The Option Alpha Podcast: Recent Episodes
Kirk Du Plessis
At Option Alpha we are devoted to empowering traders with simple, powerful tools supported by world-class research and education. For far too long the options industry has been fragmented, lagging, and unnecessarily complex. By developing industry-first automation technology, enhancing data and information accessibility, and nurturing our thriving community at every level, Option Alpha is changing the way people trade options forever. We’re more than just a software company; we’re leading a movement of traders at every level who are unlocking more freedom through improved and expanded options.
What if your portfolio looks diversified — but isn’t? This episode explores the concept of the “Pearl Harbor "portfolio, where hidden concentration risk builds quietly beneath calm market conditions. By stacking exposure in the same tickers, expiration windows, or strategies, traders can unknowingly create a single point of failure.
You’ll learn how to identify warning signs of fragility, spread risk across time and asset classes, and design strategies that behave differently under stress. Rather than trying to predict the next volatility spike, this episode shows how to prepare for it — before it arrives.
See full show notes here
Trading doesn’t have to consume your life to be effective.
In this episode, long-time Option Alpha member Jack Krupey shares how a background in real estate and private equity shaped a steady, market-neutral approach to options trading. Instead of chasing excitement, the focus is on building systems that work across market cycles and fit naturally into daily routines.
Discover how defined risk and consistent habits support long-term sustainability, along with practical advice for traders just getting started.
If you’re looking to build a trading approach that aligns with your lifestyle—instead of fighting it—this conversation offers an actionable perspective.
See the full show notes here
Short-term trading moves fast—but without a long-term mindset, it often leads to burnout, overtrading, and inconsistency.
This episode explores why sustainable success in short-term options trading depends on thinking far beyond individual trades. It introduces the concept of longtermism and explains how focusing on process, risk management, and systems can dramatically change outcomes.
Learn why dopamine-driven decision-making is dangerous, how automation and rules reduce emotional pressure, and what it really means to measure success over years instead of days.
See the full show notes here
Going live with real money brings realities that paper trading simply cannot replicate. In this episode, Kirk walks through the five essential things every trader should understand and consider before transitioning from paper trading to live trading.
From the limitations of paper trading to the execution challenges of real markets, we explain why strict expectations, conservative assumptions, and a solid understanding of liquidity are crucial.
Kirk also breaks down how to prepare for in-the-money positions, why orders don’t always become fills, and why keeping your Option Alpha and brokerage accounts aligned is so important. Plus, an important reminder that the hardest part of live trading is sticking to your strategy when emotions flare.
See the full show notes here
In this interview, Kirk sits down with Kevin, a long-time Option Alpha member who began trading in the aftermath of the 2008 financial crisis. Kevin shares how he turned his small beginnings into a consistent, structured approach that scales with his portfolio.
Kevin details how he spent years learning before placing his first options trade and how those early experiences shaped his disciplined, rules-based philosophy. He explains how he uses position sizing, trend, and DTE selection to create repeatable setups in the corresponding position type.
Kevin also walks through how automation, weekly reviews, and a focus on process over prediction helped him build consistency through market downturns, quiet periods, and personal setbacks.
Kevin enters each week with a plan and relies on automation to execute that plan to reduce noise and stay aligned with his long-term goals.
See the full show notes here
Markets rarely behave as predicted by mathematical models, and extreme events occur far more frequently than traditional models anticipate. This episode explains why understanding probabilities, fat tails, and risk is essential for long-term success.
We also explore how traders can build more resilient systems by focusing on recovery time, appropriate position sizing, and avoiding strategies vulnerable to black swan events. Discover why win rate alone can be misleading, and how expected value offers a more realistic framework for navigating uncertainty.
Plus, Kirk shares how his own philosophy has evolved over the years and why automation can help enforce discipline and reduce emotional decision-making.
See full show notes here
0DTE options are transforming the way traders approach opportunity and risk. This episode breaks down why these contracts are so powerful (and popular), why 0DTE volume has surged, and how you can trade them with clarity instead of chaos. We dispel common myths and highlight the real advantages of these short-term strategies, such as rapid time decay, high liquidity, and faster statistical learning cycles.
You’ll also learn about the risks that traders often ignore, how psychology impacts intraday decisions, and why defined-risk spreads, proper sizing, automation, and backtesting are essential for consistent execution.
This episode provides a grounded, practical framework for incorporating 0DTEs into a disciplined, long-term trading approach.
See the full show notes here
In this episode of the Option Alpha podcast, Kirk sits down with his business partner and fellow founder, Jack Slocum, to share the full story behind Jack’s journey as a trader, developer, and entrepreneur. Jack talks about how he first turned to options trading to generate extra income for his family, how his early experiences “crashed and burned,” and why he has spent years since then learning as much as possible about markets and risk. Tune in now!
How Jack First Got Into Options Trading:
- Jack says his options journey started as a father looking to make extra income to support his family.
From Tech Builder to Trading:
- Before options, Jack’s primary background was in technology and building companies.
- He created a JavaScript framework originally called EXTJS, later part of Sencha, which allowed developers to build full web applications in the browser.
