Easy Way To Find A Good Call Or Put Option – Options Trading Tips

All right, what's going on, my lovely people? Today, I wanna talk about a little trick. It's not really a trick, but it's something that I think a lot of traders overlook it, and it's to tell whether or not you should buy a call or put, really to tell if it's overpriced, or at least give you some context about the situation or the option. And I think this is something a lot of people overlook. And two, I wanted to make a video, I know a lot of, I've been hearing a lot of people say, Josh, I'm new, I'm new, give me something more digestible. So this is something you don't need to know anything about options to understand. It's just reading kind of what's in front of you and interpreting it quickly. And that's one of the big keys too, is that I've been doing this for so long, 12 years almost, I'm able to interpret this very quickly. People ask me for a checklist. This is the stuff I'm going through in my head, and I'm just knocking it out, understanding it as soon as I possibly can, because it does give me a lot of information. So if you are more advanced, you might know this, but I'm sure getting this insight from me could probably help you in some ways. And really I'm telling you the importance of it. So whether or not you understand this or not, don't downplay this into what it's telling you. And now I will be making some more like straight up beginner stuff for you guys. But the one thing I will say in those videos, which I'll tell you right now, is options is understanding a story that's being told. I know that may sound weird, but there is literally a context behind every contract. Every contract, you guys have heard the term implied volatility, it's implying something. It's saying something. So you need to know what the market and what that contract is telling you at that given moment. If not, it often goes overlooked. And when you look back, this will explain a lot of the errors a lot of the time. Once you understand, you're like, oh, that's what that meant. That's what was being said. So the little trick here is understanding the dollar change close. So for you guys who aren't familiar with this, this is saying dollar sign, CHG close. That means change. So it's telling you how many in dollars. Now there's also, you'll see it here on like, where is it? Like right here, you'll see percent change close and dollar change close. So like here on the SPY, this dollar change close is telling you how many dollars or cents it's changed since close. And that's something important to know because this is where you guys got to realize there's no such thing as a price for a stock or option. And let me say that again. There's no such thing as a price for a stock or option. It's not listed on apple.com buy one share now for 229. No, it is literally listed in the sense of it's the market price. How can you tell what the price is? It's based on what other people are willing to pay or pretty much what they traded for. So how stocks measure price, that's why they use these metrics of dollar change close and percentage change close. They're letting you know, since close of yesterday, since the last second of close, the last traded price from that day, how has the price changed at what you're buying it? So 290.87 was the last trade. At 290.87, the dollar change close is 57 cents. So it's saying it moved 57 cents. And since it's green and says plus 290.87 is 57 cents higher than where it closed yesterday. So if you wanna know what that is, you could just minus 57 from this and you're gonna be left with 30. So yesterday, the SPY closed at 290.37. Now that 57 cents represents now a 20% movement. So not 20%, a 0.2%. So 20th of a percent of a movement on the stock. So that's a big stock, you get to understand it. So now let's go to the option chain. It's the same exact thing. So now when you see here, this Google call, and it's funny, actually, we go back to my latest video because here's the day of expiration. I go look at my video. I sold this contract actually for about, I think, $1,200. I think I might have it up here, yeah. So Google, and I'm gonna go through my losing trades for you guys. They just have to update when expiration comes around. I'm gonna make a video on that. So here's some of the winning ones so far that I've closed out on. But you see this Google, 12.55. I sold this. I sold it for $1,100, made 700 bucks net profit. And go back to my one video to understand when the best time to sell is. This same contract, it was at $4 today. You guys see from when I sold it, you see the price movement, sold around 1,100 bucks. I left some money on the table, but that contract expired worthless in 48 hours. So you guys need to know how to put that money in your pocket and protect. Now, as we see here, the dollar change close of what it's telling us now is that this contract is down $5.14 since yesterday. So at a price of 5 cents, that means this contract closed at 5.19. So you're seeing, okay, it's down $5.19. And now, I don't have a percentage change close. If I do, I'll just look here. I have it linked to my chart, and it tells me the percentage. So now this isn't gonna be the best example, but what I want, because again, it's expired worthless, but you wanna see where it's at. And really, this is one of the first things I look at, because now, if you could go find the dollar change close, you essentially want it red. So the best case scenario is like, let's say the stock is going up, and the call, you could see, you could buy a call cheaper than what you paid for yesterday. That's gonna be a good deal. But even in general, if I know this is down $15.92 from yesterday, and it's going at 20, I know this is about 50% down. That's gonna be a better time to buy it, because if you've seen my other videos, this is what I go back to tell you. You want to buy your options when they're right around here. You don't wanna be the guy now, and this is what I'm saying. So let's go look at some of the puts on this side. And now, when I go look at this, in the puts, you could tell they're not bad, but I know instantly, if let's go to something more closer to the money. But even in this case, 347 change close at 820. So the ask is at 850, but that's pretty much telling me I'm paying 100% more, that's premium. You do not want that premium. You know, taking Mac now, is it as high? No, you're a lot lower on the scale relative to the price. But again, taking into account the contract has expired because days have gone by, and you also have to understand what's been going on with just the volatility of the stock in general. It's people aren't as expecting it because it had a high run-up, and now you've also got rid of almost about two weeks of time. So putting this in a perspective, this contract's better, but I know too, I'm paying a 73%. And now, what I'm saying is now, you don't even have to go through this and go through and look at these chains. You could tell right away by looking at these really what the percentages are, and you could say, well, yeah, that's a good