# Atom
### Options Position
| Column 1 | Call | Put |
| -------- | -------- | -------- |
| Buy | Rights to Buy Stock | Rights to Sell Stock |
| Sell | Promise to Sell Stock | Promise to Buy Stock|
### 5 Key Things in an Option
- a contract need to trade 100 shares
|Symbol | Date to expire| Call / Put | Strike Price | Credit|
|-------- | ------- |------|---- | ------|
| BRK/B | 20 MAY 22 | Call | 300 | 10|
- Strike Price won't change
- Credit changes everyday
- Buy pov: focus on the price different on credit
## Topic 1 - ABC Step
A : Search B : Evaluate C : Price Evaluation
1. Buy Stock
2. B.O.S.S
### Two Stratagies
1. want to own the stock
2. not fair price but want to participate and profit
| | Up | Middle | Down | Unsure |
| ----------------- | --------------------------------- | -------------------- | ------------------------------------------------------------- | ------------------- |
| 間接 | - Find Support line <br /> - LROS <br /> - DC <br /> - miniLC| - LROS | - Find Resistance line <br /> - Find fair price(can just buy) | Wait for clear line |
| 實體 (Fair Price) | - Buy stock <br />- BOSS <br /> - Deep Sell Put (When market crashes) | --- | --- | --- |
```
- to expensive ---> **ATOM** ==> for growth stock
7 { - close to fair price ---> BOSS
- fair price ---> Just buy
```
- strong moat; **EPS +1** ---> ***important***
- if ETF
- Volume > 2M
- Expense ratio < 0.8% (for BOSS < 0.03%)
| | A | B | C |
| ---- | ------------------------------------------------------------------ | --------------------------------------------------------------------------------- |:----------------------------- |
| BOS | >= 7 | Fair Price | Cash Flow; Div > 4% Boss > 2% |
| ATOM | Stock: - Strong Moat, EPS +1 <br /> - ETF: Volumn > 2M, ER < 0.8% | - When to enter; <br /> - support and resistance; <br /> - **5 year ---> 1 year** | LROS, LC, DC, miniLC |
## Topic 2 - 趨勢判斷 : 壓力與支撐
Economic pov
- Supply and Demand
- **Resistance** and **Support** line
### Technical Analysis
> **Technical analysis is not about what you should do at the moment but rather what you shouldn't do.**
- use past data(**price and volume**) to predict future price(all base on a good company)
- 
- string support; 3 point
- This technical is for **enter point**, not exit
### Candalestick with Time stamp
- Daily: 1 candalestick = 1 day
- **Short term**
- Weekly: 1 candalestick = 1 week
- **Long term**
- Weekly with 5 years ==> determine the movement
- Daily with 1 year ==> after (5 year); use to enter in
#### Rules for drawing lines
- **Clear movement**
- **3** jump (3 support or resistance)
- Newest point doesn't not count
- Find strong pattern
- Look at long term first the short term time stamp
#### Breakout
- break resistance line and turn support time
- break support line and turn resistance time
- False breakout
- 
- the support or resistance line still stands; still counts as strong momentum
## Topic 3 - 選擇權的種類
Sell ---> Bid x
Buy ---> Ask x
- within one month --> sell
- over one month --> buy (270 days and above is better)
- think about selling position first then buy call.
### PUT Option - Protection Bias
- Value in Premium
- in the money
- out of the money
- time value
- decrease over time
- volatility
- Impl vol (隱含波動率) ``ignore if long term``
- 
> 3 years ~ 120 days ==> **Buy Option** (above 2 years the best)
> - **LC, DC, miniLC**
> < 30 days ==> **Sell Option**
> - **BOSS, LROS**
- **Sell a contract**
- Sell Put:
- ex. Sell a contract for 10$ for the promise to buy the stock when it goes below 100:
- if price does not dip under 100; earn 10$ (keep the premium)
- if price goes below 100; buy 100 shares for 100; loss 100 * 100 - 10(premium)
### Call Option - Bullish Bias
- Buying **the right** to purchase a stock at a certain price
- Buy Call:
- ex. Bought a contract for 10$ to buy 100 shares of apple at 120;
- if price went over 120 to 200; earn (200 - 120)* 100(shares)
- if price dip under 120; the contract is trashed, loss 10$
- Sell Call: opposite of buy call; make money when the stock dip
- **DELTA**: the relationship between the price movement of the contract and the stock.
