This is shaking up markets, are you prepared?

Added: 2026-05-19

[00:00:00]The market continues to hit new all-time highs all day every day. Stonks only go up, or at least that's what it feels like. Now, this morning we're setting up for a pullback. We're setting up for a pullback crashing to levels not seen since yesterday. So, you probably have a ton of questions, and so that's what this episode is all about is answering as many questions as I possibly can to make you a better investor. So, let's let's start at the top. We already have several several questions loaded up, and let's get started here.

[00:00:28]So, I I recently spoke at the Trade Your Event down in Florida, and it was amazing. I had such a great time, and I I got to meet so many outliers there.

[00:00:35]But, to had enough twos question, I think you were the only Trade Your speaker not selling contracts. Thoughts on that and 24/7 trading, which Lex believes is just a matter of time. Is that the end of gap and crap or gap and go? I'll start with 24/7 trading. I don't want 24/7 trading. I don't want that at all.

[00:00:54]I I There are actually if you go back in time, it actually used to be 6 days a week, and then they they took off Saturdays. I would much rather keep it the way it is. Now, granted, you know, I'm just old man Chris, right? But, the truth is is that like traders and investors, we don't want to get an alert in the middle of the night and have to work on our position.

[00:01:18]I think if we do that, we need to have wider stops, right? And then so that's going to definitely change a lot of trading plans. But, then again, remember, there are there are forces way bigger than any retail trader, and we can't control that. If if they turn on 24/7 trading, by God, that's what we got to deal with, right? And so we have to make all of our changes to to accommodate that. Personally, I don't want to see that. I like having weekends off. I like having evenings off. Like last night, I was out coaching my my son's soccer team.

[00:01:46]It was our last practice of the season, and it was dads versus kids. That's what we always do. And of course, dads won five to two, and it was epic.

[00:01:54]We dominated those 11-year-olds. We showed them what's up. And um imagine in the middle of that having to get an alert, oh it's time to close your trade. No, I don't want to deal with that, and you don't want to deal with that either. So, listen, the the idea of selling options, we've all talked about this many, many times. If you've watched my channel for any length of time, you'll understand just how adamant I am about not selling options, but to a new retail trader, the allure of high win rates is beyond sexy. Because a new retail trader doesn't understand risk to return, right? When you can risk one and make 10, that's a way better proposition than risking 10 to make one. But you may not win more than 30% of the time.

[00:02:42]No retail trader comes into the game looking for a 30% win rate. Doesn't matter how much they're going to make on the other end.

[00:02:49]Retail traders, and you've you've been there, I was there, they want high win rates. Selling options gives you the high win rates, but they don't tell you that you know they don't tell you just how bad the risk to return is when things don't go your way.

[00:03:04]The general director of Teemu is here.

[00:03:07]Uh your opinion on long call QQQ versus TQQQ without current plans context, and I appreciate that. I get why you don't trade long call QQQ. Now, plan A aggressive so plan ETF has to be defensive. And then I got a little confused by that.

[00:03:25]But but here's the thing, right? If you're going to run uh you know, long calls on the Qs, you're doing uh l- I mean, one call contract represents 100 shares of stock. Okay? TQQQ is triple leverage ETF. Now, couple things to note here. On a triple leverage ETF, you have what's called volatility drag, meaning for a 1% In fact, I have a slide that's going to help demonstrate this.

[00:03:51]Hold on.

[00:03:53]Meaning for every 1% up, the market will go up three TQQQ will go up 3% that day.

[00:04:00]But every 1% move down, it will go down 3% that day. Now, what volatility drag is is this right here, right? Let's say you had a 50% loss, you now have to double that position to get back to break even.

[00:04:15]And volatility drag is real on leveraged ETFs because while you can get a 3% up move, remember, compounding over time, you might end up with a 50% loss and then you needed to double to get back to break even. So, it's really it really comes down to to personal preference, which is better.

[00:04:33]And it really comes down to what's better for your personality and your portfolio. And there's times where you use one over the other, right? Times where you use one over the other.

[00:04:41]Like for me, I I like to trade deep in the money long calls when it's an aggressive time in the market, but when it's a defensive time in the market, like I want to be in, but I'm I don't have the setups that I need to see, then I'll go TQs on shares. But then again, if you want leverage on leverage, you can always buy calls on TQs and just have fun with that.

[00:05:00]How do you start a family fund?

[00:05:01]So, I would say step one, you know, having a family fund is having a track record, right? If you can demonstrate that you've actually made money in the markets, that's the first place to start. Now, my family fund, what's up, Nana and Grandpa? Um I didn't I told them, I don't want to trade it. I don't want it. I'm not asking for it. Don't give it to me. And they're like, we want you to do it. And I'm like, okay. That's the other thing, too, is if you are asking your fam if you are soliciting your family, you're doing it wrong, right? Why are you trying to do that?

