 Hey, good morning, everybody. Lilo here, smartoptionseller.com. Today is Saturday, November 21st. How's everybody doing today? Hey, listen, if you are trading Tesla stock and or options and AMD advanced micro devices, stock and options, I've got some interesting stuff to show you today. I'm going to show you how we as option sellers trade AMD and Tesla. And you may get a little kick out of this. This is a process or method that you may not have ever thought about before. So I'm going to go over how we trade, how we traded Tesla and AMD in our newsletter, our smart options seller and vertical spread trader newsletters very recently. And also a little bit later on, we're going to look at some of the charts, some other individual stock charts and the markets to see how things have fared over the last week. We call this our Saturday synopsis. So let's jump right in and take a look at Tesla and AMD. And I'll show you how we trade them with our options strategy. Let's open up the charts, take a quick look at Tesla here and you can see, if you've been watching some of my videos, you will notice that we have put this triangle pattern on Tesla. We draw the trend lines from the tops of the daily bars as a daily bar chart of Tesla. And we draw the trend line, the uptrending trend line on the bottoms of these daily bar charts. And what you can see here, this triangle pattern is typically, what it tells you is that the stock is congesting in a very tighter and tighter range as the days go on. And at some point, as it gets closer to the tip of the triangle, the stock will typically break out in one direction or another that's either higher or lower. In this case, we were banking on Tesla probably breaking out to the upside only because it had been in a nice uptrend. As we look at charts, these are the things we look at. We look at moving averages, we have a 20-day moving average and a 50-day moving average. And we have this 200-day moving average line here and our RSI indicator down at the bottom. But typically, you really only need to look at the movement of the chart, of the stock and that is, it was moving upwards. And when it starts to congest like this, it will probably break out in the same direction from where it came. What was the catalyst for breaking Tesla out to the upside this week? Well, it was finally revealed that Tesla will be added to the S&P 500 index, which is a very bullish indicator. That's because now all these mutual fund managers, hedge fund managers, passive fund managers all have to add Tesla to their accounts, to their hedge funds, to their mutual funds now. So that means there's going to be a lot of buying pressure on Tesla and that popped it out finally out of this triangle. So what do we do as option traders in our service? Well, we are option sellers, we are put option sellers. That means that we are mostly neutral to bullish on a direction. And we typically like to get into a put-sell trade. We sell naked put when we realize that the stock is going to continue moving higher. As you sell put options, the higher movement in the stock is good for your position. And one thing that we do as option sellers is we take a directional idea different than what most people usually do. Now, when you buy a stock or before you get into a stock, you typically say, you know what? I think the stock is going higher or I think the stock is going to move in this direction. Well, as option sellers, our goal isn't so much to figure out where the stock is going. Our goal is to figure out more about where the stock isn't going. And it's a big discrepancy between strategies that you can choose. Most people say, yeah, I think it's stocks are gonna go up. I think it's gonna go here. Well, our goal is to always to figure out where the stock isn't going to move. So if we're bullish on a stock, we definitely think the stock is going up. Yes, but we're more sure that the stock isn't going to fall to a certain level. So that's very important. Let's take a look at AMD as well. And then I'll show you how we traded these options on these two stocks. Now AMD, I've drawn this support line here. If you've been watching some of my videos recently, we have the support line on AMD around $74 a share. And it's kind of been trading in this now range, which is a great thing for option sellers. If the stock's just trading flat, that's a great for option sellers because that option prices decaying as each day goes on as the stock doesn't move in one direction or the other. That's what we like as option sellers. So once again, just like Tesla, AMD had a nice uptrending chart. So we were pretty sure that AMD is going to keep moving to the upside, but we're even more sure that it's not going to fall in price. So we're estimating that we're estimating where the stock isn't going to go. And to us, that means AMD isn't going to go, you know, really far to the downside. Yeah, we wanted to keep it going up. But we're not basing our trade on thinking that it's going to go up and trying to figure out where it's going to go up. We're just trying to figure out how far it won't fall in the future. And since we have momentum on our side, we're pretty sure it's not going to fall a good distance. And you can totally base trades on that. And you can be thinking, well, how can you base a trade on where a stock isn't going to go? Well, that's the great thing about selling options because you can base all your trades on where a stock isn't going to go. And I'm going to show you how we do