Bootcamp Lesson 5 - The Hourly Trigger and the Daily Trigger transcript PaperClips

Question 1

In the context of options trading, why is selling options considered a better strategy than buying options?

Answer 1

Selling options is considered a better strategy than buying options because it allows for consistent passive income, while buying options carries more risk and can lead to both gains and losses.

Question 2

What are the potential gains from selling options? Why is it considered a stress-free trade?

Answer 2

The potential gains from selling options include collecting the entire premium from the sold contracts. It is considered a stress-free trade because you only need to buy back the contracts if the price breaks back below the trigger, and the entire trade is relatively easy to manage.

Question 3

According to the course notes, what happens to the value of puts that have been sold when the price eventually comes back down to the trigger?

Answer 3

If you sell puts and the price eventually comes back down to the trigger, the puts you sold will have lost value on theta, allowing you to profit from the decrease in value.

Question 4

What does theta represent in options trading? How does it affect the value of options over time?

Answer 4

Theta represents the time decay of options. It causes the value of options to decrease over time, making selling options a profitable strategy, especially when the price goes sideways.

Question 5

According to the course notes, why should one be cautious when looking at others’ gains on social media platforms like Twitter or discord?

Answer 5

One should be cautious when looking at others’ gains on social media platforms because there’s often a lack of information regarding their losses. Risky trades can lead to both significant gains and losses, so it’s important to consider the full picture.

Question 6

What does the course notes suggest as a focus for consistent passive income in options trading?

Answer 6

The course notes suggest putting a big focus on selling contracts to achieve consistent passive income, as the triggers make it relatively easy to execute profitable trades.

Question 7

What is the trigger crossing usually followed by?

Answer 7

The trigger crossing is usually followed by a retest

Question 8

What should you look for when deciding whether to buy off the daily trigger?

Answer 8

Look for bearish divergences, and as long as there are none, it can be considered a buy off the daily trigger.

Question 9

Which timeframe does the speaker suggest starting with when looking for bullish divergences?

Answer 9

The speaker suggests starting with the hourly timeframe and then working up to the higher timeframes.

Question 10

How does extreme buying reflect in the hourly velocity?

Answer 10

Extreme buying is reflected in the hourly velocity as a rapid repair rate, indicating a reversal to the hourly trigger.

Question 11

What triggers the turn of the daily velocity?

Answer 11

The turn of the daily velocity is triggered by the presence of daily bullish divergences.

Question 12

How do the velocities work together to call bottoms and tops?

Answer 12

The velocities work together by starting with extreme bullish divergences at lower timeframes (hourly, daily), which then turns the weekly and monthly velocities.

Question 13

What mistake does the speaker highlight regarding trade decisions based on monthly velocity?

Answer 13

The speaker highlights the mistake of disregarding strong bullish daily divergence just because the monthly velocity appears negative.

Question 14

What is the expected movement of price when it reaches the daily trigger?

Answer 14

When price reaches the daily trigger, it is expected to move closer to the weekly trigger, initiating the turning of the weekly velocity.

Question 15

How does the monthly velocity become less negative until it flips positive?

Answer 15

As price moves closer to the weekly trigger and the weekly velocity starts turning, the monthly velocity becomes less and less negative until it eventually flips positive.

Question 16

According to the notes, when do we sell the position after a bearish cross?

Answer 16

We wait for the retest because once there’s a trigger, cross is almost always going to be a counter trend move.

Question 17

What formation is formed when price moves back through the daily trigger and the hourly trigger?

Answer 17

An airplane formation.

Question 18

What are the two ways mentioned in the notes that can result in price breaking below the daily trigger?

Answer 18

Bearish divergences or complete loss of velocity.

Question 19

What trigger cross indicates a good short opportunity?

Answer 19

If the hourly trigger crosses below the daily trigger when the monthly and weekly triggers are on top of the hourly trigger.

Question 20

What is the significance of the monthly and weekly trend when deciding to go short?

Answer 20

When the trend is bullish and the weekly is above the monthly with positive velocity, we are not looking to short, but rather to buy the dip.

Question 21

What do you check every night on a trade?

Answer 21

Daily velocity

Question 22

When do you expect price to come back down to the five minute trigger?

Answer 22

If there’s one, two or three bearish, five minute divergences

Question 23

What should you consider if hourly velocity is very strong?