[00:05:30]What is your benefit here?

[00:05:34]Let's be realistic here. Why are you trying to trade their money?

[00:05:37]What are you getting out of this?

[00:05:39]Are you going to charge them a fee?

[00:05:41]I don't know. Are you just trying to be altruistic?

[00:05:45]Could be. I don't know. But for me personally, I don't want to do it.

[00:05:48]But they wanted me to do it, and so I was like, "Okay, fine. Fine. I'll do it." Now, um second, you need to have a track record, and you don't need to go solicit those.

[00:05:58]Uh because it is family. Family's different. You and I both know that working with family is is a different beast than working with customers.

[00:06:04]And because of that, it can it can make things weird, right? Imagine holiday time uh trying to explain things to them, right? Like for example, uh my account was up last year, while Nana Grandpa's account, you know, the family fund was down. And how do you explain that?

[00:06:23]It's timing, right? We happen to get in on the family fund. We started the family fund later in the year after I'd already made gains, and I still took losses.

[00:06:33]But when we started their account, it just happened to be when those losses started. And again, you you know that you can't pick when the wins show up and when the losses show up. If we could, right, we'd all have private islands.

[00:06:46]But we can't, right? Losing trades is a natural consequence of trading, just like winning trades is a natural consequence of trading. But we don't get to decide when those show up.

[00:06:57]Do you use 5-minute chart to enter and exit trades? Uh the only time I use a 5-minute chart is an intraday emergency exit signal. So, let me go to that real quick.

[00:07:06]Um here. When it runs into an order block.

[00:07:11]That is the only time that I will use a 5-minute chart. Literally, I don't use it any other time. Now, um this trading plan, this all this side deck is linked down below, and it will be in every video forever in the in the description of YouTube videos uh for 2026. So, by all means, go click it, and you'll see exactly what I'm talking about. But the reason that I do that is because, in fact, let's go to silver, cuz silver just got absolutely dominated by this order block right here.

[00:07:36]Uh I got to turn on order blocks, apparently.

[00:07:39]Oh, oh, oh, not not silver. Not SLV, but it was uh the silver this.

[00:07:47]Yeah, silver got absolutely monkey hammered on that order block right there. Crazy, right? Weird. To- Totally coincidental spot of Order Blocks don't work. They're just random spots on the chart. That's so weird because it seems to have all that support on the bottom and all that resistance on the top.

[00:08:02]Totally random spot on the chart where silver got monkey hammered, right? Now, I would switch to the five This is on futures, so this is going to be like a million candles, but I would switch to the five-minute chart when it comes up into this area because I don't want to get monkey hammered. I want to take my money and I want to close it at the top.

[00:08:17]So, if it comes up into here Let me draw on this.

[00:08:21]If it comes up into here okay? And then starts to reverse, as soon as the five and 10 cross, the five and 10 EMAs cross, I'm sorry, the 10 and 20 EMAs cross on the five-minute chart is what I meant to say. That's where I'm going to get out. And that's linked right there. So, of course, uh do download the the trading plan down below. There's no cost, there's no obligation, there's no email, there's no BS. You click it, you got it.

[00:08:47]Um If we enter a bear market, would investing in dividend stocks be a better bet until the market recovers? I like where your head is at there, right?

[00:08:56]Because hey, I'm going to get paid a dividend, but think about the net asset value of the stock. So, a couple things to talk about here. A dividend is like a uh it's like owning a rental property, right?

[00:09:09]Think of it this way and and it will make all the sense in the world to what I'm going to explain. Imagine you own a rental property.

[00:09:15]And that rental property is paying you, let's say, a thousand bucks a month in rental income, okay? Now, the value of that rental property when you bought it was $250,000. So, every month you're collecting that thousand-dollar check and when you bought it, it was 250,000.

[00:09:30]Then the housing market goes into a bear market and now it was 250. Now, if you were to sell that, it'd be 200. But, you're still collecting that $1,000 a month, right? 1,000 bucks a month.

[00:09:42]Now, you need 50 months to offset the fact that you've gone down in the market value of that house. What if it continues down? What if it goes down to 150?

[00:09:53]Well, now you need 100 months in a row of collecting that dividend, of collecting that rental income to offset the fact that your net asset value has gone down. So, where I understand where you're coming from with hey, if it goes down, I'll still be collecting money. If your net asset value goes down, it is hardly going to be a scratch against how much the net asset value has gone down that you're going to make in dividend income. So, but again, you do you. You need to come up with the plan that fits your personality and your portfolio. For me, I'll be sticking in SGOV, which is ultra short-term bonds, paying roughly 4% right now. So, I will be making money.