that. Let's take a look at our cheat sheet that we use. And I try to explain these strategies to you. So at the smart options seller, we sell naked put options and we sell put option credit spreads. That's what we do. Those are our two main strategies, selling naked put options and selling put option credit spreads. And those strategies always turn out well with a flat to rising market, okay? And even if the stock drops, we still have an opportunity to make money on these types of trades. So when we sell put options and we sell put option credit spreads, we're not trying to figure out where the stock is going to go. We're just trying to figure out where the stock most likely isn't going to go. And it's a great way to increase the probability of profit on your trade. So let's take a look at how we actually engage these trades when we sell put options and we sell put option credit. So here's the three step process. You always want to pick a quality stock, right? You want to pick a stock that's got good bullish momentum behind it that everybody knows that it's a good company. It's got good earnings. You know, it's a leader in its sector. You know, you don't want to make trades on high flying stocks that you really don't know about or you're just getting tips on from a neighbor. I mean, those will burn up on you. You don't want to do that. So pick a quality stock. In our case, we pick AMD and Tesla, great companies, bullish momentum behind them. So we like those. Now, when we sell either the naked put or the put option credit, we're always looking for at least a 20% downside cushion between the current stock price and the strike price that we use. What does that mean? Well, if the stock price is here, we're going to pick an area where we think the stock isn't going to move. And in our case, we don't want the stock to move lower on us, but we always want to have some kind of directional buffer cushion in case we're wrong on which way the stock is going to move. In this case, we want the stock to go higher, but we're thinking the stock isn't going to drop, but we still need a cushion, right? If the case were wrong, we want some kind of directional buffer. And that means that we have to pick strike prices that are at least 20% below the current price of the stock, okay? That's step number two. Step number three, as you probably know, if you're an option trader, all option contracts have an expiration date. And the shorter the expiration, the better when you're selling options, okay? You want a short amount of time when you're selling options, but you also want to be able to receive, you know, a credit that's somewhat worthy, you know, it makes it worth your time. In our case, our method is that we always want to receive a credit of at least 25 cents per contract or 25 cents per spread if we're trading the spreads. So pick the shortest expiration date in which you can get a 25 cent credit plus the 20% downside cushion. So these three things have to work in tandem with each other. And how do you do that? Well, first, you know, you look at the stock, you find the cushion, then you go through the expiration dates of the options as long as you can get a 25 cent credit within, you know, a short expiration time. And to us, most of our trades are lasting, you know, one to three months at this point, which is good, okay? But the shorter the better, as long as you can get that cushion and the 25 cent credit. And when you have trades like that, when you find trades like that, they typically can yield over a 95% probability of profit. What does that mean? Well, as an option seller, if you sell the option at one price, what you're wanting is for that option to just expire worthless. Or, you know, you can buy the option back at a very cheap price after you sold it. If you sold it here, you can buy it back at this price, you lock in your profit. But typically, if you're a seller of options, you just want those options to expire worthless and you'll keep the whole credit that you've received. And when you do that, the way that we do it, we typically can yield over a 95% probability of profit. And let's take a look at the AMD, for example, the AMD, in our smart option seller newsletter, we sold an AMD naked put trade. We had $37 of downside cushion, okay? And that is a 44% buffer. That's more than double the 20% downside cushion that we look for. And this trade had a 99% probability of profit. Let's take a look at the AMD chart here for a second and see what that means. Now AMD is around closed on Friday, yesterday, November 20th, 2020, $84.64. AMD is just kind of meandering around. We sold a naked put option with a $37 of downside cushion. That means we sold AMD a naked put all the way down here. $47 strike price is what we use. We sold the $47 put option. Can't tell you the exact trade because that would be unfair to our paying customers. But right now, we have all this downside cushion from $84 all the way down to 47. What does that mean? Well, as long as AMD doesn't fall from 84 all the way down to 47, we're gonna make a profitable trade. So in this case, we think AMD is going up, but we're not interested in trying to figure out where it's going to go, how much higher it's going to go. We're just trying to figure out where AMD is not going to go. And we've assessed that AMD is not going to fall down to $47 in the next couple of months. And that's how we sell our put option. So how do we know that we had like a 99% probability of profit on this trade? Well, one thing