Study Hall: Understanding Stock Options Trading: An In-Depth Breakdown

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Troy has become a stock market analysis wizard of sorts and he's had a tremendous track record with stock options, specifically leaps and even short term options as well. And we haven't had one of these like actually breakdowns in a while. You've done it on tour a few times, but a lot of vast majority people.

Were not at one of our tour stops.

So what percentage I'm going to cut you off a shot? But what percentage did that cost him by not going to the show?

How much?

So that's the thing, Man and I'm happy that. Uh, we we're back in uh the four front of things to speak.

Hit the like button please and share free in for me. This could potentially change your life, no.

Cap, especially if you're listening and not complain. No cap.

All facts.

So we got we got purposes by saying Wednesday, we're gonna have a full you want the first.

Let's go through the presentation first, and then we'll say it later. Let me orchestrate the show. No, no, because it's more of a preview touches, let me produce the show.

And oh you know, you know Mike Divbi right now, Okay, I won't spoil it either.

Yes, ah man. So it's been a minute.

I'll be honest with you, it's been a long while since we had an opportunity to sit back and really teach about trading and about options tradings.

To be specific.

Uh.

And so we're going to give you a little preview of how we're going to stop moving forward, especially with Yo University.

Especially I was at the forefront of.

It because it's important, right, Like people can understand how to create a brokerage account.

Some people have understood how to trade.

Equities, and that's great, but most people, especially over the past five years of trying to figure out how can we make money trading options, because that's what they see all the percentages, And we have to say we have the purpose it by saying trading has considerable risk risk, but trading options has even more so of a considerable risk, all right, And so we're going to preface it about some of the things that you know we're going to be talking about over the next couple of weeks. So

Right, the options contract.

Is really the oblig not the obligation right, but the right to right. So you're not obligated to buy a share, but you have the right to.

And so each contract is worth one hundred shares.

And so when people are talking about I want contracts, I want contracts, I want contracts, that's really the equivalent of one hundred shares. So if you see somebody with one contract, that's equal to one hundred. If you see somebody buying two contracts, they have the right to buy two hundred shares. Now that doesn't mean you have to, and we'll break down that even further when you talk

Right. So if I make a call.

I'm making a prediction saying that the stock equity is going to move upwards or it's going to move downwards, which would be a put. And so most times you see people saying that they made this money and if they had a call, so you see the word call in front of it, that means they said that the equity was going to move up a certain amount during the specific time, and a put would just mean the opposite, Right, So if the equity moves down in that specific time,

The strike price.

So the strike price could be anywhere in the range of ten to one hundred dollars of the actual equity, right, So if we take a company like Apple and you spoke very well, very well about it trading at one hundred and seventy five dollars, Well, if I ask you, do you think in the next two years Apple can raise is price target to one hundred and eighty dollars, most people would probably say yes.

If you agree, yes, put yes.

And the home run, Yeah, that's a home run.

That's a home run, right, Yeah.

Even two of five is a home run.

Right, So that would be a call, right, And there's a there's a premium that comes with that, so you have the you're buying that number. In the event that it goes up, you make money. Now, if you're a pessimist and you think that Apple won't do that in that frame timeframe, right, then you would make a put. And if that number goes down, then there's also money that can be made, and it's a premium that it's get paid.

So most people don't realize this is how it works.

Right When I'd say one hundred and seventy five dollars is what Apple the actual equity costs.

That's not what you're.

Paying when you're buying an option contract. You're actually looking at the bid and the ass right. And so when you think of bid and ass, I want you to think like when you're going to buy a car. The bid is what the deal is going to tell you the car costs.

Right. The ass is what the deal is going to tell you what the car costs. The bid is what you're.

Willing to and so's negotiating the price.

It's a negotiation process. So these margins are where the brokerages make a lot of money. And most people have no idea high they make the money, but this is it.

Right. So if I wanted to buy the.

Contract and it was a one hundred and eighty dollars strike price and it cost me two dollars, they're gonna say, all right, I'm going to charge you. I'm gonna charge you two seventy five for it. And so that margin is where they're gonna make their money. Now it's not two seventy five. Actually, it's gonna be moved. You're gonna have to actually move a decimal point across, so it really becomes a two hundred and seventy.

Five dollars per contract situation.

And so you have to know this still, which is a still right, Right, These are hypothetical numbers. Right, so before we do anything, we need to know all the parameters of that. Right on top of that, we're gonna have to figure out how to find contracts that make sense because some of them are overvalued.

Right If I if you.

Look at Nvidio contracts right now, you probably say to yourself, all right, these are two expensive for me is a suicide.

I can't afford this.

I can't And they probably are right because in video as you see, has trended north for the past six months. It hit an all time high today is trending toward one thousand dollars, which is incredible, and so it becomes a higher premium based on the trend of the actual equity. So we're going to figure out how to use undervalue contracts, and there's a very unique system that we use to figure that out so that we always have the wind

I'm so bad. I think it is bro I'm.