[00:10:29]My net asset value will be increasing as the dividends are increasing.

[00:10:34]And then, once the market figures itself out, I'll have more money to trade with versus less money, but I did collect the dividend income. Again, I totally understand where you're going for, uh but it it it's not going to work out as great as you think it is.

[00:10:49]Um Are you guys still working on adding new setups? Dude, are you kidding me? Yes, of course. We're So, um in the very near future, uh we are currently building out strategy library right now. Not me, the dev team. I'm it's way over my head. Um they're working on what we're calling strategy library. And uh plan M and plan ETF are going to be the first ones in there.

[00:11:10]Uh we plan to hire Scott. Don't tell Scott, it's a total secret. Uh to be a full-time quant for us, and we're going to develop tons and tons of plans to add into that. Now, of course, every plan is going to have different levels of expectancy, and we may even shift from one plan to another. But, we want to have plans that work in all market conditions, so we can say, "Okay, with this condition that's going on right now, we're going to run from M. With this condition, we're going to run plan ETF. With this condition we're going to run plan I don't know.

[00:11:37]F, right?

[00:11:38]>> [snorts] >> Plan F, plan F, I don't know. We'll figure it out.

[00:11:42]But yes, we're going to have tons and they will be available to you for free, 100% for free inside of Outlier. Outlier is only 82 cents a day, so it's unbelievably inexpensive. And so all of these plans will be available to you and then you as customers of Outlier can actually upload and build your own plans. We're working on a back tester that will allow you to put in your own variables and then it'll show you what the expectancy is and then you can upload that into the strategy library assuming that it has a positive edge. We're not going to load anything that has a negative edge and that's why it has to be back tested first and then people can subscribe to that.

[00:12:20]Won't that be cool, right? So you could put up your own plan, whatever that plan is and it it actually could be amazing and then you could have people subscribing to that plan and they can all have amazing portfolios as well and maybe I will as well. We'll have to see.

[00:12:34]I'm very excited about this, right? We are taking a completely different approach to every other YouTuber, right?

[00:12:39]Because everything we do at Outlier is data backed, right? Proven plans that um Now, we understand that just trust me, bro, it's going to go up is is a whole load of hogwash, right? We want to make sure that anything that we're putting our money in actually has a positive edge to go along with it.

[00:12:58]How important is stock rotation or ETF rotation? So I I assume you mean sector rotation. It's incredibly important, right? The way that I like to describe my trading is I want to be in the greediest stock in the greediest sector as the market's getting more greedy, right? And think of it this way.

[00:13:11]Nicholas Darvas figured this out in the the book how I made $2 million in the stock market all the way back in the 1950s. He found that there are hot sectors and you and I both know there's hot sectors. Like right now the semiconductor sector is the hot sector.

[00:13:23]Absolutely, right? In fact, let's go to SMH.

[00:13:29]Yeah, that's the hot sector, right? But then let's go to XLF, which is financials. That's not so hot at all.

[00:13:37]Sector rotation is real, and you want to be in those sectors that are running like gangbusters.

[00:13:43]Assuming you have a plan that gets you into those.

[00:13:48]Great question, though.

[00:13:52]Have the demographics changed on the channel? It seems like there's more girls watching. No, in fact, it's 93% men. So, it's all dudes and then a couple girls. So, y'all be chill.

[00:14:02]Uh Morgi says, "Hi Chris, when rolling an option out, are you trying to keep it at 1 month to expiration?"

[00:14:09]Fantastic question. So, whenever we roll options, it's basically like we have um we're Hang it Hang on. Uh let's pull up Tradeier. Maybe this will be easier.

[00:14:19]So, imagine that we had bought Meta. And Meta went up, I don't know, 100 bucks, okay, from 518 to 618. The original option we bought is going to be ultra deep in the money. So, we're looking to roll it back closer to the money, roughly around the 80 delta. That's where I I That's where I live.

[00:14:35]Now, let's say that it goes from 80 originally up to 90, and we roll back to 80. By rolling back to 80, we're taking partial profits now with the amount of credit. And at some point, after three or four rolls generally, you get enough credit to offset the original debit, making the trade 100% risk-free. Which is so cool. It's the biggest ninja hack of all time.

[00:14:56]Um Now, your question here is do you roll out? So, I will keep it within the same expiration until I get to 1 week until that expiration. So, for example, if it's 7 days out, then I'll be like, "You know what?