that you can do is you use the probability calculator. I've talked about the probability calculator many times before. Also, let's plug in some numbers here. Now, I'm going to show you the Tesla trade in a minute and I'll show you the downside buffer that we get and the probability of profit with that one as well. But let's concentrate on AMD. AMD was at $84. And the expiration date is at 55 days. It's in January. And we have the future volatility of AMD. It's probably around 45% and I'll show you how I figured that out. And we have our $47 strike price, okay? So AMD is at $84. We have a 55 days until expiration. And we want to know what the chances are of AMD dropping from 84 all the way down to 47 in the next 55 days. And we click on the Go button. Let me make sure I got this here. And we click on Go. So here's what the probability calculator is telling us. We have a 99.95% probability that AMD is going to finish above $47 a share. Conversely, it has less than 1% chance that AMD will fall all the way down to 47 from its current price of 84. So that gives us our 99, over a 99% probability of profit on this trade. It means it's probable we're going to walk away as winners 99% in this case. So that's a great trade on AMD. Now let's go back and take a look at Tesla. And this is what we did on Tesla. Now, since Tesla is a very high priced stock, we aren't going to sell naked put options. We sell put option credit spreads. It's a limited risk, limited reward type of trade. So in Tesla, we were watching the chart, saw the triangle, we were waiting for the breakout and then it had the breakout. So when Tesla was around $450 a share, I put out an alert to sell a put option credit spread on Tesla. And we wanted to make sure all the parameters are in place. We wanted a 20% buffer short expiration where we can collect at least 25 cents credit on the spread. So what did we do? We ended up selling the Tesla. We sold a $4 wide spread underneath $300 a share. We chose a strike price all the way down here. So we were banking on Tesla, not falling, not going down here. Even though we think Tesla's going higher, we're still basing our trades on where we think Tesla is not going to move to. And we're thinking that it's not going to fall below $300 per share in the next couple months. So let's go back to our cheat sheet here. And with the Tesla put option credit spread, we had $191 of downside cushion, which equaled a 39% buffer between the current stock price and the short leg of the spread, okay? And that equals at 98% probability of profit. Go back to the chart Tesla. Tesla's all the way up here. Our strike prices are down here where we don't think Tesla will fall to $191 of downside cushion. That means Tesla could keep moving around, keep moving around, higher, lower, sideways, whatever. As long as it doesn't fall all the way down to here, we're going to have a winning trade. Let's go back to the probability calculator. For Tesla, we'll put in $489. And we still have a January expiration date, 55 days ahead, Tesla's volatility around 60%. And we want to put in our short leg of the spread. This is what we did. So Tesla has to fall from $489 all the way down to $298 before we get into any trouble. Click on go. And so here's what we got. Over a 98% probability of profit that Tesla will not fall that far and that will give us a winning trade. Conversely, it only has a 1.67% chance of actually falling that far. Okay, we don't want Tesla to fall. We want it to keep going up, move sideways. It can actually even drop a little bit. We just don't want it to drop over $191 a share while we have the trade open. And it's telling us there's a 98% chance that Tesla will not fall that far. So how do you find these numbers, Jimmy? These numbers are easy to find. Current price of the stock, the expiration date. So where do you find the future volatility number? We always show you that. We go to our website of ivolatility.com. Let me just move something out of the way here. ivolatility.com, you pull up the volatility chart. I've got AMD listed here and I'll show you Tesla in a second. This is the volatility chart. You look at the current volatility all the way on the right side of the chart. So Tesla's, I mean, AMD was about 45%, okay? You got the implied volatility and historical volatility numbers. Two different numbers usually move in tandem with each other. Take an average of the two of them where they currently are, it's around 45%. Let's look at Tesla, okay? Tesla, and this is all for free. You can do this all for free on ivolatility.com. Click on the volatility chart and here is Tesla's volatility chart. Current range right here between the implied and historical, the blue and green line. It's right around 60% the average of the two. So we put that number back into the probability calculator. Here we go, Tesla, current price, current expiration date. Here's your volatility number. You put in the strike prices that you're looking at, that you don't think the stock will fall to and then you've got your results, bottom left corner, bottom right corner. So that's how we do it. That's how we as option sellers, smart option sellers, that's how we make our trades. We're not interested so much on trying to predict where the stock is moving to. We're just trying to figure out where the stock most likely won't move to and that's how we sell our options. That's how we sell our puts and we sell our put spreads. So remember, you're looking for a quality stock. You know, if you're