Using it in terms of trading, and so one of the things I found is like, look, there are plenty of experts that are analysts and they get paid hundreds of thousands of dollars to do their job. I said, that's great. All I need to do is find out where they're reporting, take their report PDF and have my good friends over AI or chat, GBT or any of the ones that can actually decod PDFs and tell them to summarize it.

I prompt them to exactly what I want.

At some points, I'll say, hey, give me an experted target price for the next six months, and it'll do that. If I do that over six seven experts, now I have a great consensus.

You have a good great media and strike yep.

I can figure out what they're thinking based on the research that I'm doing, and now that gives me a nice target to find out where I'm going to put my strike price.

Right.

So all these things are what we're doing to evaluate how we're going to trade our options.

Right, because it's a delicate process.

It is a sensitive process, but it could be a very rewarding process.

And when we do that, we get results.

Now I'm not one and you know this, and y'all probably notice I'm not one too, gallavan.

And talk about results.

But if we're going to show results, figured, this is family, this is market, mondays, my earner is at hand. Let's let let's let's go through the scoreboard or some of these results, because not only are we talking about trading equities and trading options and telling you, hey, these are the things that we're looking at, and now we're actually implementing these things and winning.

Before before you're showing the results.

Great, great production membershod, go ahead.

Explain the AI play just like you did in Chicago.

All right?

So or should it be kept for university?

No? No, no, just no no, trust me. Okay, all right, this is valuable. I love y'all. I love y'all. I love y'all so so much. Man, I love y'all so so much.

His hot work, and I kind of just broke it down a little bit. But I'll give you dead specifics, all right. So I look at the company like HubSpot, I look at the Shark, I look at this trend. I'm looking for the support resistance over the past year. I'm looking at support resistance over the last six months, I'm starting to see trends.

I see it in Salesforce, I see it in CrowdStrike.

I'm starting to see that there was a rise during the pandemic, there was a great pullback. It's almost like a perfect mountain, and then we're starting to see a climb again.

So all right, let me. Let me start figuring out how we can take the advantage of this.

And so I look inside the HubSpot, look at well all the experts are. I figure out where the institutional money is going first, the retail money.

And that's important because I want to know where.

Institutional investors are putting in their money, because that's why I want to put mine.

Right.

So if I see eighty percent of the equities owned by institutions black Rock, Vanguard, you can I mean a number of institutions.

I'm all right, this is something that they're invested in, especially in tech.

I need to be behind that. I take their expert opinions. I download the PDFs now. These PDFs are fifteen to twenty pages. Now, if you have the time to.

Read it, great, feel free.

We got to maximize our time, and I think that's one of the best things benefits of having AIS that you can actually maximize sown. So download the pdf, put it in anthropic, which is a great AI two. Claude two is their version of chat GBT prompt it, Hey, I need you to summarize this. Give me the strike, give me the price target, and give me the guidance the four guidance for the next year.

But then hit return on it.

Within ten seconds, I've got an entire page layout of everything I just asked for. My God, that's pretty cool. Let me go find another expert prompt the same thing. And now I'm creating my own database from those experts who actually spend hours, have more tools, have more.

Resources, have a bigger network.

Now I'm just compiling all the information that they have option she cheat and now I'm just creating my own formula to figure this thing out. I'm like, well, well, this is how AI really should be used. Let's maximize our time, let's become more efficient. And so I'm saying to myself, perfect, this is exactly what I'm gonna do. And so we did this in Chicago. It was like really the first test, and before I even presented, I

Yep.

Spot was trading at four to ten, and I think when I closed out the position, I actually put it in the slide in one of my results.

I think it closed out.

At five ninety five ninety so we're talking I mean, and that's just percentage on the equity. So the actual option, I think I closed out at maybe three hundred four hundred percent, something crazy like that. But that was just using technology, using the research, using knowledge that I already had, right because we always talk about hey, I can make you. It's not going to make you smarter, but it can

Network is much more vast. I was that that was good, Thank you, appreciate you. All right, let's show this results. Let's do some results. Man, Mike, where you are you got me?

Mike? You know or not?

Just there we go? Yeah, yeah, I mean we're not just talking about it. So when we talk about Microsoft, when we're talking about all.

The things that they're doing with AI, I mean, these are calls that we're putting in. And so when we talk about leaps, that means we're going from a year to two years out.

And so this call I probably.

Put in maybe June of last year, but you're starting to see some of those returns.

So two hundred and seventy six.

Now most people are going to say, well, how much money did you make? And my thing is like, I'm never one to tell you about the money, because the money is great, right, and of course we're going to make money, and that's what we're doing is for.

But the percentages are more.

Important to me because we all start at zero, when I don't have a call, when I don't have a contract, we all start at zero, right. We may not start at the same amount that we're investing, and that's fine. I don't want to discourage anybody. You should use what you have to invest, right. I don't want you to putting the entire life saving life savings and into tried and trade options.

No, I want you you should never put more than ten percent. Please off your PORTFOLI absolutely.

That's my personal that my personal long term ten options, and.

That's it's extremely important.

So the percentages is so much more important to me because again everybody starts at zero percent, and what you do and when you do it is important will determine how your account's gonna look anyway. So this is one of our first ones. Microsoft we're into twenty twenty five. We alread where's Microsoft training at Ian?