- The framework became widely adopted, with usage by 8 out of the top 10 financial institutions and over 70% of Fortune 500 companies.
- Jack emphasizes that the community was the strength of that project: developers shared what they were building and provided the core toolkit with their own “extensions.”
Faith, Mindset, and Staying Inspired Through Drawdowns:
- He credits his Lord and Savior, Jesus Christ, for his determination, passion, and success.
- He says this gives him a resilient state he can tap into no matter what is happening.
- Kirk shares a mindset he learned from Jack: instead of saying “we can’t,” ask “how could we?”
- Jack connects this to his belief that all things are possible for someone who believes.
- He says reframing problems this way opens the door to solutions instead of shutting them down.
Key Trading Principles Jack Follows Now:
- Jack says the most important principle is never to enter a trade unless you are willing to take the maximum loss.
- In the past, he entered trades assuming he could always get out before max loss, which led to huge losses.
- He rarely uses stop losses as a guarantee because during big moves, spreads widen, and fills can be much worse than planned.
- An example of his opening range breakout bot, which sometimes risks $925 to make $75 and makes him uneasy.
- He prefers to run a mix of strategies, including both higher-probability, smaller payoff setups and lower-probability, larger-payoff setups.
- Jack says every trade should have a clear, logical reason behind it, and not be fear based.
Using His Own Platform to Design the Future of Automation:
- At his old company, he would build a real app with new features before a release to find issues.
- Now, he trades daily on Option Alpha and uses that experience to see what needs to be added or improved.
Watch the full interview here
As an options trader, how closely should you be watching gamma and gamma exposure (GEX)? This episode will help you better understand gamma, interpret volatility, recognize inflection points, and build more context-aware strategies.
Kirk sits down with Mat Cashman from the OIC to discuss gamma, explore how market makers hedge their positions, and why 0DTE options are so “gamma-rich.”
Mat explains why hedging dynamics can create sharp market moves and how concepts like charm and convexity shape market behavior over the course of a single trading session. Then, we try to help traders understand how gamma can help them interpret volatility, recognize inflection points, and build more context-aware strategies.
Watch the full interview here
Gamma is one of the most misunderstood yet powerful forces driving options markets. In this episode, Kirk sits down with Lex from Tradier to break down gamma exposure (GEX) — what it is, why it matters, and how it quietly shapes market movement.
Together, they unpack how professional traders use gamma to stay delta-neutral, manage risk, and interpret shifting liquidity, while retail traders can use it to better understand price behavior and volatility.
Lex explains the difference between long and short gamma, how “sticky strikes” form, and why SPX tends to act very differently from fast-moving names like GME. You’ll also learn how changes in open interest and volume can trigger sharp accelerations or reversals — and how to read these setups without getting buried in formulas. It’s a practical, eye-opening conversation about the hidden dynamics of gamma exposure and the edge it can give you in any options market.
Watch the full interview here
Welcome to the Top Traders interview series, where we hear from Option Alpha community members who have delivered strong results over a meaningful number of trades.
In this kickoff episode, FK breaks down his disciplined, probability-driven options trading strategies. We'll explore FK’s approach to selling premium with defined risk, sizing positions conservatively, and running a dual-track portfolio that balances longer-term spreads (marathons) with 0DTE trading (sprints) for consistent returns.
Discover how he structures trade duration, risk management, and exiting positions through automation, with a mindset for long-term sustainability, and shares the steps he's learned to develop a process that focuses on risk control rather than short-term gains.
See the full show notes here
In this comeback episode, I’ll catch you up on the biggest updates inside Option Alpha, the major shifts in today’s options market (hello, 0DTE), and what to expect from the show going forward.
The options landscape has changed dramatically in the past year. From 0DTE dominating SPX volumes to a flood of new retail traders, the environment today looks nothing like when this show last aired.
This reboot of the OA podcast recaps the biggest trends shaping options right now, explores the major updates we’ve released at Option Alpha, and previews what’s ahead for the podcast, including interviews, mini-series, and unique case studies.
See the full show notes here
We're joined by Adam Cohn, Vice President and Head of Trading Operations at TradeStation, an award-winning trading platform known for its comprehensive trading tools, advanced charting capabilities, and extensive market analysis features.
Adam brings a wealth of experience, not just from his role at TradeStation but also from his extensive background in options trading in the Chicago pits and as a market maker. His deep understanding of market structure and dedication to best execution have made him a trusted figure in the industry.
In our conversation with Adam, we discuss trading operations, market structures, and the complexities of order execution. You’ll learn about order routing and execution, what factors determine fills, payment for order flow (PFOF), the role of market makers, and so much more.
This episode is a must-listen for options traders looking for a deeper understanding of trading options!
See the full show notes here
Show Notes: https://optionalpha.com/show232
Navigating options expiration is a critical skill for traders, especially with the rise of daily expirations.
This week’s podcast explores the top 7 automated tips and tricks you can use inside Option Alpha to set up your portfolio for better options expiration management.
