S&P indices are strong and making all-time highs despite weak market breadth; expect significant upside if broader market participation returns.

The SPY fell by 0.33% at $774.68,

So, um it's been an interesting, you know, last six weeks under the hood. Uh the entire market really has been um underneath the hood has been going down. Uh AI stocks, right? uh really holding the market up or at least the indices.

The indices are making all-time highs while the breadth of the market underneath has been lower.

as we take a look at S&P you could see that S&P is doing quite well. I was looking for 7823 here. uh we uh were just coming up to it. That's on a weekly. Let's take a look at an hourly chart here.

Um really looking for that next pump if we break above 7823.

If you wanted to do S&P, I would suggest like a a debit spread on S&P. So, um, if you're not familiar with a debit spread, just a different type of trade vehicle that would allow for consolidation as well as maybe even some downward movement, but it really not affect you. It gives you diamond hands, right?

But if you have a small account and maybe you can't afford uh a single call or put on S&P as an example, look at the one dayers. This is $270, right? Is it too expensive for you?

If you wanted to go a week out, right? Uh still that's not bad. $270. But what happens if we take it and do it as a debit spread? So, let's say we take that week out and we're looking at about $300.

Uh, let me go ahead and click on that. It's 275 27 uh 270 here for a debit spread.

Well, to take a do a one day out, you're looking at $2,130 to get that SPX call expiring in one day. Kind of a lot of money. If you can't handle that, could you then switch this to a debit spread where you're actually buying a call and selling a call at the same time?

Those two legs together create that debit spread. And look at the price. I mean, that like went down what, 10 times? $270 to do that same thing.

And what was the what was the level I was looking at? I was actually looking at 7823. We're not even close to it, but could we get close to it like overnight for tomorrow's action? Absolutely.

We're going to do a call because we have some consolidation. The indices are acting completely different than what the rest of the market's doing. Though, the rest of the market seems to be stabilizing right now from their six-w week down period.

Right? So, we may get kind of a trend change here under the hood. And by the way, if the indices are already doing well by themselves without the entire market participation, do you think when the market starts to rise that those indices are going to start to take off like a rocket? I think so. I do think so.

Right now, I took the at the money call. I want to take a look, by the way, of our um our mark for at the money is 250. Let me write that down and I'll show you why in just a second, just because we're in a war.

We're still in a war, guys, regardless. So, I want to make sure that I always have a cap on my order. Um, kind of a resistance level of, hey, I'm not willing to pay more than this, right?

Just in case there's a crazy uh tweed or a bomb going off or whatever that I'm not going to be gouged in my contracts.

So, as we take a look at the at the money, the at the money is at 7 uh 77.90 to 77.95. I was actually looking at uh 7823. So 7823 is down here. Let me put a couple more strikes here.

So we're looking at uh 7823 right about here. Right. So it says that my contract's going to be about 190. But I got to tell you that the contract when it gets to 7823 is going to be up here to the at the money.

That's why I like to look at the mark which what is the mark guys? The mark is the between of the bid and the ask, right? It's the between of the bid and the ask. Why do I need the mark price?

Well, if I take a look at the at the money and I take a look at the middle, right, this says around 270 and I write that down. Now, I actually know what the contract price approximately will be when 2823 rolls around. then that means that that vertical now will be at the money.

And so if I want to kind of strategize and say, well, I'm not willing to pay any more than this price for it, I have to know where that contract's going to be when it actually triggers. So that's why I like to take the at the money.

So now that I know that the price is going to be around 260, 270, I can take my calculator, right? and I could say, "Okay, what am I willing to spend for that price uh for this contract?"

Because we've learned during the wartime volatility that when there's a news tweet or a bomb or something weird going on that the market makers, they actually jack up the prices of the option contracts, which in that case, it's a lose-lose situation. you're not going to be making any money because they jacked up the price so high that it doesn't even, you know, even if you were to make your target, you're not making any money because you paid too much for the contract.

They typically will jack up those prices between um, you know, 50% all the way up to 500%. We did actually um a look at this at CBOE and we were looking at other uh times where we had mayhem in the markets, other wars as well as like COVID.

That's exactly what took place. So because of that, we protect our capital by not getting into a bad um you know, a bad uh trade to begin with.

So as we take a look at this contract, I say to you, okay, well, if the mark at the money is around that 260, uh let me take 260 and plus 25% cuz that's only what I'll be willing to pay for this.

And it comes out to 325. So now I have a ceiling for when it actually happens. However, you know, um if the if the price of the contract at the time is going lower, let's say it's going for 260, thinker swim will automatically get me in at 260.

So don't fear about putting a ceiling on. It doesn't mean, hey, I want to buy it at that price. It just means I'm not willing to go over this price. So all of a sudden, if we're at the money and it triggers my level and it's above that price, I won't get in it.

What does that mean? I save money. And that's what you should be thinking about, too, is not only making money, but saving your money during uh these types of volatile markets.