- ex. (while) DELTA = 0.7, stock rise 1 dollar; stock = 101, call option = 10.7
- dip 1 dollar; stock = 99, call option = 9.3
- Call contract
- Intrinsic value
- price different(stock)
- Extrinsic value
- time value; goes down
- volatility
## Topic 4 : The Mad Money (LOL) LROS
> LROS = Linear Regression Options Strategy
- turn the profit from the price different of a growth stock into dividend stock
### BOSS vs. LROS
- both are Sell Put
- BOSS: fair price; perform on dividend stocks
- LROS: Not fair price; perform on growth stocks
- the date of expire; close contract
### LROS Rules
- Bullish; stock price above support line, or in between(盤整)
- Good stock in the future 10 years
- **strong EPS and moat**
- ETFs
- Every day, **> 1M volume**
- **Open Interest(未平倉量) over 300**
- **Premium over 2.5%**
- Earned premium can reinvest into dividend stock; generate passive income to compensate the lost (or repair)
- Trust the system and continue the do it
### LROS Steps
- Step 1: Sell Put; 賣價平的put; the first price that is lower than the strike price
- Step 2: 1. Bought the stock at strike price (close contract)
2. Won't get the stock (let contract expire)
- Step 3: Continue every month
### Why 價平
- selling a 價平 can gets the best time value
### TD thinkBack
- 1 year before
- Setting
- Date, Stock price, strike price, premium, P/L
| DATE | Stock Price | Strike Price | Premium | P/L |
|:--------- |:----------- |:------------ |:------- |:------- |
| FEB(2020) | 46.3 | 46 | 0.975 | - 0.25 |
| MAR | 44.77 | 44 | 0.575 | + 0.575 |
| APR | 45.12 | 45 | 3.5 | + 3.5 |
| MAY | 50.51 | 50 | 1.4 | - 1.02 |
| JUN | 47.58 | 47.5 | 1.975 | + 1.975 |
| JUL | 48.15 | 48 | 1.35 | + 1.35 |
| AUG | 49.92 | 49 | 1.125 | + 1.25 |
| SEP | 52.68 | 52.5 | 1.127 | - 2.475 |
| OCT | 48.75 | 45 | 0.3 | + 0.3 |
| NOV | 49.54 | 49 | 1.15 | + 1.15 |
| DEC | 50.13 | 50 | 1.45 | - 0.61 |
| JAN(2021) | 47.94 | 47.5 | 1.075 | - 1.55 |
| FEB | 44.87 | 44 | 1.05 | + 1.05 |
``` haskell
FEB :: P/L
0.975 - (46 - 44.77) = - 0.255
```
## Topic 5 - 資產倍化術 LC
> **Use on high exponential growth stock**
- The basic principle of Buy Call
- The longer the better; leap call
- cuz the value of the contract decrease over time.