See all 7 tips here
- Adjust exit options as you near expiration
- Check the extrinsic value of your positions/legs
- Check the probability of short legs being ITM
- Don’t use market orders, use defined limit orders
- Tag positions for their state so you can analyze performance later
- Setup alerts for low liquidity exit conditions
- Setup ‘critical’ alerts for positions between strikes of a spread
Show Notes: https://optionalpha.com/show231
This week we explore the latest and most pressing challenges emerging for investors who have embraced autotrading.
As automation revolutionizes the financial markets, traders find themselves navigating uncharted psychological territory. From trusting bots and algorithms, coping with reduced decision-making control, and the novel complexities of autotrading that demand a new style of adaptation and resilience.
With help from our team, I’ll peel back the proverbial onion on the evolving mindset of options traders and shed some light on these new psychological challenges popping up.
See the full list here
- Obsessive-Compulsive Overriding (OCO)
- Strategy Straitjacketing
- Current Events Fallacy
- Sweeping Conclusion Anxiety
- Shiny Object Syndrome Freeze
- Bot Scapegoating
- Feature Creep
- Emotional Hedging
- Version Control Disorder
- Identity Panic Disorder
Show Notes: https://optionalpha.com/show230
This week I explore a deep and philosophical viewpoint into the world of automated trading and its inevitable rise for investors. I explore the evolutionary nature of human decision-making and its limitations in complex financial markets by examining cognitive biases and their impact on manual trading.
I’ll also discuss the technological advancements driving this shift, risk management in autotrading, and the future trends and challenges in this rapidly evolving landscape. Get ready for a fresh perspective on the future of investing and why autotrading is poised to dominate.
These are my 9 key takeaways
AI is the hot new buzzword these days, sparked by the release of ChatGPT a few months ago. Since then, it seems everyone has used OpenAI’s software in fascinating (and sometimes scary) ways.
So, I jumped into ChatGPT and asked it to come up with the top questions that new and advanced traders ask about options trading. This week's podcast explores the 15 questions - and answers - that options trades want to know.
See all 15 answers here
- What are options and how do they work?
- How much money do I need to get started in options trading?
- How do I select the best options trading strategy?
- What are the key components of an options contract?
- What is the difference between a call option and a put option?
- What is the difference between buying and selling an option?
- How do I determine the strike price for an options contract?
- What is implied volatility and how does it impact options trading?
- What are the risks involved in options trading?
- What are the different options trading strategies I can use?
- How do I calculate profit and loss for an options trade?
- How do I manage risk in my options trading portfolio?
- Should I use technical analysis to inform my options trading decisions?
- Can you use charts and graphs to trades options?
- What are some common mistakes to avoid when trading options?
How long does it take a stock to get back to even after a large daily move down? And does the magnitude impact how long it takes the position to recover the loss?
We’ve all been in losing trades and wondered if we should hang on to the position for a little longer or cut it loose. So, to help answer the question, we studied the short-term performance of stocks and ETFs after different daily loss totals.
The study analyzed 324 assets over a 20-year period. We calculated the 5-day returns following single-day losses up to 5%.
See the full research report here.
Stocks have been described as a rubber band, and we often assume they will snap back and revert when prices become overextended.
So, we wanted to know: How likely is a security to continue or reverse its momentum above and below major moving averages in short, medium, and long-term timeframes? And does the security’s proximity to a moving average impact its performance?
We researched 20 years of data on 286 symbols, using short, mid, and long-term trends to analyze the ticker’s 30-day return relative to its simple moving averages.
I'll be honest, the results surprised me.
Click here to see the full research report.
"The trend is your friend." It’s a popular saying amongst traders, and we hear it all the time. But is there validity in the statement?
We backtested directional option selling strategies with a long-term trend filter to see if there is a significant impact on performance.
We used Option Alpha's backtester to review the data for SPY, GLD, and TLT short put spreads and short call spreads. Short put spread tests included a filter to only enter trades above the 200-day moving average. Short call spread variants included a filter to only enter trades below the 200-day moving average.
Click here to see the full backtest results.
Important Note: This podcast is for educational purposes only. Past performance does not guarantee future results. This data is presented objectively and is not financial advice or a suggestion to use these strategies. We encourage you to always do your due diligence and test your strategies.
Let's take a closer look at the performance of these strategies using different trend filters. This is a great baseline when considering how to set up your trades, and we hope this inspires you to backtest your ideas for strategy optimization.
This week we take a look at the performance of the Monthly Iron Condors ($3k Portfolio) bot template. You might recall that we previously did a deep dive on this template back on Show 214, walking through the strategy setup, the scanner and monitor automation setups, etc. But now that we’ve had it running for a little over a year, we thought it would be help to take a look at how it has weathered this year’s market volatility and explore possible ways to adjust or improve its performance in the future.
Important Notes: This podcast is purely for educational purposes and my exploration of this bot template is not a recommendation or suggestion to use this strategy as your own. Bot performance does not includes in commissions, which might vary from account to account or broker to broker. We encourage you to always do your own due diligence, factor in your own personal situations, and trade strategies you are comfortable with in your account.
So, let's dive in and look at how this strategy has performed in this year's volatility and explore possible adjustments and future improvements. Ultimately, if nothing else, we hope this example helps give you some ideas to help with your own trading.
