right we want the
00:19:15
price to go much higher and wait until
00:19:18
the stochastics is overbought and then
00:19:21
we want to see at that point of time
00:19:23
where exactly is the price right maybe
00:19:24
when the price goes up down here maybe
00:19:26
around 260 then this will start to show
00:19:30
an overbo signal right then at this time
00:19:32
this is where I'll start to pull out you
00:19:34
know the trend line to try and find you
00:19:36
know where is the resistance area so as
00:19:38
you can see there's quite a few right
00:19:40
you have a resistance area at 265 you
00:19:42
have another one down here around 270
00:19:44
and another one around 280 right so it
00:19:47
really depends on where the market is
00:19:50
when it's an overboard signal right if
00:19:52
the market is all the way at around
00:19:54
271 uh and then it shows an overboard
00:19:57
signal then the one we want to use is
00:19:59
somewhere around 280 which is our
00:20:02
resistance so again we want to just draw
00:20:04
that out so use the Drone line right
00:20:08
click on this one time and then just
00:20:10
extend it to the other side so for here
00:20:12
we can see somewhere around 278.50 6
00:20:16
right so let's say for example the
00:20:17
market has already gone up the market
00:20:18
has gone up and we see that you know
00:20:20
it's at an overbought area then we want
00:20:23
to go to our option chain again right at
00:20:25
the point of time we want to go to
00:20:26
option chain go to the trade tab same
00:20:29
thing open up this one and then go to
00:20:32
the DTE that you want to choose right so
00:20:34
we'll be looking at the call Credit
00:20:35
spread at this point now at this point
00:20:37
you notice that if you were to choose
00:20:39
the one at 280 as our short strike it's
00:20:41
just going to be too far away right it's
00:20:43
like 7 Delta but in the advance we can
00:20:47
somewhat already know roughly what kind
00:20:49
of credit we will get provided you know
00:20:51
in the next few days right because
00:20:53
remember the DTE as it gets lesser and
00:20:55
lesser our premium will also shrink as
00:20:58
as well so you cannot say that you know
00:21:00
I'm waiting for it to get to close to
00:21:01
280 and maybe a week has passed a week
00:21:04
has passed this DTE will now go down to
00:21:07
about 30 what 36 days so if 36 Days you
00:21:11
cannot measure the kind of credit you
00:21:13
get based on what you get right now
00:21:15
because right now you have about 43 days
00:21:17
so at the point of time you may want to
00:21:18
go to the next one already right next
00:21:20
one after a week later should be around
00:21:22
50 days but just get a general sense of
00:21:25
what kind of credit we can get let's
00:21:27
just take a look at around the 35 to you
00:21:30
know 30 Delta so in this case we have
00:21:31
the 33 Delta one down here so it's
00:21:34
around 235 so provided that at the point
00:21:37
of time you know when the market goes up
00:21:39
this 280 will be somewhere around 33
00:21:42
Delta we can take a look at roughly what
00:21:45
kind of uh credit we can get on average
00:21:47
right so maybe it's around $237 $2
00:21:50
thereabouts right especially you know if
00:21:52
the days to expiration left becomes
00:21:54
lesser and lesser now let's talk about
00:21:57
exits so how do we actually exit our
00:21:59
trade so generally for me if I want to
00:22:02
exit a credit spread I generally have a
00:22:05
very simple rule right it's either at
00:22:07
50% take profit or 21 DTE right so I do
00:22:11
not even look at the chart to see what
00:22:13
the chart is doing you know just to exit
00:22:15
my trade but for some people people
00:22:17
might you know use technical analysis so
00:22:19
maybe for yourself if you were to take a
00:22:21
look at the chart and if you see that
00:22:23
let's say for example we we're looking
00:22:25
at the put credit spread right in this
00:22:26
case let's take a look at put credit
00:22:28
spread so maybe if you see that the
00:22:30
market keeps going up and it's still far
00:22:32
away from this resistance area down here
00:22:36
and you think that you know the market
00:22:37
still has some room to go and there's
00:22:39
not many days left to expiration you
00:22:41
could maybe want to choose to hold all
00:22:42
the way to expiration right so maybe
00:22:45
that is what you might want to do if you
00:22:47
use technical analysis or maybe some
00:22:48
indicator right maybe the other way you
00:22:50
can use is using this stochastic or the
00:22:53
RSI to see hey if it becomes overbought
00:22:56
then maybe that's time to get out of
00:22:58
your uh buut spread because right you
00:23:00
don't want to get into a situation
00:23:02
whereby the market starts to come down
00:23:03
again and erode your profits okay so
00:23:06
that's how I would tackle exit and as
00:23:08
you can see guys it's pretty pretty
00:23:10
simple okay guys so I hope you like this
00:23:13
video and have an insight as to how you
00:23:15
can actually construct the credit spread
00:23:18
on your trading platform by the way if
00:23:20
you like this video then you absolutely
00:23:22
going to love this next video which I
00:23:23
have for you so go ahead and watch that
00:23:25
video right now also if you haven't
00:23:27
already got your free copy of the
00:23:29
options income blueprint you can do so
00:23:31
just by clicking this link down here on
00:23:33
your screen and you'll be able to get it
00:23:35
for free all right I will see you in the
00:23:38
next video