Answer 23

If there’s one five minute bear divergence and price breaks below the one minute trigger, don’t be scared

Question 24

When might you expect price to come all the way down to the five minute trigger?

Answer 24

If hourly velocity is very low, the move looks exhausted, and there’s a 15 minute bearish divergence

Question 25

Why is there no fear that price will end up tapping the daily trigger?

Answer 25

Because there are no bullish daily divergences

Question 26

What is the significance of zero weekly divergences? As hourly In a daily and weekly trigger

Answer 26

If there are zero weekly divergences, even if the hourly trigger crosses below the daily trigger, we do not expect a sell down to the weekly trigger.

Question 27

What happens when hourly velocity is positive?

Answer 27

When hourly velocity is positive, it indicates that bulls have control and we expect the hourly trigger, daily trigger airplane to form.

Question 28

What are three trigger clusters and why are they powerful?

Answer 28

Three trigger clusters are setups where the hourly, daily, and weekly triggers are closer together. They are powerful because they indicate triple the acceleration in price changes.

Question 29

What condition is required to go long when the hourly trigger crosses above the daily trigger?

Answer 29

Bullish weekly divergences.

Question 30

When does a trigger cross usually result in a retest of the daily trigger?

Answer 30

After a trigger cross, a retest of the daily trigger usually occurs.

Question 31

What happens to velocity divergence when price touches the trigger?

Answer 31

Velocity divergence is reset when price taps the trigger.

Question 32

What result is anticipated when a trigger cross occurs?

Answer 32

The counter trend move is expected to occur after a trigger cross.

Question 33

When can you sell the top position instead of waiting for a bearish trigger cross?

Answer 33

When there is bearish divergence

Question 34

What does bearish divergence indicate for higher price movement

Answer 34

It suggests that the price will come back down to test the trigger.

Question 35

What happens to bearish divergence once the daily trigger is hit?

Answer 35

It is reset and there is no more bearish divergence.

Question 36

What should you look at to determine when these moves can eventually fail?

Answer 36

Weekly velocity

Question 37

When is it not a great long position when the hourly trigger crosses above the daily trigger?

Answer 37

When the weekly trigger is below the monthly trigger.

Question 38

What should you look for when price is moving flat and velocity is dropping?

Answer 38

The possibility of price heading back down to the trigger.

Question 39

How do meme runs usually start?

Answer 39

With trigger crosses.

Question 40

Which stock is mentioned as one of the best stocks to take longer term positions?

Answer 40

Tesla.

Question 41

What does a bearish divergence on the weekly velocity indicate?

Answer 41

A bearish divergence on the weekly velocity indicates a 33% chance that price will come back down to the weekly trigger if the hourly trigger moves back below the daily trigger.

Question 42

What does the climbing monthly velocity indicate?

Answer 42

The monthly velocity indicates zero bearish divergence and climbing, suggesting strong momentum.

Question 43

How many bearish divergences were found on the weekly timeframe?

Answer 43

There was one bearish weekly divergence found.

Question 44

How can theta help when selling call spreads?

Answer 44

Theta can eat away at the contracts that were sold, allowing them to be bought back for cheaper if the price comes back down after a bearish cross.

Question 45

What would you do here? Price breaking below the daily trigger confirmation and the hourly trigger crossing below the daily trigger.

Answer 45

Taking a short position

Question 46

What is the significance of the monthly and weekly triggers in trading?

Answer 46

They need to be considered when trading with the hourly and daily triggers.

Question 47

What is an 'airplane setup' in trading?

Answer 47

An 'airplane setup' refers to a trading pattern where the hourly trigger moves up to the daily trigger and price moves back down through the hourly trigger, signaling a bearish trend.

Question 48

What are breakout levels in trading?

Answer 48

Breakout levels in trading refer to specific levels of hourly velocity that indicate a potential significant price movement.

Question 49

Right. That was pretty easy to see clearly. Daily velocity was there, stepping down with each new low, putting in new lows.

Answer 49

Right. Visually, it's pretty easy to see now. Then we have the most extreme velocity print that happened right over here, followed by a couple of consecutive lows without daily velocity printing a new low before the return to the daily trigger, which is followed by a bullish cross.

Question 50

spot the airplanes on the hourly/daily crossings

Answer 50

Question 51

how would you go long with spy calls 2-3 months in advance? what needs to happen?

