Good afternoon hakunas matatas, it is your boy trey, coming back again for another freaking amc, video and today, i'd like to discuss the benefits and the downfalls of technical analysis, and i'm going to kind of bring this home with an important point and uh show you the Options chain for this week, because looking at the options jane it makes it makes you ask a little bit uh a few questions right because we are sitting kind of in a goofy spot right now, uh, but before we get into that. What is up? It's your boy trey, coming back again from the freaking video. I, like your purpose by saying i'm, not a friend of my financial advice. Do what you got ta do take away the same with a great install, let's get into the video.

So why is technical analysis? Important, and why is there also a downfall to this right? Well, i'm going to make this a very simple sort of concept, for you. Technical analysis is a tool that can dictate short-term mid-term long-term price action and movement right, that's important for any sort of investment. It gives you sort of benchmarks, you can check where things are going. You can see if things are bullish, you can see.

If things are bearish, you can anticipate what sort of sentiment you're going to be dealing with on twitter regarding a stock right. There's a lot of things that this is useful for, for example, i could have told you right here at this breakdown underneath 3428 34 bucks that there'd be an uptick in negative sentiment towards the stock. That's just a simple example in terms of gauging sentiment right. It's a nice tool to use there's a downfall of a dome right.

The downfall of ta is, if you over fix it. You hyper fixate on day-to-day price action and you start to psych yourself out of certain situations right, for example, fixating on one minute candles fixating in five minute candles hour long candles right. The reason i only really show daily candles for amc these days is because this is what you should be paying attention to as a buy and holder right now. I want to show you something, though, because this is where i think you get the negative side effects of ta uh, where people this is kind of an add-on to what i was mentioning before, where people kind of don't pay as much attention to it, as maybe They should - and this comes over to the options chain right.

Let's talk about the 145 calls for 21 january 2022.. You can see here the 145 strike. You have a current open interest which, if you do not know, just dictates how many of these contracts are currently being held at 209. 000 total contracts.

It's a lot of money right. Currently, these are trading at about two cents, but these have obviously decreased in value over time, and i want to show you a very simple chart to be able to dictate this for you right. If you don't know how options work, this is very, very simple. You have a chart right here value then you've got time and over time you lose the extrinsic value, which in this case is the value of time right time passes.

Value of the contract goes down, it goes down, it goes down, it goes down. It goes down until eventually, if it does not gain intrinsic value, which is the options contract coming to fruition. You get the price of 145 dollars met and then some so you break even uh you're, just gon na have this expire worthless versus stock stock. If the price stays, the exact same time is not a variable, time will not affect the value of your stock if it was to remain the exact same, only the way that it is traded, is there more buyers? Is there more sellers? Did the algorithm forget to turn itself off right? It's very simple things in that nature.

So this brings me back to technical analysis. I want to be able to show you something, and this is why i think, there's pros and cons to ta, because this, i think, was pretty avoidable right. Let me show you this here, really quick, i'm going to turn on all my drawings. This is what it would take for.

Amc's 145 calls to run in the money this friday you need to have, i mean. Obviously, this is just. This is a hypothesis right. This is some sort of representation just to show you what these candles would look like this candle right here alone is about the same size as the largest run-up that we have had for amc right.

This candle right here went from 37 up to 62.. That is just barely bigger than the first candle. You need to stack those sort of days back to back to back to back all four trading days this week in order for those 145s to run in the money. Now this actually isn't a doom and gloom video right, not much! You can do about these there's an off chance for this probability of anything.

There's a probability that uh that that today i could go out to uh my my favorite freaking bar and i could uh get struck by lightning. As i walk into my car and i'd survive and then maybe i go to the hospital and when i get to the hospital i meet with all of my life and maybe we have kids, maybe she birds the child in the first 24 hours. Who knows right? Anything can happen right, but the likelihood of these running the money is very slim. The likelihood of these coming to fruition is slim, and that brings me back to technical analysis, because, if there's a pitfall right of options trading within retail stocks such as amc such as gamestop such as, maybe even tesla right, it's that options aren't played correctly.