[00:15:10]There's too much gamma risk here." And gamma risk means that the um the moves, the change uh from if it's going to be in the money or out of the money, happens a lot faster. And that's risk I don't want to work with. I don't want to work with that at all. So, I will then roll it out in time. Now, one of the things that I recently changed was instead of working on weekly contracts, I'm only working on the monthly contracts. So, at that point I'd be looking to roll from uh month one to month two.

[00:15:37]Um now, granted at that point you may not be able to roll for a credit. It's possible. And if you can't roll for a credit, you have to close the trade.

[00:15:46]But you can't keep it on.

[00:15:48]You have to close the trade as per my my rules, I should say. So, one week before expert Look at this. I have a slide for this. Is it already profitable? If no, then you just close the trade. All right, it's just not working out, and that's fine.

[00:15:59]If yes, can you roll out for a credit?

[00:16:02]Now, if you can roll it out for a credit, that's what you're looking for cuz every time you take a credit, you have less risk in the trade. But if you're doing for a debit, now you have more risk, and we don't want risk. We want to reduce risk as far as possible.

[00:16:12]If you can't roll for a credit, close it now. If yes, it's just a roll from strike one to strike two, from month one to month two. You're taking your partial profits, you're freeing up capital, and it keeps your trade alive. Great question.

[00:16:26]Um Trying to think of how to phrase this without sounding like a total dick.

[00:16:38]I love the thought.

[00:16:39]I appreciate the thought.

[00:16:41]But I would also like to to impart upon you anything that you think of, we've already tried.

[00:16:47]So, when we are doing the strategy library, and we're building up these uh these plans, I actually want to have a spreadsheet to say, "This was the test we made. This was the outcome." That way when I have a question like this, I can say, "You know what? Great question. We already tried it. This was the expectancy. It lowered the expectancy.

[00:17:05]That's why we don't use it."

[00:17:07]But you can do whatever you want.

[00:17:09]You can do anything you want. There are an unlimited opportunities to do unlimited things every single day.

[00:17:15]Um having seen the strength of the outlier performance summary for a stock, is anyone simply using the outlier buy and sell signals? And you absolutely could. 100% you could, right? But, here's the thing. The software gives you the buy and sell signals. The software shows you the buy uh uh uh the fear and greed. The software shows you all kinds of great stuff.

[00:17:36]Take it a step further into building it into a trading plan, right? That's why it's one part of the trading plan. Well, it's not just one part, but it's it's a few parts of the trading plan.

[00:17:46]So, grab your data, put it in a way that works for you, and then, if you just want to run the buy and sell signals, you can. That's what they're there for. But, of course, any uh any any plan needs to know where you're going to get in, where you're going to get out, and how much you're going to get in with.

[00:18:03]So, you totally could do that. In fact, I would encourage you to backtest this and see if it's right for you, if it fits your personality and your portfolio.

[00:18:11]Um, are you able Hey, skinny buff guy, what's up? Hey, cool background or cool avatar, I love that. Uh are we are we able to periodically run a new backtest on plans to make sure they're still working as written? So, that's what's cool about having a plan that has 7,000 positions.

[00:18:30]Is that this has been run extensively.

[00:18:32]So, 7,000 different trades came up with this number. If it was 70, then yeah, you would definitely want to add more and more iterations to this.

[00:18:40]Um, but again, how many like for example, this is 7,000 over 5 years. So, we've got how many per year?

[00:18:48]7,000 divided by five. So, 1,400 trades per year. Assuming that we would have had 700 more this year, right? That would only change by 10%. So, would this really make a difference? It could. I'm not going to say that it won't, but it's going to be a very small difference. And that's why you want going it on a big data set.

[00:19:12]Now, granted with with a full-time quant coming on, he's literally going to have it where we can just run it back test anytime we want to.

[00:19:20]But, yeah, that's that's going to be great. I'm very excited about this.

[00:19:26]When you were selling options, did you have any specific entry and exit rules?

[00:19:31]Oh boy, do I. Let me tell you.

[00:19:33]One of my very favorite trades I ever put on was I was on a business trip doing consulting cuz actual finance, bro, I would go and do consulting with financial institutions all over the country and I would show them how to make more money and have less risk. And I remember specifically being in Arizona getting in the back of a Uber and I had my iPad for those of you for the who know the story. I had my iPad and I had no positions on right now. And by the time I had gotten to the the the bank or or credit union or wherever that ended. I don't remember where I was going. But, by the time that I got there, um I had my full portfolio all the way in.