### Reason for LC
- when the stock is bullish; want to profit from price different
### Rules for LC :fire:
- strong and bullish growth stock
- **contract expire date > 270 days**
- **Open intrest > 300**
- every stock; the max to use is 5% of total money
- find **in the money** ; find real number整數
- **DELTA = 0.7 - 0.8**
- Stock price > 100 (if you got the money)
- **close when 120 days till expiration date** or approaching resistance line
### Steps for LC
- Find 7 point stock, strong moat and growing stock
- Use trading view to draw up-trend line
- Set alert for point to enter
- when apporach 120 expiration date or resistance line ==> close leap call
#### **TrailStop**
- Use at LC for securing profit
- set only **when** posistion is **profitting**
- it is not a stop loss
- Steps
- when closing; change Limit to TrailsStop
- change Day to GTC (Good to cancel) 6 months
- change under price box: to % or +/-
## Topic 6 - 時間逆流術 DC
> Covered Call (Have a position/Buy Call in a stock perform **Sell Call**)
- Buy leap call then sell short call
### Principle of Sell Call
>The cover call need to be higher than:
- **current price** and **strike price** of the buy call
- **NEVER Sell uncovered call**
- Need to have 100 stock to do a contract
- Can execute every month like LROS
### Rules of DC :fire:
- **Perform a LC first**
- **Expiration date of Buy Call > Sell Call**
- 25 - 35 expiration date sell call
- Strike price should be **above the resistance line**
- When the stock rise over the strike price; **close sell call first and then buy call**
- if only close sell call instance of both; need to be sure the price will still go up
- When LC reach the goal date; close both
- **Always close sell call first then buy call**
- the return of sell call > **20% profit** of the buy call
- **DC should only be use when buy call is profitting** :star:
- **DC can be use to close buy call too**
```c=
Sell Call (premium) / 成本(of Buy Call) > 20% (Goal)
```
#### Pros and Cons of DC
- While either bullish or bearish; still make make money
- If the stock rise too much; lose out on many profit
```c=
Call Stike Price Put
================================================
low
^
| Deep sell put
| BOSS
(1) LC |
|
|
| LROS
----------------------------------------------- Stock Price
|
|
(2) Sell Call |
|
|
mini LC |
v
high
(1) + (2) = DC
```
```c=
^
/
hp /
/\ /
/ \ /
hp / \ /
/\ / \/
high point / \ / //lp
/\ / \/
/ \ / // lp
/ \/
/ // low point
/
```
- Bullish trend
- High point is higher and low point is higher
- Bearish trend
- oppsite
## Topic 7 - Strengthen Enter Point
- Unstable company
```
^ \
/ \
/ \
/ v
up trend down trend
```
- stable company
```
^ - - - - > \
/ sideway \
/ \
/ v
up trend down trend
```
- a consolidation stock, best to use area block
- one about the resistance and one below the supprot
### Implied Volatility
- can't predict IV
- the higher the IV rate the higher the premium
- **Sell Put (> 50%)**
- the lower the IV rate the lower the premium
- **Buy Call (< 50%)**
- the ideal % for LC DC (Diagonal Call) < 35% (Current IV percentiles)
- Compare **Current IV percentiles**(avg. of 1 year) with **Implied Volatility**
### EMA
> Exponential Moving Average
- 20 EMA; 50 EMA; 200 EMA (Strong support and resistance)
- EMA not suited for **high volatile** and **news affected** stocks.
- Strong bull:
- 20 above 50 above 200
- Small bear:
- 20 crossing down 50 and 200
- Strong bear:
- 20 and 50 crossig down 200
- Start think strategies
- 200 above 50 above 20 start crossing up
#### The Use of EMA
- only useful for pass data
- can't predict sudent big dip
- useful for identifying bearish or bullish
- when stock price is over EMA 200; show its has a support
### MACD
> Moving Average Convergence & Divergence
- the understanding of strength of a price movement
- Defensive indicator
- prevent from entering a wrong point
### Mini LC :fire:
- growth stock
- expire date > 270 days
- doesn't look at DELTA
- find **Out of the money**
- Open Interest > 300, and the lartest OI
- Use only 2%
- Close when reach resistance line; or reach set price
- MiniLC is like a hit and run strategies
- high rish; take profit as soon as possible
## Topic 9 - Asset Allocation
### Why Asset Allocation
- focus on the risk not return
- lower risk (diversify)
- well manage risk; profit will come along
### Case A
```c=
BOS Stock | > | ATOM Option Stock
======================================================
| |
Dividend > Growth | > | LROS > LC
| |
| |
| |
| |
| |
```
### Case B
```c=
BOS Stock | > | ATOM Option Stock
======================================================
| |
80% | | 20%
| |
Buy LC with Dividend | | Buy Stock with LC
| | | ^
| | | |
| | | |
--------------- | | ----------------
```
### Case C
```c=
Dividend Stock | > | Growth Stock | > | ATOM Option Stock
======================================================================
| | | |
Buy LC with D | | -----> | | Use LC to buy growth
^ | | | | and dividend stock
| | | | | |
| | | | | |
------ | | <------ | | --------
| | | |
| | | |
```
### Practice writing a script
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