Show Notes: https://optionalpha.com/show224
Option spreads are a simple and flexible, yet powerful strategy for traders. And while spread strategies come in many forms, shapes, structures, and durations, some core elements are present in spread trading generally that new traders should pay attention to. On this week's show, we'll once again slow things down a bit and focus on understanding what option spreads are and how to trade spreads in your portfolio.
Show Notes: https://optionalpha.com/show223
What if you could build an automated strategy that navigates all market conditions? And while we know there is no one-size-fits-all strategy, we believe you can design a bot strategy that assesses the market trend and proactively adapts to current conditions. This "trader's dream" finally manifested itself in a bot template that become the collective “brainchild” of the amazing Community of traders right here at Option Alpha! The Hexabot, as it's now lovingly referred to as, was a labor of love, and we are super excited to share it with you. In today’s episode, we introduce you to the Hexabot and share the entire story of it's origin.
Show Notes: https://optionalpha.com/show222
Option strike prices are an absolutely critical concept to master if you're going to seriously trade options at any point in the future. Without a holistic and firm understanding of what strike prices are, how they work, why they are different than break-even prices, you cannot be adequately prepared to safely trade options. And therefore, because we want to help all traders place smarter trades, we've devoted this show to answering your questions around option strike prices.
Show Notes: https://optionalpha.com/show221
Starting to trade a covered call strategy is a popular "bridge" for traditional stock traders or investors transitioning to the world of options trading. It's a logical, bolt-on options strategy that has numerous benefits over traditional long stock positions. Today's show digs in one extra level and explores the different setups and ways to trade synthetic covered calls with a particular focus on using call spreads vs. single-leg short calls.
Show Notes: https://optionalpha.com/show220
In today's show, I'll walk through four clever, dare I say "wicked-smart", ways to leverage our proprietary SmartPricing technology for routing orders intelligently to the markets. If you're already trading with us at Option Alpha then you'll learn some new techniques that will help improve the efficiency of your bots and automations. If you're not trading with bots yet and are still manually entering all your opening and closing orders yourself, waiting for your trade to fill, canceling and replacing the order with a different price if it doesn't fill, waiting again for the trade to fill, and on and on, then you'll love how much time you save when you start using SmartPricing.
Show Notes: https://optionalpha.com/show219
Calculating break even prices for different option strategies isn't as complicated and overwhelming as it might seem. Yes, you do need to perform some basic math functions to find different break even prices but it's certainly not rocket science. Plus, it's an invaluable concept to master because it's critical to your success as a trader. In today's show, I'll help you understand what break even prices are and how to calculate them for all of the most popular option strategies. Yep, that's right, we're going to walk through everything together step by step so you can finally master it once and for all. Let's get started.
Show Notes: https://optionalpha.com/show218
In life there are three things that are certain; death, taxes, and bear markets. For many new options traders, the current bear market we've found ourselves in might just be your first. An inconvenient reminder that risk is present when trading, particularly when trading options. But alas, as the old saying goes, "It's just part of the game..." and my goal today is to make sure that this bear market isn't your last. That's right, I want to help you survive this bear market, maybe even thrive in this volatility, and ensure that you live to trade every bear market that comes in the future.
Show Notes: https://optionalpha.com/show217
Hey everyone this is Kirk here again from optionalpha.com, working every single week to make this the most popular investing podcast offered online because it's based on one thing and one thing only and that's. . . Helping you consistently place SMARTER trades. Thank you so much again for tuning in and welcome back!
Show Notes: https://optionalpha.com/show216
Hey everyone this is Kirk here again from optionalpha.com, working every single week to make this the most popular investing podcast offered online because it's based on one thing and one thing only and that's. . . Helping you consistently place SMARTER trades. Thank you so much again for tuning in and welcome back!
Show Notes: https://optionalpha.com/show215
On this week's episode, we'll present a collection of questions custom tailored for digging deep into your psychology and mindset around trading. These are questions you should ask yourself, ones that trading coach might ask you, on a recurring schedule to help uncover and keep a pulse on the potentially harmful subconscious "self-talk" that tends to consume you. Look, trading options is already hard enough and it's certainly not in your best interest be your own worst enemy when it comes to your mindset. We cannot predict or control the markets, though we all try on some level, but we absolutely can learn to focus and control our minds if we give it the attention it deserves. To help frame our trading psychology session together we'll walk through 15 questions you should ask yourself right now.
Show Notes: https://optionalpha.com/show214
New traders with small accounts are constantly on the hunt for option strategies that help them get started but intelligently allocate their money without blowing up. And so back on Show 159 of the podcast we outlined a framework for building an options portfolio with just $3,000 which become of our most popular episodes. But when we recorded it, almost 2 years ago, we didn't have automated trading which means you still had to take everything we discussed and manually implement and execute the trading strategy yourself. Well, the days of manually trading are history. We've entered a new era with autotrading technology and on today's show we'll blow your mind as we introduce a new bot template you can clone in 1-click that was specifically built for traders with a small portfolio around $3,000.