[00:20:10]I think it was like 20 positions. And I remember coming home and showing my wife who like, "Hey, look at all these positions I put on." She's like, "Oh, that's great. I don't really care. As long as the credit card swipes is all I care about."

[00:20:19]Um and I don't know how those positions turned out, but my entry rules rules were if I got my entry I better trade it.

[00:20:29]My exit rules were, "Boy, I hope this works out."

[00:20:35]A terrible trading plan, isn't it? Yep.

[00:20:38]>> [laughter] >> And that, my friends, is why I lost all the money. But then again, I also drank the Kool-Aid of, "Hey, it's it's 80-90% win rate. You're going to be totally fine. If a trade doesn't work, that's fine. You can just let it go."

[00:20:52]Yeah.

[00:20:53]It was awesome.

[00:20:54]Do you offer an API?

[00:20:56]It is coming and automated plan ETF is coming also very very soon. It will literally be I'm so stoked about this.

[00:21:03]It's literally going to be as simple as click the turn on button and then done.

[00:21:09]I said it's going to be awesome. I cannot wait for this.

[00:21:12]Uh Mark, soon to be Charlie's student, says, "Do you only sit in cash and don't have up during bear markets? Do you plan put or similar?" Uh at My answer to that is we did run some uh short signal testing, and it proved to be a negative edge. So, short signals are not ready yet. They are in process, they're in development, and I can't tell you when that's going to be, unfortunately. Um but at some point in time, we will have short signals.

[00:21:41]But, shorting's really hard.

[00:21:44]You have to be really, really spot-on with timing. And I'll show you a great example why. Um you have to be like uh an absolute sniper when it comes to timing. Oh, no, the market's crashing to levels not seen since Wednesday. Oh, no.

[00:22:00]Well, I don't want to draw that. Hang on. Undo that.

[00:22:02]I'll just hit done. There we go.

[00:22:04]Um What do I mean by shorting here, right?

[00:22:07]Imagine you shorted this move down. This one candle was an 11% up move.

[00:22:18]If you had shorted against that up move, you would have blown out your entire portfolio one day.

[00:22:24]The biggest and this is a weird thought, it's a weird stat, but it's 100% true.

[00:22:29]Google it, bro.

[00:22:30]Trust me, bro.

[00:22:32]The biggest down the biggest up moves on a single day happen in midst of bear markets.

[00:22:41]So, it actually gets really, really tough, really tough to short because something like that can absolutely pop up, ruin everything you've been working on.

[00:22:49]Uh but it's a good question. It's a good question.

[00:22:52]Bugsters ask, "What is Alerter and how much does it cost?" Well, Alerter is our trading intelligence platform, and it only costs 82 cents a day to get access to everything, right? Now, right now, we're sitting on a couple buy signals for the uh the spies and the Qs. And if we pop into here real quick, uh you can see that buy signal since April 9th, I think it was. Yeah, April 9th, has been an absolute runner, right?

[00:23:16]Big, big, big, beautiful moves right there. And again, 82 cents a day is all it takes to get access to the platform.

[00:23:23]And everything else is included as well, including our Discord, which is amazing.

[00:23:26]You guys do an amazing job on our Discord. And the soon-to-be strategy builder, uh strategy tester, uh strategy library. It's going to be amazing.

[00:23:34]Everything all included.

[00:23:36]Um it would be great if the web page tabs Oh, I already talked about that. Yeah, I mean, that's what I'm doing, dude.

[00:23:43]Uh European Your Your porn versus American-style options. So, if I remember correctly, uh first off, I've never traded a European option, right? America, freedom first, baby.

[00:23:55]Um If I remember correctly, they they Europeans can only be exercised at expiration. American-style options can be exercised at any point in time. Now, I could be wrong, um but if you never plan on exercising your options, then it doesn't matter. I mean, you would if you were going to uh exercise the option, meaning you bought 100 uh you bought a call option, and then you could exercise that option and get that 100 shares into your account, it would make a difference. But if you never plan to exercise the option, you never really need to worry about it. Uh birdie, he Yeah.

[00:24:30]Bert Bertie is a he.

[00:24:34]Um How do we get into Charlie class? I don't know yet.

[00:24:38]I don't know yet, but I do have a spot for Mark. And I I gave these spots out for people who are willing to help us.

[00:24:45]Um I think that's the real answer is how how can you get into Charlie class? It's by willing being willing to help out. Um I gave a spot to Mark because he went out of his way to come down to Florida and video and take a a million pictures for us, which we really needed for marketing assets. So, Mark is a rockstar for having done that. So, he got a spot.

[00:25:04]Cam helped me out with um some options backtesting and option strategy and options theory, and it was really great.