Answer 51

hourly trigger needs to cross over the daily trigger

Question 52

what would need to happen to short long?

Answer 52

hourly trigger crosses the daily trigger

Question 53

what can you do to minimize risk for a long term short position?

Answer 53

take calls when price goes above the hourly trigger, on a micro short term period.

Question 54

what happened here?

Answer 54

hourly crossed daily trigger, healthy velocity with 3 new highs, then price went down for a retest.

Question 55

would you continue going long here? what else can you tell about this graph?

Answer 55

yes, still above the daily trigger. price touched the daily trigger, and reset the divergence count.

Question 56

what would you do here?

Answer 56

airplane set up, hourly trigger did not cross daily trigger, so I would buy more.

Question 57

what would have happened if hourly crossed daily?

Answer 57

I would have cut my losses.

Question 58

why wouldn't you be scared of price dipping below?

Answer 58

no bearish divergence in the velocity chart

Question 59

what happened in this crossing?

Answer 59

a countertrend which always happens on a crossing.

Question 60

What could have indicated this move was over?

Answer 60

daily velocity ran out of steam

Question 61

when could you short right here?

Answer 61

if when weekly and monthly are above the hourly

Question 62

what made price go down?

Answer 62

daily velocity ran out of steam

Question 63

in order to see if these price moves could fail, we have to be looking at?

Answer 63

weekly velocity

Question 64

what made the price go down here?

Answer 64

weekly bearish divergences

Question 65

what's similar to a five minute trigger going below the hourly if there aren't divergence for daily to weekly?

Answer 65

The same way when there's no bearish five minute divergences and price sells below the woman and trigger, we don't expect price to go back down to the five and the trigger the same way when there's no hourly bearish divergences and price sells below the five minute trigger. We don't expect price to go all the way back down to the hourly trigger, the same way when there's no daily divergences in price was below the hourly trigger. We don't expect price to go back down to the daily trigger.

Question 66

price tried go up but what happened here?

Answer 66

monthly velocity was still moving upwards.

Question 67

what happens here that makes price go up?

Answer 67

weekly and monthly velocity rise

Question 68

what is this?

Answer 68

bullish divergences

Question 69

what effect did this have? what is this?

Answer 69

caused weekly and monthly velocity to lose steam bullish divergences

Question 70

what did you need to do to find out what happened with these bullish divergences

Answer 70

check hourly velocity, as you can see there was heavy buying.

Question 71

what did you need to do to find out what happened with these bullish divergences on a smaller scale

Answer 71

check 5mt velocity, you can see a huge print

Question 72

on a grander scale, what order would you check velocities to see if there's a new trend?

Answer 72

hourly, daily, weekly, monthly.

Question 73

what would make relying on just the monthly velocity as a nasty trade?

Answer 73

So we were watching this live and we were seeing bullish daily divergences. But then you say, Yeah, now I don't like this trade. The monthly looks nasty. That's a big mistake from looking from using trigger signal and it's a big mistake that can limit you in taking great trades. So just because the monthly velocity is nasty, if you see really strong bullish bullish daily divergence, then you understand the price is going to go back to the daily trigger. Price is going to go back to the daily trigger. Then you understand that price is going to be closer to the weekly trigger, which will help start to turn the weekly velocity and if we give us is going to turn, then of course, and price is going to move closer to the weekly trigger. That's in turn going to turn the monthly velocity and make the monthly velocity Now less, less negative, less and less negative until it flips positive. price would be closer to the weekly velocity

Question 74

which stock is the best to trade hourly/daily trigger crosses?

Answer 74

$TSLA

Question 75

if you do nothing but play $tsla daily/hourly trigger crosses you would probably _______.

Answer 75

beat the market at the end of the year

Question 76

did this make a bearish divergence? why?

Answer 76

yes, it did not make a high velocity print

Question 77

focus on selling calls or puts as well

Answer 77

you will make money!

Question 78

What is this a great example of?

Answer 78

great example of 5 min divergences causing hourly velo to start reparing

Question 79

What can be expected about what happened?

Answer 79

because hourly velo was still on the way down, the bearplane was expected but what those 5min bull divs helped with, is that now spy just put in an hourly bullish div and this is essentially how all reversals develop over time