Show Notes: https://optionalpha.com/show213
Last year during the beta launch of the autotrading platform, I decided to take some time off from trading so that my full and undivided attention was appropriately on supporting groups of beta users during the launch of the autotrading platform. Plus, my live accounts were the proverbial "guinea pigs" for lots of critical testing and bug hunting that could only be found when connecting bots to live markets. But this "reflection time" was not only welcomed because of the time it freed up in my daily routine, it also was enlightening to sit back and observe for an extended period of time. And now that I'm back to trading (with bots of course), I thought it might be helpful to share some of the the things that stuck out most during my time not trading. As they say, self-reflection is scary but necessary for growth.
Show Notes: https://optionalpha.com/show212
Allocating capital used to be a cumbersome and time-consuming process. Breaking out your calculator or excel spreadsheet to manually run risk calculations and position sizing percentages before opening new trades. That's all of course if you actually remember to check your position sizing before each new position. Now, with automated trading, smart traders are creating highly efficient capital allocation systems that correctly adjust position sizing on the fly without ever forgetting or skipping this critical step. In this week's show, we'll spotlight unique and automated ways to allocation capital inside your bots and unpack some thought-provoking questions you should consider when building your trading strategy.
Show Notes: https://optionalpha.com/show211
The iron butterfly strategy is a popular neutral options strategy. Plus, with their high probability and risk-defined characteristics, traders of any experience level can use in their portfolios. On this week's show we'll invest some time together and help you understand as many of the "ins and outs" of trading iron butterflies as we can possibly fit into an episode. We hope this becomes your new "go-to" resource for learning how to trade iron butterflies and helps answer important questions around entering and managing them in your automated portfolio.
Show Notes: https://optionalpha.com/show210
Sometimes we don't know what we don't know. As a trader, we might have been conditioned after years of using legacy platforms to just "suck it up" and grid our way through complex and tedious tasks on a daily basis. But with automated trading, you can finally offload the things you do now (or should be doing) as a trader for bots and automations. In today's show, we'll highlight at least 12 complex things that are simple to automate with bots. If you're serious about trading this year then it's time to get serious about being efficient with your time by leveraging these new automation tools.
We are excited to announce that the Option Alpha platform doors are open to the trading public!
This episode explains how you can get access to our new platform and what to expect when you begin autotrading. We’ll also do a deep dive on why we built the platform, what it is, what it is not, and what’s next for Option Alpha.
How to Get Access
- Join the Waitlist and request an invitation.
- You will gain access to a FREE 30-day trial with no limitations and no commitments.
- You can move up the list by referring your friends and family. The more you refer, the faster you’ll move up the list.
- If you don't want to wait, you can get immediate access by upgrading to an annual subscription. PS - We’re giving away a 50% discount during our launch promo!
- You can also skip the line by using the promo code shared in this episode.
Show Notes: https://optionalpha.com/show209
Show notes: https://optionalpha.com/show208
The decades long evolution and growth in easily accessible brokerage platforms have created a self-reinforcing cycle of low attention span investors that are also now pulling even the deepest and most steadfast investors down the rabbit hole. Plus, the rise and popularity of meme stock investing certainly has pulled investor attention spans away from traditional analysis and reprogramed us constantly look for the next big move. On today's show we'll explore why the speed and magnitude of stock movements causes us to fall victim to classic investor biases precisely when we need to elevate ourselves above the noise and argue that “deep work” is more important than ever for traders.
Show notes: https://optionalpha.com/show207
Earlier this year we officially rolled out a massive free resource for traders with our launch of The Option Alpha Handbook. No more wasting time searching endlessly across dozens of unreliable sources cluttered with ads to get answers to all your burning questions about strategies, markets, options, and so much more. We built this just for you and our goal is to make it the ultimate reference guide for traders seeking clear, non-subjective answers to thousands of investing questions. Consider this your new "go-to" digital encyclopedia for everything trading you've been looking for but never found until now.
Show notes: https://optionalpha.com/show206
On this week's episode, I wanted to try something new and explore just a single bot template in detail together - a full and complete deep dive into the origin, strategy, automations, and decisions for one bot template. For this maiden voyage I chose the Trendy Short Put Spread bot which I believe is a great starting point for the potential series of "Bot Talks" in the future. Inside the show, we'll talk about everything from the backtesting we did leading up to outlining the automations to the tweaks and modifications we've made along the way as we've watched it perform through multiple expiration periods.
Show notes: https://optionalpha.com/show205
Often the terms hedging and diversifying are used interchangeably by traders. You might hear someone say, "You need to hedge your positions..." or, "You need to diversify your portfolio..." and in either case we understand the overarching goal as broadly the same objective; reduce risk inside a portfolio. However, the means by which you might accomplish this and the manner in which you get there via either hedging or diversifying, or a combination of both, are very different and require a better understanding of each. This week on the podcast we'll unpack these two juggernaut concepts.
Show notes: https://optionalpha.com/show204
Ever wish you could intelligently use automated technology that tracked and or trailed option trades for specific exit criteria without having to watch, edit, and replace orders day after day? Not some boring, outdated Good-Til-Cancelled order or generic, static Stop-Loss order either. Well our team granted this #1 wish from our beta users months ago and in week's show we're going to walk though one of the coolest new features developed for traders in a long time. We call it SmartStops.