You got your things? Yeah?

So Microsoft is that for fourteen fourteen, So we're.

Way past the strike price this this call is probably gonna go up.

I mean, at the rate that the market is moving. By next year, I can see it's going up to four fifty eight.

Yeah, might keep going. Actually, I got it, I got it. Oh you skip mine right? We here, we talked about Lily all the time.

Lily.

Yeah, we're gonna go into this a little bit more.

Another one looked at the research, saw the earnings was coming, and I'll show you a site that we're using to figure out how the earnings are being projected. Another one saw Lily was traded a little bit under six seventy five, so I took a little bit of it.

Again, well, this was a price of your call. But look look at the returns, and this is something that we've done within the last month. Let's let's just keep rolling. I'm gonna keep rolling.

Let's so let's go so sm We talked about Semis all the time, right, we love Semis, love Semis, love Semis. Why are we not investing in ETFs? Why are we not investing in ETFs option calls? Here's a perfect example of one hundred percent. Now most people are saying, oh my gosh, well it's only it's only one hundred percent. Yeah, but where else are you getting one hundred percent in less than four months? Less than two months? All right,

You did, We did, we did. We did another one and this is more of a short term option call. Now.

At the end of the year, when we asked what would our companies for the year, specifically said TSM is the one I'm looking at It's one of my favorites because I know the infrastructure and how much is needed in the And when we're talking about technology, right, if we're talking about semis and we're talking to a video who is a number one provider for TSM all companies run through them. They make seventy percent of the world's semichips. Of course I have to have a call on them.

In them, we own the stock.

You see like that in video there's no call there, there's no call, there's no expiration date.

That is the stock.

So I own the stocks of these companies, and so what is the strategy. I own the stock and then I own the.

Options on the stock. And we've been telling you.

For five years, I want you to get a hundred. I want you to get a hundred. Why because when you get a hundred, now you can actually sell calls. And so one hundred has always been the number. And so this is video my stocks. Probably I think in this brokerage account here, I think I got four hundred shares. Those four hundred syeares are up three hundred percent. The shares all right, and that came from this call why and video hit A one seventy five at the time,

What are your costs? You not being it? Now? For everyone else?

You see how we're able to get twenty three hundred and three thousand percent returning in a year.

This is an I'll execute. That's why I said percentage is so so important. That's not twelve hundred dollars, ladies and gentlemen, that is twelve hundred percent. So so I said that it doesn't matter where I started at because we're not going to be starting at the same positions.

That's fine.

But if you put one hundred dollars in, if you put one thousand dollars in, that's twelve hundred percent on that call. Right, So these are the things we're talking about, all right. So in the stock and owning options on it as well. But once I saw this, I said, wait, I can't just stop at the two o five call.

We got to get more calls.

You could get stopped, but it would be wouldn't be wise.

It wouldn't be wise. So why why stop? Let's let's part taking all of it. Let's go to the twenty five call for four fifty five.

Well, video is running up to eight twenty five, so that call is going to keep running right when the jew one expires. Just want to keep running? Well, why stop there, Let's keep going right. And so now I'm in the twenty six call for eight hundred. That's already up seventy four percent. So you can start to see we're compounding, and we're compounding, and we're compounding. Why because I see the trend, I'm watching it. I'm watching my

Of the show, at the beginning of the show.

It's still prints with me, It's still prints with me. And then this is one we spoke about last week that I probably I just did. Maybe I might have did this on Tuesday, right before your party. I think Salesforce man Salesforce, right, if I saw what was happened in the huts spot inside of the CRM space, we understand they have great leadership.

We saw them have a great pullback. They obviously let people go.

We talked about the acquisitions and Slack and how that affected the company. I like Salesforce going long term, and so I'm like, all, well, perfect, this is an opportunity to grab them and and have a call.

On it, and so why not? All right?

So the the real question is, you know, I think you posed it already. What would it cost to you to not being lost.

And not do it?

And if we could talk about triangle offense, Rasha calls QQQ, I'll tell you the trade nas that future. What would you be up long on QQQ calls easy fifty.

It took en out so so so yeah, black out. So that was an options situations but this isn't an option program.

We just wanted to do it.

But what the announcement is that So Eyo University, like I said, we were back hands on. I've been teaching a financial planning class every single month, but Troy will start teaching a monthly Options master class for Eyo University every month.

Every month. He's been at it.

You know, he used to be a teacher, so he's coming back into the classroom and he's teaching. And the first class is this Wednesday at eight o'clock and it's forty eight hours. Only forty eight hours enrollment, so if you want to if you want the full hour of him that eyouniversity dot com. It's a forty eight hour enrollment and then we just go and debit for the rest of the month. We want less people in this

Now we get in business. I'm being honest with you, We're gonna get busy. It's been a while, and I started looking back in the files. I'm like, damn, it has been a while, So it's going to be a while.

It's been a while.

Everything I've just told y'all, I'm actually gonna show y'all in real time. I'm gonna have y'all involved in it. Plus, I'm gonna tell y'all what we're looking forward to next.

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