[Music] [Applause] hey guys Mark Yi again here I've got one for you Oracle just reported some numbers so I'm going to be talking a little bit about Oracle not a stock that you hear about too much these days but they're stealthily really creating a really great chart and this was a stock that back in the 90s was just killing it and then they kind of went into this consolidation mode for a bunch of years didn't execute kind of like Intel but now they're remerging from that and uh they are a market leader certainly what I'm looking at here so let's take a look at the weekly I'm going to look at the weekly and you can see the stock is breaking out on an earnings report today the stock was supposed to make about A1 four and they made $139 so they blew away Street estimates all the other numbers don't really matter I could just tell you if you look at this candle it's a high volume candle on a 17% earnings increase and uh the stock is breaking out now you could see the high here is 14659 about 14670 is the breakout spot so I would say you know right in here is where you want to be buying it if you would have known that stock was going to go up to 155 or 160 actually did today then you would have bought it there but you know we don't know sometimes you know these earnings reports can go the other way so you want to be really careful with this but how do you get into the stock NOW first of all I don't like to chase stocks so if you want to make this an earnings play here a couple statistics for you first of all 40% of stocks that break out fail okay proper breakouts I like to have 40% uh average daily volume uh increase on the breakout and I think we're getting that today I'll look at that in a second but also most stocks or many stocks come back and they test their breakout spot so how do you play this well that 14670 is a critical spot that's the that's the breakout spot that it wants to come back and test so what you want to do is you want to say listen I don't want to chase it but how could I make money on this stock if I'm not in it well the answer is selling puts so if you take a look at this chart I know it's a little bit different color but now you can see this candle right here is the candle where you know we want to we want to use that as our breakout spot it's a pivot point of 14670 but it's a nice high volume candle you can see a good volume candle right there it's about double average volume certainly more than 40% so that is a great candle for what we're trying to do today okay now what you want to do is say well I don't want to chase it so how do I play this game well the way you play it is you say I'm going to get involved in Oracle by selling a put now when you sell a put you give somebody the right to make you buy the stock at a certain price you like Oracle we like Oracle it's breaking out 14670 so how do we get involved in that stock without without buying it and you know getting involved and maybe even doing a covered call and limiting our upside at this point well the market is yellow almost red right now so that means you shouldn't be chasing stocks because the probabilities are that we're going to have a lot of volatility and maybe some down some more down stuff going on I know the fed's lowering rates and that's going to supposedly make the market go up but it isn't working right now um and so we'll see if this is a buy the rumor sell the news Okay so looking down below here we've got all all of our puts are over here on the right side and so what I like to do is I like to look for about a 30 Delta you can see the Delta is here got a 32 Delta right there and so that would be the 15250 is the stock is at about 156 15589 actually so to me that's a little too close for comfort that's got a 33% chance of being in the money somehow to me it seems like that's only two bucks away the stock was up big today it was up $16 two bucks three bucks can move very quickly so I'd rather be a little deeper in the money and get a little less money so we've got a Delta of 21 here a 22% chance of being in the money and uh you can see if I just sell these puts I get 88 cents so on a th000 shares you end up making $880 and you have to tie up about $155,000 to do that now the cool thing that's a that's what what's called a cash secured put you have the cash to be able to get assigned that stock at 150 that would be the strike price that we're looking at right there so we sell the put to somebody else that Gambler is buying a put we get to pocket $880 but we don't even have to put out any money it's just the money is sitting there so the reason the puts are the dark side is because you have to really kind of root for the stock to go down like if we want this stock it's got to go down below 150 before we get it so we could go out and buy it but now why not why why not just sell the puts and pick up 88 cents and you haven't had to take any money out of your wallet you just had to have it sitting there right you could use margin if you have a margin account things like that but you just have that have that availability of money sitting there and you make $880 now if you wanted to play this a different way now I don't like this because we're in a yellow or a red market right now but you could go to the other side over here and we could do covered calls now covered calls are a little more natural to most of us that think stocks are going up now this is on a breakout it's on a gap away and wait let's say we think that the stock is going up to um well let's let's play this conservatively how how about that so let's say that we're looking at the stock we think it's still going to go higher but you know what we're happy to make some good money at the money and the stock is right around 150 what do we say 156 so it's a buck in the money or so so what we're going to try to do is we're going to sell the calls we're going to have to buy the stock and now tie up that $156,000 but we're we're going to sell the calls for $345 that's a189 in the money okay so we're going to pick up $345 cents and the covered return is going to be 69.3 4 if we can do this over and over again all year now it just had numbers and the the premiums are a little bit inflated but you can you can get a pretty decent return now if you wanted to be even more conservative you could go to the 150s for example okay the 150s would get you $6.75 and that isn't too bad right $6.75 if you sell might get you a little bit more here but let's say we just pick up $6.75 it's $589 in the money so you'd only be picking up you know like a $1.75 on that particular position and that's why this 3160 is what you would be getting uh for the year but notice how your probability of being in the money is 75% so would you rather have a 75% chance of being in the money and making a 3160 31% return for the year or would you rather go at the money or slightly in the money and say I've got a 53% chance but if it happens because I get more juice I end up making 6743 I would probably go deeper in the money in this market in another Market if I thought the stock was going to continue to go up if we were green and we had all the probabilities on our side I might say let's go out of the money and maybe we sell the 160s and we pick up a137 for the sell and you know we got a 32 uh. 89% return on that if it stays the same right but if it goes up we get to make that extra money and we have a 28% chance of making that so that's the way you can look at this uh this particular trade now I like the fact that you can trade this without ping money out of your pocket so if you want to just pick up the $880 to me that's a safer trade it's only a 22% % chance you get exercised on that trade and that means you can pocket money maybe do it over and over and over again next week and if it never comes back all you're doing is making $880 uh a week on a trade that's similar to this so hopefully that makes sense and that's how you can capitalize on Oracle take care see you on the next video