[00:25:12]And I made some actual changes into my plan by working with Cam.

[00:25:16]Um and Cam is a really bright dude. He went to Texas Tech and he's living um I think he's in Spain right now.

[00:25:21]But I feel like he moved to Portugal. I don't remember. But um yeah, he uh he did some great work help me out with that. And so, Cam has a spot in Charlie class. Then Vida uh Vida was going to do some work with us. We ended up not not making it work, but I did promise her a a spot in Charlie class. So, yeah. That honestly, I think that's that's the answer for now. Uh I don't know when Charlie class is going to start. It's going to start probably in the fall after my kids go back to school.

[00:25:47]Um and then we'll be back in in school as well. Uh there you go. There's a timeline.

[00:25:52]When my kids go back to school, and now granted, I don't have a start a hard start date. Like the the LR University is a lot of work for me. Like a lot of work for me. Like an additional 4 hours a day on top of what I'm already doing to make sure Charlie class is good to go. So, um it's it it it it's not something I just want to jump into when I I I don't know if I have the time for.

[00:26:14]Um is there any way to put the buy and hold return on the screener?

[00:26:19]Um yeah, I think we could.

[00:26:25]In fact, um go into Discord. Do me a favor, Tyson.

[00:26:29]I've met Tyson twice. He's a great dude.

[00:26:32]Do me a favor. Um can you go into Discord and there's a feature request section?

[00:26:37]Will you just add it to that?

[00:26:39]Uh cuz I know Mahesh looks at all this over here. Can you go add it here to the feature requests? I think that's a great idea. I mean, literally, it it's just the coders who come in here and, you know, add things or take things off or whatever to the screener.

[00:26:54]So, yeah, I I don't see why we couldn't.

[00:26:57]All right, cool, cool, cool.

[00:27:02]Um Great question from Helio. Is there a difference between shorting and buying puts? Will it work Plan M buying puts?

[00:27:14]Okay. So, again, I I mentioned this earlier, but Plan M is a long-only strategy. Uh we do have short signals in process, and I don't know when they're going to be ready, but they are going to be ready at some point. Um no, the more you ask me, it will not make it go any faster, so you don't have to keep asking me. Trust me, I'll let you know. Um but is there a difference between shorting and buying puts? So, think of it this way. When you buy a stock, you want it to go up, right? And And let's do some options theory here. I love options.

[00:27:43]Long calls.

[00:27:46]And let's go to images.

[00:27:50]The other day, this was like ultra slow.

[00:27:52]Surely this will work.

[00:27:54]Um Hey, there's my friend Dr. Jim Schultz.

[00:27:57]He was once my personal trainer, by the way.

[00:27:59]I know those tastytrade people more than you would think.

[00:28:03]Open image in new tab. Okay, so here's a long call. Beautifully not pixelated version.

[00:28:09]So, when you buy a long call, you're wanting the stock to go up, right? Now, for every call that you buy, it represents 100 shares of stock.

[00:28:18]Um but let's say that this line that I just drew right here is the uh the stock itself, right?

[00:28:29]And this is the current price. X is the current price. Let's say X is $100. Your break-even is how much you paid for the long call, right? So, let's say you paid $5 for this call. Five bucks.

[00:28:42]That's how much it cost you to get into a shares.

[00:28:47]Oh, that's kind of cool, right? Yeah, it's really cool. But, your break-even point at expiration is going to be the difference between the price right now and what you paid for it. That makes 105. So, that's why it's moved over to here.

[00:29:02]Now, your risk is what you paid for it.

[00:29:04]It's five bucks. Your risk in the uh stock itself is all of it. It's 100%.

[00:29:11]So, if you were to um if you were to buy the stock, it'll cost you 100 bucks a share versus uh and so that'd be $10,000, right? 100 * 100 $100 * 100 shares gets you 10,000. I'm spending $5 here and $5 * 100 shares means I'm spending $500 total. That's my total risk in the trade. Now, of course, you're probably not going to hold it all the way down to zero, but you could be like these other YouTube jokesters who were like, "Oh, just trust me, bro. It only goes up, right?" And then you get yourself in a situation like SoFi.

[00:29:45]Mhm.

[00:29:46]That didn't work out so well. Or you get yourself in a situation like Nike.

[00:29:50]Mhm. That didn't work out so well. Or you get yourself in a situation like Elf Beauty. Mhm. That didn't work out so well, right? And so you're losing not just what you um were planning to lose, but significantly more. So, if you had bought the call option, it could have done all that and you still would have lost only $5.

[00:30:09]Okay? It could have absolutely gone to anything and your whole risk is only five bucks a share.