really wanting some high probabilities of profits, high chances to win, this is how you do it. You pick a quality stock, you use in our case a 20% buffer and then you pick the shortest expiration dates where you could get at least a 25 cent credit. Now, if you want to get a higher credit, if you wanna get more money, then just you can pick different expiration dates because the longer out in time you go, the more money you get or you pick different strike prices. If you wanna go a little bit higher and your strike prices have less downside cushion, you'll get paid more. So there's always a, you know, there's a trade off. You want more money, you gotta take a little more risk. Want a higher probability, you get a little less money. So there's always a trade off. If you figure out what works best for you, for us, these are the method, these are the steps that we take. So selling put options, selling put option credit is what we do and it works out really great for us. So there you go. And let's take a quick look at some other charts here. This is what we do as part of our Saturday synopsis. We look at the charts, we look at how things are looking, see how the markets fared over the last week and see what may come forward for the next week. And let's go back to the, we always try to look at the broad market first, the S&P 500 to see what the general market is doing. We always start with the SPY, which is the Exchange Traded Fund for the S&P 500. What do we look at? Well, we've always looked at this. We've been seeing that the SPY has been making this nice W pattern, bullish pattern. And as long as it moves above the resistance line, it will be off to the races. Let's open this up a little bit, see where we are here. Let me just see what we got here. Okay. Now, we've been waiting for the SPY, the S&P 500, to break above this resistance line, which is right around 356, 357 or so. And this is what we had last Monday when Pfizer came out with the news that they had this coronavirus vaccine, which is great news. So last Monday, this one bar, then the markets came back below the resistance line, popped back above it. So this week, here's our one week's worth of trading. Trade is getting kind of narrow here. We've got the Thanksgiving holiday coming up in the United States on Thursday this coming week. So the range has gotten a little tighter. It's been half the week above the resistance line and then it closed Friday, yesterday, November 20th below the resistance line. So the S&P 500 needs to figure out where it wants to go. When you're dealing with a major supporter resistance line, it's going to trade around it for a while until it can figure out where it wants to go. So we may see some more meandering right around this 356, 55, 57 level until it really can blast out higher. And what will get it to move higher? Well, we're in a very news driven market right now. The market can certainly fall back down. We have the support down here around 320 or 3,200 in the S&P 500. We really don't want to see that. We want to see the market keep its footing and then just continue to move higher. I mean, we've got the coronavirus vaccines right ready to go. We've got the Pfizer one. We've got the Moderna vaccine ready to go. I think by the end of December, first line responders, healthcare workers are going to get probably the first ones to get the vaccine. And then moving into 2020, 2021, hopefully by the spring, maybe the general population will be able to start to get the vaccine. So that's great news on the horizon. The market always looks out six to nine months, very optimistic. So we can see and feel that the market wants to keep going higher. So that's the S&P 500. It will probably continue to meander right around the resistance line and hopefully it can break through it again. Let's take a look at the NASDAQ, see what's going on there. We had the resistance line here drawn. If you watch some of the past weeks of my videos, you can see we've been dealing with this resistance line here. Sort of has the W pattern as well, still kind of moving upwards. We want to see the market blast through the upside. We can actually even see possibly the A sending, a triangle here. You can draw the lines. You can kind of draw the lines along the bottom. And so now you have this, and I'll connect the other line here. You have this sort of triangle, A sending triangle pattern where you have the upward momentum and you have the flat top. And once the stock or the index kind of coils in here and then eventually, hopefully it will break out to the upside. Now I want to show you another website. Let me, there's the calculator. Let me see where the other website is that I wanted to show you, move something out of the way. Where is that website that I had? Okay, so here chartpatterns.com. For those of you who are looking to try to figure out, how do I spot these patterns? What, how could I see these things? Chartpatterns.com gives you a nice, easy way to understand what these patterns look like. You can click on this one right here. This is what the NASDAQ looks like right now. You click on this and it'll tell you a little bit more about what it is. It is an A sending triangle, which is typically a bullish pattern. Just like the NASDAQ, it's starting to move upwards, got the flat top resistance. And once it breaks out, it should continue to go in that same direction, meaning upwards, okay? So take a look at chartpatterns.com. You know, great, easy way to figure out what some of these