---
# System prepended metadata

title: Atom

---

# 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)
- ![](https://i.imgur.com/pAWMZwA.gif)
- 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
    - ![](https://i.imgur.com/WfdJwLy.jpg)
    - 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``
- ![](https://i.imgur.com/p7BDPzg.png)
> 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