[00:30:15]Now, with a long put, it's the opposite.

[00:30:17]It's It's literally the opposite. It's you flip it on its head, long put.

[00:30:24]Right? So, as the stock goes down, see, this like slow. I click it, nothing happens. There we go.

[00:30:33]Open image in new tab. That was a right click. Open image in new tab. There we go.

[00:30:38]Now, on a put, it's the exact opposite.

[00:30:41]Okay? Still, let's say you spent $5, so your break even is 95 and the current price is at 100. Your max loss here is the $5 you spent. Your max profit caps out where the stock goes to zero. So, what is the difference between buying puts and shorting? They are the same thing.

[00:31:02]But, also the amount of capital that you have to spend. Remember, buying the stock or shorting the stock is going to cost you whatever the stock is and and maybe your your broker gives you margin.

[00:31:13]Um but, if you buy the options, it's going to be significantly less capital outlay and that's one of my favorite things about it. It's a great question and I'm really glad you're here, dude.

[00:31:21]You We We do options deep dive Wednesdays every Wednesday. So, be sure that you uh that you tune in for that, right? Be sure you subscribe. Be sure you subscribe. We are at 49,400 last I checked. We're so close. So close to 50,000.

[00:31:35]Okay, um Let's see. I have time for one more question and then we're going to uh hit the Outlier Outlook for the day.

[00:31:48]Enoch, what's up, dude?

[00:31:50]Before or what indicators, rules, etc. did you use before you partnered with Outlier? Just curious on some of the bigger changes you've made over the years.

[00:31:59]So, I've been trading for 17 years. I started in 2009.

[00:32:03]Uh when I first started trading, I wanted to create my own model.

[00:32:07]Um I didn't know what I was doing, but uh I was working at Raytheon at the time and for those of you who don't know, Raytheon is a defense contractor. And my my personal job there was uh I was a financial analyst for the Predator and Reaper drones missile targeting systems.

[00:32:21]Um so, let me show you this real quick.

[00:32:23]Predator drone.

[00:32:27]Right, so um like this this Oh, that one doesn't have one. That's interesting. So, the missile targeting system is the little ball little ball sack that hangs underneath the uh the drones.

[00:32:39]Um And each one of these cost like $13 million by the way. So, I was the financialist on this project financial analyst on that project. So, I was uh over, you know, dozens of these. And um also, I love the stock market. So, uh in my downtime, I would uh I would try and find different ways different uh patterns that I could find in the market based on data based on data. I could not do a chart pattern to save my life. Um but here and there I'd make a buck or lose a buck. Uh but I remember specifically when I when I made my first $800, I was I was at home and I was showering and I was washing my hair when I still had more than 40% of my hair. I was like, man, such a genius. I can't believe that I made $800 in the market.

[00:33:22]Uh if I do that every day, then I'll uh I'll eventually have, you know, a quadrillion dollars.

[00:33:29]And uh just about that time I got hit with a free ride violation and got my account locked out for 90 days. That was fun. I didn't even know about that. Um but then uh I fell into the uh selling options rabbit hole for years. And there were a lot of years where I thought I was doing something right. I literally I I don't remember what year it was.

[00:33:51]But I had done all my journaling through that year and I came out at the end of the year with less money in my account.

[00:33:57]I was like, how did this work? I I did my numbers. I had a 84% win rate.

[00:34:02]And I was down.

[00:34:04]Now, cumulatively I lost $200,000, but at that time I don't remember how much it was.

[00:34:09]Um I was like, how could I be down with a 84% win rate? This doesn't feel right.

[00:34:16]Something's not right here.

[00:34:17]And then um I was I was trying to be a contrarian where anytime the market was up, I would go short, meaning I would sell calls against it. Or anytime the market was down, I'd sell puts, meaning uh I would sell uh yeah, I I I sell puts against it being long. And um it quickly turned into this was a losing strategy. Every time I did that, I lost. In fact, I remember one time I took my my son Colin, who's 14 now, he was an itty-bitty baby boy, to to the McKinney library, for anybody who knows, the one downtown McKinney. And I remember he was going through the aisles, like little 3-year-old, right, running through the aisles, picking out books. And I remember the queues were up that day. This was in 2015, when the only thing that happened was the market going up. And uh like from the moment that I sold those calls to the moment that I had a max loss, there was never point in time where I made money. It was just day after day after day getting monkey hammered over and over and over and over and over.

[00:35:12]I was like, this freaking sucks. I hate this. Why is it so hard? And then I was like, well, maybe instead of shorting it, maybe I should go with the trend. And then I started selling put spreads. When something was going up, I would actually sell put spreads. I'd be like, hey, you know what, this is a lot easier. This is a lot easier.