patterns are. Let's go back to the charts. So the NASDAQ is sort of in this A sending triangle pattern. We're just waiting for the move out to the upside. Hope it doesn't fall down to the downside, but I think bullish momentum is behind us and it should keep going up. Let's take a look at the Dow, Jones industrial average. Dow has been moving very strongly, finally made all-time new highs, finally got back above the highs, all-time highs it made in February, right before coronavirus really struck. You know, look at this, finally made it all the way back to all-time new highs. And it's trading right around the resistance line, just like I showed you in the SAP 500. It has to figure out what it wants to do. And so as long as it can keep this, stay above the resistance line, it should keep moving back to the upside, right? Okay, so let's take a look at some individual stocks. Now, if you watched earlier part of the presentation, obviously you saw Tesla. You know, we like talking about Tesla. It was in the nice triangle pattern, finally blasted out to the upside and that is because it has been added to the S&P 500. So that's great news for Tesla. Tesla probably will just continue on moving higher. Great thing for you Tesla owners. Let's take a look at Apple. We look at Apple as well. Sort of in a triangle pattern also. Okay, Apple's sort of been meandering made it's all-time highs and then it's just got kicked back down. This is after it finally split head. It's four for one split back here around this time. And then it's just sort of been sold off and just meandering around. So it's in this somewhat of a triangle pattern waiting for it to break out to the upside, hopefully not to the downside. We want Apple to keep going up. So keep an eye on Apple. I'm hoping that it's going to break out of this range in the very near future. Let's take a look at Amazon. Amazon, same thing. Triangle-ish pattern. Okay, everyone could see something different depending on what time frame you're looking at. It's sort of stuck in a range here as well. Some people would say, okay, well, Amazon is trading here's the lows and here's the highs. Some will say it's trading in this sort of channel. This is a channel pattern, okay? It's hitting the tops, hitting the bottoms, going towards the tops, going towards the bottom. So it's sort of trading in this range within this triangle pattern. So if it breaks out to the upside, this is where it may see resistance in the future. If it breaks to the downside, this is where it may find support. So keep an eye on Amazon. Let's take a look at Google. I've had this in the past. Google bounced right off this 200-day moving average a while ago in September and has gone up since. And I had drawn this small bull flag pattern, okay? You got the flagpole and then the pennant part. This is a very bullish indicator. Flagpole, once it breaks out above the top of the pennant, it keeps going. It had a little dip here, but look, eventually it found its footing. So Google's looking strong. What else do we have? Facebook, we'll take a look at Facebook. Facebook's not doing so much. It's just kind of in this, you can also maybe see it in a triangle pattern there. So it's just meandering around. Some of these stay-at-home stocks are, we're getting hit recently. Zoom, I think we looked at Zoom last week. Zoom sort of has fallen off from its all-time highs. Kind of meandering around here. Peloton, another stay-at-home stock that people like had a big dip. Sort of finding its footing here, making a little bit of comeback. So these are some of the, people concentrate on the high-flying stocks. Once again, AMD, we love AMD at the smart option seller. It's been a great trade for us. We keep selling put options on it. And look at it, it just keeps meandering around, going up a little bit. That works great for us as well. So there you go, that's some of the stocks. I think for next week, let's take a look one more time at the S&P 500 SPY market. It's just hugging this resistance line. I think it's just gathering up steam to want to continue on its bullish run. I am bullish. I feel confident that the market is going to continue higher once it finishes this little congestion period. And you can also draw, for your technical analysts out there, you can actually draw a little teeny triangle pattern here as well. So SPY is in this tightening channel and hopefully it's gonna break out to the upside. I'm bullish. I mean, the market will always reward you in the long run. If you stay in for the long run, the market always goes up over time. Even through all the worst of the things that we've seen over history or time, the market keeps going up. So I feel bullish. I like the chances of the market going up over the long run. And that's just my opinion. But we continue to sell put options, sell put option credit spreads because we're trying to figure out where the market isn't going to go. And most likely that isn't all the way back down here. So we sell put options with lots of cushion, same with the put option credit spreads. So there you go. I hope you enjoyed today's video. Give me a thumbs up in the YouTube channel here. If you haven't subscribed yet, hit that red subscribe button and always send me questions. You can leave comments below in the comments section or you can email me. I'll always answer and I love hearing from you. Okay, so that's all for me today. I wanna wish everyone a good weekend and a good trading week ahead. This is Lee Lowell signing off.