So, we said 7823. I'm just going to do 78.25. Let's do the conditions first. So, if you just click on it, it'll start filling it out automatically. So if you fill out this symbol, you come over here, it defaults to mark.

That's fine. And then these triggers are less than or equal to. And then the second one is greater than or equal to. Since we're buying a call, it's greater than or equal to. And by the way, if you ever get lost with these triggers, they were hard for me in the beginning.

When you click on it, you could look down here at your programming. We're turning you into a programmer. It's very simple. and it'll say greater or equal to. And then now in the threshold box, we could put the price that we were looking at.

I was looking at 78.23. Let's put 78.25. We give it a little bit of a pad and click out. Okay. So now we're actually telling the computer, hey, I want you to get me into this call vertical spread when the price of SPX hits 78.20. 25 or greater.

So now because I'm doing a trigger on the stock price or on the indicy price, I do not want to do this with an option price, but I do want to tell them that, hey, I have a ceiling.

And what's my ceiling? We did the math already. Is 325. I hope that's making more sense now. And this is manual because I actually manually created that level. Good till cancel.

We want this to go uh we don't care if it triggers today. We don't care if it triggers on Monday. Right? So now I save it. So now that I have the saved order, that's it. It's done.

So now I don't have to sit in front of my computer screen all day once I submit this.

But I do now want like a takerit or a stop-loss on this. Right? So now we could either look at the chart and say okay should I should I if I was to look at the 78 uh25 level what would I be using for my stop could I use this 7778 yeah but it's like 100 well it's about 50 points below it right so now I have to determine where is going to be my stop loss I can use it as a trigger or I can use it as a percent.

Percent is way easier to go. There's no doubt in my mind, right? Way easier. So now I can say or I can just pad. I could just use like 1% as an example or 2%. And say if I enter this trade and the stock price drops 1% or 2% just immediately get me out. because really that level for me is about a continuation from this consolidation that we're having right here.

And so that would allow me to continue. But if it drops down 1 or 2% then I'm out, right? So you could do it that way.

I always really just like to use a percentagebased. Typically speaking 50% is is easy for me. I in a normal market I typically go 50%. 50% takeprofit, 50% stop-loss here with this crazy market, you know, uh the volatility on the morning may may get me out of it.

Uh as well as, you know, all these headlines. So sometimes I like to lower my my profit uh taking. However, since the indices itself has been strong, the market underneath not so much, I think I might just go with a percentage and see if this ends up working.

Uh let's see here. So now if I go back to my uh order form, uh I'm now going to uh move this to an advanced order because I have a single here, but I want to do an OCO. So what I'm going to do is go first triggers an OCO and then I'm going to bring up two sell orders.

And so I just rightclick on here and say create an opposite order and uh create a duplicate order because I need two cells. And remember because I already programmed this that programming is going to be in the other one.

So you have to clear it unless you're smart enough to bring these orders up before all this. Right? So now what I want to do is I want to go into the gear icon and I want to make sure that I take that off.

And all I got to do is just remove uh spx and it takes the programming off. And then of course from here I can do a percentage. It's easier uh really then to just go to the face of this and instead of manual hit trigger and then you're going to click the percent sign and let's do a 50% stoploss and a 50% take profit.

Did my light just go out? Hold on, guys. Let's see if I got my lights. That was kind of weird. Sorry about that, guys. Now you can see me. It was probably like really dark. So now here, this is a 50% takerprofit on S&P, right?

And then here, I'm going to do a trigger and I'm going to do a negative on this. Let me make sure I get my negative. And I'm going to do a five and tab out. And so now you can see I have a 50% takeprofit and a 50% stop-loss.

And that's a way that you can just look at your chart if you have a level or you can use an existing kind of support and resistance uh levels there, right? and then use that support and uh uh that support and resistance as levels to get you in or out of a trade or to strategize about hey you know right now we're sitting at 7790.

If it breaks above 7835 I'm in for a a long call. If it breaks below this level you can actually take our low of the hour here 771. I would go 7770 for a put and then where's your takeprofit?

It could be at the next level or you could just do a percentage.

And so this is an easy way as an example to submit your order and be protected, right? To where you don't have to sit in front of your computer all day or put on a trade and not have a stop-loss or a take profit.

I mean, you know, that's how you, you know, you're in a winning trade and then you leave your computer and then all of a sudden you come back to a losing trade, right? So, this is an easy way to do that.

So, as you could see, if we just read it, it says, "Okay, get me into this October 12th uh debit spread. We're not paying any more than 325." Uh, and we're only getting into this when the trigger actually hits 78.25. also get me out with a 50% take-profit or get me out with a 50% stop-loss.

And this is how now you could go ahead and send it. And now you have your order already on.

I say let's use this candle's low. This is an hourly chart, guys, right? Hourly chart. I'm going to use the the candle low here today to get into a put. And our low is 777175. I might um just pad that a little and say 7770.

If it breaks below that, then I'm going into a a debit spread uh put.