[00:35:32]And then I I I started like hounding people on Twitter. And I was unbelievably blessed to work with Steve Burns. And Steve Burns recommended me all the books that you see behind me.

[00:35:44]And I really started to click with, okay, maybe this trend following thing is real, where you can just get in on the trend and then let it ride forever and ever. But, you can't do that with a put spread because it has capped capped upside.

[00:36:00]And so I remember talking to Steve and telling him what I was doing. He's like, oh yeah, I used to trade that way that way, too, until I realized I wanted to make money.

[00:36:08]I was like, oof.

[00:36:10]>> [gasps] >> Makes perfect sense. Now, at this point in time, I had never even understood what a chart was. I never understood what an indicator was. I didn't know anything. I was just purely a price is up or a price is down.

[00:36:22]And then Steve, he was he was showing me charts like this and he'd be like, "Okay, Chris, which which direction is the stock trending?"

[00:36:33]Like, I have no idea. How do How do I know this?

[00:36:36]I literally had that that that exact I have no idea, Steve. How do I know this?

[00:36:41]And he goes, "Okay, here's what you're going to do. You're going to add three moving averages on your charts. First, you're going to start with the 10 EMA."

[00:36:47]When you start with the 10 EMA, that's your short-term trend. That shows you where things are moving over the last couple of weeks. If price is below that, that means the short-term trend is down.

[00:36:56]If price is above that, that means the short-term trend is up. I was like, "Okay, that's actually pretty easy. I understand."

[00:37:02]Then you're going to add the 20-period EMA. When you look at this, this shows you over the last 4 weeks. This is your intermediate-term trend. When you see the 10 go over the 20, that means your short-term is rising faster than your intermediate-term and it tells you a better more confirmation that the trend is working in that direction. Now, like right here, it doesn't show you how long it's going to be, but it does show you that direction happening, okay? And you can see right here, it showed you that beautiful direction on the downside. It never crossed and it continued to show that direction down.

[00:37:34]And he's like, "For the last one, add in your 50-period EMA. This is your longer term. This is a 10-week uh moving average if you want to think about it.

[00:37:42]So, when the uh price is under the 10-week moving average and then you've got your 10 under the 20, that right there, that's what we call the outlier trend template. So, I wish I could take credit for that, but I can't and I'm okay with giving Steve all the credit for that because Steve came up and gave me the outlier trend template. Now, this absolutely works because it's just time and price. There's no other variables here.

[00:38:07]Price and time are the only two things that fall into a moving average, okay?

[00:38:12]Now, um linked down below is my trading plan and it has a little cheat sheet that I got from Steve. Let me find that slide real quick.

[00:38:20]A little cheat sheet. You love a good Everybody loves a cheat sheet.

[00:38:24]Uh, it's highlighted yellow. Where is it at?

[00:38:27]Oh, no. Did I How did No, there it is.

[00:38:29]Okay. I was like, how could I have deleted that? So, this is a cheat sheet that I got from Steve as well. Uh, take a screenshot of this if you've never seen it before. In fact, let me drop off chat for a moment so you can see it. All right, there you go. Take a screenshot so you can keep this. Put it on your your print it out, put it on the walls, whatever, right? There's all kinds of different trends that you could use uh, for different circumstances. And those are the three and I like to keep things simple for my itty-bitty baby brain.

[00:38:52]Those are the three that I have used for a long, long, long time. Um, but I've also tried lots of other things, right?

[00:38:58]I've tried the RSIs. I've tried the MACDs. And and and people get really like religious around MACD. MACD is moving average convergence divergence. MACD shows you how far apart the moving averages are spread.

[00:39:13]That's it.

[00:39:14]Did they cross? No. Are they spread apart? Yes. That's it. It's literally all it is.

[00:39:20]Um, RSI shows you relative changes in the average gain to average loss of a stock and then it normalizes it based on a scale of 0 to 100. Um, I've tried VWAP.

[00:39:32]Um, I've tried anchored VWAP. But, uh, at the end of the day, what do I use? I use those three moving averages and I use outlier and and ATR. ATR is your volatility. That's your average true range of the stock and that's it, right?

[00:39:47]You don't have to have hundreds of indicators. You don't need to have every chart pattern memorized on the screen.

[00:39:52]That's going to wrap it today. Thank you guys so much for hanging out with me.

[00:39:55]Um, uh, if you are watching live in just a moment, we're going to be doing the outlier outlook for the day. And if you're ready to save time, make money, and start winning with less risk, go subscribe to the channel and click one of these two videos. We'll talk soon.