Show notes: https://optionalpha.com/show203
Futures trading is on the rise and continues to grow in popularity. The trouble has been however that for most traders getting started in futures they find it overly complex and hard to manage. Though more capital-efficient than stocks, futures contracts come with a slew of complex sizes and specifications that turn many traders away from them. Thankfully this week's guest is on a mission to help make futures markets more accessible with small, standard, and simple futures contracts.
Show notes: https://optionalpha.com/show202
Decision recipes use easy to read natural language to help you setup detailed instructions for your automations to follow inside a bot. These decision recipes can also be grouped and linked together into infinite combinations so you have as much flexibility and control as possible. The last few months we've seen thousands of automations created inside the new Option Alpha platform and today I wanted to highlight eight of the more popular decision recipes being used right now.
Show notes: https://optionalpha.com/show201
This week on the podcast we finally release our much anticipated interview with Jason Goepfert of SentimenTrader.com. Inside Jason and I dive deep on investor psychology, market sentiment analysis, and discuss the concept of adjusting and managing risk exposure using sentiment as opposed to market timing. You don't want to miss this very timely and important conversation.
Show notes: https://optionalpha.com/show200
Well today we celebrate the 200th episode of the Option Alpha Podcast. First of all, I would like to thank everyone who has made the show possible, and most importantly, you the listener who has supported us in this journey to get to 200 episodes. It's pretty incredible that we got to this stage with this podcast. I hope that you really enjoy all of the upcoming shows that we have scheduled. Here's to another 200 more episodes on this podcast in the coming years.
Today, we're going to do a deep dive and case study on the volatility of bid-ask spreads. To help with this conversation. We invited back on for an encore, our Chief Market Strategist Ryan Hysmith, who's going to be diving deep into some research that we did recently on bid-ask spreads. You're not going to want to miss this, because if you think you understand bid-ask spreads and the volatility around them, you might have a different perspective after listening to today's episode.
Again, thank you so much for supporting the podcast and doing everything you can to get us where we are here. We couldn't be here without you. As always, we really appreciate it. We're working hard to make this the best podcast for you all, our traders in the community moving forward.
Show notes: https://optionalpha.com/show199
As automated trading starts going mainstream for retail traders, we wanted to ensure that expectations are set properly. Particularly, this includes discussing why we believe that automated trading does not mean unattended trading. To help guide and frame this conversation I invited our Chief Market Strategist, Ryan Hysmith, back on the show with me. Inside we'll talk about the future of automated trading, if automated trading provides an edge, and what some of the possible downsides to automated trading might be that you'll have to consider carefully.
Show notes: https://optionalpha.com/show198
After a couple of months on pause for the podcast, while we focused on the beta launch of our automated trading platform, we're thrilled to be back and ready to rock and roll again. On this week's show, we'll do a mini "State of the Union" on what we've been up to, what's new, and what you can expect moving forward. We think this is a great way to cover a lot of ground in a relatively short amount of time and make sure we're all aligned together moving forward.
Show notes: http://optionalpha.com/show197
There's a lot of research to support the usage of trend indicators as simple risk reduction elements that can be layered onto an existing strategy. The trouble, however, was that in the past investors had to monitor the trend and execute the appropriate trade reversals when the trend changed. With automation, we can now offload this simple portfolio strategy to bots - and cleverly defined multiple possible trend exits all from one simple automation. This week's podcast walks through the two Macro Trend bots we built to show you how you can start leveraging the new automation tools at Option Alpha to trade either stocks or options in a trend.
Show notes: http://optionalpha.com/show196
Trading short naked puts (i.e. put selling or put writing) can be an effective and profitable options trading strategy. Often the attraction to naked put selling is the ability to collect premium with a margin for error if the stock drops, and have the ability to purchase stock at a discount to the current market price. The trouble comes however when the stock moves lower and challenges the naked put position and today's show is dedicated to helping you understand all the ways you can hedge short naked puts.
Show notes: http://optionalpha.com/show195
It's well documented that not only do investors classically chase performance, ultimately yielding sub-par performance in pursuit but that they also do not have enough patience to stick with strategies long enough. My hope is that it ends today and you can elevate yourself above all this and objectively look at strategies for what their expected outcome range is, not what it's done in the last couple of months or a handful of trades.
Show notes: http://optionalpha.com/show194
This week I'm thrilled to welcome back on a very popular guest, Cameron Skinner, to the Option Alpha podcast. Way back on Show 61, Cameron and I talked at length about his consistent and religious process for trading options even though his "day job" as a real estate investor takes the majority of this focus and attention. Well, Cameron is back for another interview, and this time we dove even deeper into his strategies and how he thinks about risk and the markets. Please enjoy our follow up conversation with Cameron Skinner.