deal, that's a bad deal. So let me find one. I saw it on Nike, I thought these were decent. And Nike closed up, and you could even see kind of on here, you know, if I wanted to get a put on Nike, I know at least I'm getting these, you know, 20 cents below on 90 cents. That's a big percentage that I'm saving. But like, so here would be a good one. But now look, these contracts aren't at 67 cents. If I could have got them at 67 cents, right away, I could instantly look at this chain and say, okay, this one is going for cheaper than what it was yesterday. That's probably gonna be a good deal. But now, 67 cents, if I could only get it at 80, that means I'm gonna be spending 13 cents higher. So then this would be plus seven at 13 cents higher. Hopefully that makes sense. I'm not going too fast for you guys. But essentially, what I'm saying with this little trick, just look at the dollar change close to quickly identify if an option is trading at a premium yesterday and understand what kind of premium, you know. If you're looking at it, it's up, a $4 contract's up $2. That was a $2 contract yesterday. You have to ask yourself, if anything in the market switches, where's that contract gonna go? And that's where a lot of people could, sometimes you could buy the same exact option as me, but if you pay that double premium the next day, and at the end of the day, we both mess up, goes the other way, we both lose money, but how much are you gonna lose? You're gonna lose double what I paid. So you gotta be careful on the premium. And then at the same time, understanding that premium will give you a better idea of when you should sell. And you wanna sell when that premium is at the greatest, because sometimes, like I proved with that Google contract, and go through my latest trading videos where I go over the plays and even the one where I said you could've made 10,000, you would've been better off selling into that premium, even if the stock went up higher, the contract would be less value because it didn't get to that pace at the right time. The IV, the implied move, is gonna be less. You're gonna get less money on your contract. But essentially, paying attention to your change flows is good, and the key is one to quickly do this, but then the next key, I've talked about this before, but as a refresher, look where you're buying the contract. You know, this right here, I'm not, now, I just pulled up Nike. I'm not saying there's a play on this, but I like this contract. Now, I could go through the rest of my checklist. Now, I could go through, okay, what's Nike? Where does it fit into my macro situation? Where is it fitting into the other news I know, the markets, how can I use it to hedge or gain exposure? But in this case, this would be a good contract simply because in 100 days, I would be buying it at the cheapest price. Now, at 87, you see, when you get back to 87 or 80, it's a little higher, but 67 was a no-brainer, and you see the contract's already up 20% from there. That's where you wanna be that guy because options are easy to turn around. That's what a lot of people don't realize. Your options are not safe, and that's the, let me say it again, options are not safe. Options are not safe. This is how you're gonna blow up a ******* account. You know, you have to be very, very cautious. Things could change like that. That's just how the market works. These are liquid investments. It's not real estate where you could wait seven, 10 months of data before you start to see anything happen. This will happen in a second. Your contract's instantly worthless. Example, look at those Googles. Imagine how crazy is that. I sold a contract to somebody for $1,100. Today, you could buy that contract for a penny. It's not literally. You can't even buy it. It's not worth anything. That's crazy, but that should let you guys know. So in general, even then, as a rule of thumb, even if you buy at the lowest time from here, it doesn't mean you're safe because this could still drop to 30 cents if the stock goes down, you know, and I've seen that happen. I got in a play on Amazon. I did that. I bought a put, and you guys saw what happened with Amazon. Let me see what put I got. I think I got like a September 14th, but even if you go look, I'll just show you the chart of these. I don't know exactly which one I bought, but I think it's only worth like 100, 200 bucks now, and I paid like $400 for it. We'll go to like one of these, but take a look. You know, you bought it. You could have bought it at like 800 bucks, 600 bucks, 500 bucks, even at the lowest. You're like, okay, yeah, so if I bought it at the low of 400 bucks, I'm at the lowest point. Amazon rips. It gets the ---- knocked out of it. This contract's now at 283, 250 on the bid. You still lost another 50%, so you have to be cautious, but what I'm telling you is that the odds are gonna be at your favor when you're buying at the lowest price for the contract with vice versa, so even that's the tricky part of options. You're more likely to make money if you buy a contract at the cheapest point where, you know, at the bottom, like I'm showing you here, and nothing happens to the stock or not as much happens versus buying a stock that has a lot of premium. You buy into the top. You buy it when the contract's priced up here, and it even goes in your move. You still might not even make that much, so again, there's examples recently like NVIDIA's ran and just kept going, and that would disprove that example, and that happens, but again, I'm thinking on a scale where you plot this over time. You know, I'm making a lot of trades in a week, you know, a month even. I have 500, 600 trade notifications. You have to think over a long time what is gonna be reliable and consistent, and that's what you want. That's why I tell you guys, just take the profits when you see them. Don't try chasing them. Let it come to you. Always take your profits when you can because on a long basis, if you wanna keep trading, keep trading. That strategy will always prove to benefit you, not the other way around, so I'll leave it at that, though. Hopefully, this helped you guys. Hopefully, you guys learned from it. Now, use this to ask me some questions. Give me a direction of what you guys wanna see in these videos, and I've been seeing it's been helping you guys. I love it, I love it, I love it. I'm really excited to see some of you guys trading. Remember, paper trade. Options are risky, you guys. It's so easy to blow up account. Please paper trade. Don't get ahead of yourself because, again, you could keep watching these videos. They're costing you nothing. You could learn. Cost you nothing to paper trade. Literally learn, better yourself, become that much more knowledgeable, then come into the markets with real money versus blowing your account up, losing your money, getting sad about it, and now you don't even have money to trade on. It's just a vicious cycle, so please be smart. Love you guys. Drop a subscription or a like, and then a subscription, and make sure you got the post notifications turned on. Peace out, y'all.