They're not they're, not utilized in the way that they probably should be, and this is uh sort of where i'd like to say as some sort of precursor is some sort of warning that if you don't understand options, it's best not to touch them. It really is they're complex, there's a lot of different variables that affect the way that they're priced the way that they gain value and it's important to understand those things right, so you could have avoided this simply by looking at the chart right draw this up. You can see that uh outside of a lottery ticket if you want to buy a two dollar lottery ticket, that's a whole different ball game, but outside of that you know, there's it's it's very unlikely. It's very unlikely that he's running the money you could have been able to see this through technical analysis, uh, perhaps back here right.

This is a point in which 145 calls actually, if you'd like to play those make - maybe some sense right, maybe some sense uh. You get this potential breakout of a pretty decent downtrend, uh sort of setup right here and it rejected you could have taken those and then gotten out of those contracts pretty much immediately after. Perhaps you take that setup again right here right, you see this uh sort of potential breakout of this long-term downtrend. You got a bunch of different touch points on this descending level of resistance.

It tests that it looks like i might have got a break. You could take an entry there if you'd like right, but at the end of the day when it rejects off that you kind of have to know when to take your lickings and that's where options are different. Right stock doesn't lose value over time. Options do - and i've mentioned this in a video before right, stock holdings diamond handing is much much much different than options.

Holdings time is not your friend with options. Almost all contracts expire, worthless. Right, look at this. This is what to a t.

What you're doing, if you're diamond handing options contracts as you are betting on a date you're setting a date, you're setting an expectation for yourself which could very easily lead to disappointment? If i was look at the options chain this week right, what is the most probable likelihood of cause running in the money? Well, you can look at the 22s. You can see there's a decent amount of open interest here. Maybe 22s can run in maybe the 25s. If you're, if we're pretty decently, lucky maybe 30s, if we're really really lucky right, 145s is out there uh, and that comes back to the ta.

So i want to bring you back to this ta, and this is how i'm going to drive it. Home. Ta is important for making financial decisions, especially if you're going to be trading options which undeniably retail is doing. We cannot act for a second like this is not happening.

209. 000 contracts right here, that's just the 145s. If you were to add all these up, that's got to be damn near half a million, perhaps more right. That's a lot of contracts, so undeniably there's options trading taking place on amc uh on a day-to-day basis.

Right ta is important for that. If that is the sort of thing that you're doing right, you really have to pay attention to the way that these charts move, because you are pissing your money into the abyss and you are letting market makers win. Ultimately, that's the enemy here, market makers, algorithms. These are the bad bad that are trying to take money from you with temptation, after temptation, after temptation and to be frank right, you're defeating yourself.

If you have these and they expire worthless. If you held these for months and months and months and all that you're seeing is them decreasing value, while the chart turns down right, that's that's something that was avoidable and we really want to be mindful of those sort of things uh. When we look at this chart on a day-to-day basis so to wrap us up last driving home point right, technical analysis benefits, downfalls, don't hyper fixate on the very short term price action if you are buying and holding this stock, if you have nothing to do with Options all that you're going to do is set expectations for yourself in terms of dates in terms of uh prices. Right, there's no need for that.

If it hasn't reached your sell dollar amount. Yet right, it's not worth like you know, fixating over the benefits of it is it gives you an indication of what you can expect over time and what could happen down the road right in terms of sentiment in terms of future price action uh, especially with options Trading this, this sort of setup right here we got 145 dollar strikes, uh that are gon na expire, worthless, most likely right, very high probability, uh, that's avoidable. We want to avoid those things, so we don't defeat ourselves and we can keep marching forward to beat the out of these silly chicken, hedge funds and market makers who try to annihilate retail investors and that's what i've got for this video catch on the next one. Much love to all you light taps as always see you all tomorrow, tuesday and peace.