Show notes: http://optionalpha.com/show193
One of the beautiful things about shifting to fully automated trading on the new Option Alpha platform is the ability to finally be able to clone and replicate entire trading strategies using bot templates. Bot templates allow anyone to build a trading strategy and seamlessly share the structure and details of that strategy with one-click. Today, I want to walk through just one type of strategy that I think is the tip of the iceberg when it comes to situational trading and hedging bots. I have no doubt that this discussion will spark some creative ideas, allow you to dream of what's possible, and show you that the future of trading is incredibly bright once you adopt autotrading.
Show notes: http://optionalpha.com/show192
Back on Show 187 we tackled the top 15 questions we consistently get around options expiration. Today, we're taking a slightly different approach and addressing head-on the 18 biggest questions and concerns traders have around options assignment and exercising, whether on or before expiration itself. Regardless of your trading experience level, seasoned investor, or complete options newbie, I promise you that today's episode will help you more clearly understand and navigate any future options assignment or option exercise situation you might find yourself in. After all, this is part of the business and if you trade long enough you'll have to manage through this, dozens of times.
Show notes: http://optionalpha.com/show191
We're all subject to investment biases, often multiple biases working together at the same time trying subconsciously to derail us. And whether we offload the actual order execution and management to an autotrading platform or not, the human element or side of investing still impacts the decisions we make and the strategies we choose to execute or not. Until we take the time to label and recognize these major investor biases, we cannot overcome or manage them in the future. Therefore, today's podcast is geared specifically at exposing these classic and detrimental investor biases that ruin your performance. You're either going to learn how to manage and deal with them or be unknowingly controlled by them for the rest of your life.
Show notes: http://optionalpha.com/show190
One of the most impactful things you can do for your portfolio is add money or capital to it. A consistent and persistent schedule of funding your account, even with small amounts, gives you the added boost that compounds over time. But we all know this already don't we? So why don't we do it, or at least at a higher level than we do now? On today's show, I'm going to help you break down the zillion ways you can save money to invest into core concepts that I have used in my own life to save money at an incredible pace. I'm a firm believer that these "big ideas" around saving money will help free up some cash for you.
NEW Beta Site is Live: https://beta.optionalpha.com
Today’s show is a massive announcement – we are officially announcing that we have our launch dates set for our new auto-trading platform. Today on the show, we’re going to answer some common questions that we've been getting around the new platform and we're also going to start going through some of the features that you are going to love about it.
We have all the information you need right now about the platform and how to use its new features on https://beta.optionalpha.com.
Show notes: http://optionalpha.com/show188
Ah, taxes, a dreaded but necessary part of investing and trading. And although you might be inclined to skip this week's show, I'd encourage you to dive in because, even for me personally, this discussion helped clarify and re-solidify concepts that were mildly opaque. After all, tax concepts and terminology can get complicated fast and our goal is to help educate and explain things so that it's useful to you moving forward. Plus, I brought in a special guest to help chat through the different sections and I know you're going to love this week's episode on taxes for options trading.
Show notes: http://optionalpha.com/show187
We get a lot of questions around options expiration - hundreds and hundreds each week. Yet, the same vital few seem to float to the top consistently so we're pulling these 15 questions into this week's podcast episode to help you understand and effectively navigate options expiration. And in the off chance, we didn't answer your question during the show, you can always reach out to us anytime for help and support. If you're going to trade options, you can't avoid going through expiration. So, if you're going to trade options, you can't miss this week's podcast.
Show notes: http://optionalpha.com/show186
Summer vacations are in full swing and as everyone rushes to their favorite social distancing hot spot, traders are often left wondering what to do with their positions and trades while away. And since we cannot build automated and trigger-based strategies yet, though it's coming soon from Option Alpha, we wanted to help with a simple but effective checklist you can use to square up your account before going off the grid. Make no mistake though, this checklist isn't just for when you go on vacation, it's also a great workflow to help you before a long business trip or busy week at home when you have limited time to manage your account.
Show notes: http://optionalpha.com/show185
Filling option trades can often feel like pulling teeth. While some trades and orders get through easily and without issue, others are incredibly stubborn and hard to get filled. To add to your frustration, the entire order execution process appears to be just another confusing black box. There's seemingly no rhyme or reason why this trade got filled but that one didn't? So this week's show is dedicated to shining a light on order filling for option trades and helping to demystify what is otherwise a simple market process.
Show notes: http://optionalpha.com/show184
Adjusting trades that move against you can be hard enough. Choosing how to adjust and when to pull the trigger complicates what otherwise was a simple trade to start with. Now, throw in an early assignment to the mix and you've got quite the convoluted option trade on your hands. Sounds daunting already doesn't it? But fear not. Complicated and complex trades like the one that happened to us in FXI the other month give you a great opportunity to learn and grow as a trader. On today's show, we'll walk through the entire FXI position from start to finish, including all the profit and loss calculations including adjustments and an early assignment. Lean into this show and don't skip it - your future self with thank you for taking the time now so that you don't have to freak out later when it happens to you.
Show notes: http://optionalpha.com/show183
Be fearful when others are greedy, and greedy when others are fearful. This classic Buffett quote had echoed though the ranks of investors for decades. But does that data support the methodology? Does investor sentiment, which for many investors is widely considered a contrarian indicator, have enough predictive power to warrant our time and attention? In today's show, we'll explore investor sentiment from all angles and help discover which readings, if any, give predictive power to future stock market returns or trends.
Show notes: http://optionalpha.com/show182
Greed, fear, FOMO, anxiety, panic, over-confident, stubbornness, impatience. These are just a few of the frequent emotional and mental states that traders find themselves in. And while we cannot avoid these emotions and thought processes, we can learn to manage them through emotional intelligence. This week's podcast was curated to help you learn how to more effectively recognize and manage the dozens of emotional and cognitive responses you'll come across in your trading career.
Show notes: http://optionalpha.com/show181
There's an old saying in investing that a "rising tide lifts all boats." And while that might be true, when the tide goes out, all the boats sink and fall just as fast as they rose together. Still, you'll hear the pounding of drums in the name of classic diversification as the portfolio savior during these downturns. Our research suggests, however, that even a well-diversified portfolio can still completely blow up just when you need it to protect you most.
Show notes: http://optionalpha.com/show180
You've got your prized covered call setup and it's working in your account - now what? How do you manage or adjust the position in different market scenarios? Lucky for you, we are going to review the best-covered call management techniques on today's podcast. And if you think this show is just for stock traders, you'd be wrong, because proper covered call management could be a lifesaver for options traders who get assigned and are forced to deal with stock.
Show notes: http://optionalpha.com/show179
You've got your prized covered call setup and it's working in your account - now what? How do you manage or adjust the position in different market scenarios? Lucky for you, we are going to review the best-covered call management techniques on today's podcast. And if you think this show is just for stock traders, you'd be wrong, because proper covered call management could be a lifesaver for options traders who get assigned and are forced to deal with stock.
Show notes: http://optionalpha.com/show178
Box spreads and arbitrage strategies are often synonymous with one another and referenced interchangeably in the options trading community. And after all, who doesn't want a risk-free way to earn money right? But like all things that seem too good to be true, box spreads carry some serious risks if you're not careful in how you set them up. Today's show then focuses exclusively on box spread basics for options traders.
Show notes: http://optionalpha.com/show177
Index options have continued to grow in popularity. Potentially because they are easy to use, available in highly liquid markets, have favorable tax treatment in some cases, and offer a simple settlement process. Therefore, we've dedicated an entire show to help you understand what index options are, how they work, how they are different from equity options, and what you need to be aware of if you decide to start trading them in your portfolio.
Show Notes: http://optionalpha.com/show176
Hedging stock positions can be tricky business. One of the most common schools of thought is to use a simple protective put strategy whereby a stock investor would simply purchase a long out-of-the-money put option to act as "insurance" in case the stock fell. Sounds logical but we're skeptics here at Option Alpha and so we went on a hunt to see what research and data say about the protective put strategy and it's effectiveness at protecting or hedging stock positions.
Show Notes: http://optionalpha.com/show175
Stock trading is easy to understand conceptually because it's one-dimensional. Either the stock goes up or it goes down. Clear and simple, at least from a trading and profit or loss perspective. Options trading, however, is multi-dimensional. Price, time, and volatility all impact the value and price of an options contract. On today's show we're selectively choosing to highlight the impact that volatility has on options because, as we've seen in the 2020 market collapse, if you're not managing volatility, it could become your worst nightmare.
Show notes: http://optionalpha.com/show174
Earnings season comes around four times a year for stocks, and as traders, we've always loved the idea of trading these events for the crush in implied volatility and quick potential moves in option strategy positions. However, after analyzing 1,546 earnings events across 40 underlyings over 10 years we decided to stop trading earnings events completely. In today's podcast, I'm going to walk through the research on earnings moves, and how different options strategies performed under various setups and conditions.
Show notes: http://optionalpha.com/show173
We're excited and honored to have a very special guest this week on the podcast, Richard Hudson, co-founder of the London and Brussels-based Science Business Publishing Ltd. He's the co-author of The (mis)Behavior of Markets: A fractal view of risk, ruin & reward which he wrote with famed Yale/IBM mathematician Mandelbrot. Our discussion frankly should be required listening for any investor and was recorded in January of 2020 immediately preceding the market crash that occurred just weeks later.
Show Notes: http://optionalpha.com/show172
This week on the podcast we're doing something a little different and turning this podcast episode into a full-blown audiobook. Today I'm recording the newest book we released entitled "Mastering Covered Calls". I encourage you to pick up your copy now, did we mention it's 100% free, and follow along as you listen to this audiobook. We've included dozens of charts, tables, and graphs to help as part of this new book and we hope you enjoy listening or reading your copy.
Show notes: http://optionalpha.com/show171
Today on the show we welcome special guest, Rob, who's the co-author on our recent research report on Covered Calls. On the show this week we go over the top three performance insights we learned from our massive study on Covered Call Performance. If you trade covered calls right now or plan on using them at any point when dealing with assigned stock, then this show should be required listening.
Show notes: http://optionalpha.com/show170
Factor-based strategies and trading systems are all the rage these days. We've been promoting these for many years now but it seems that more and more investors are catching on. As a result, we wanted to cover the 5 critical factors that your trading strategy should have. To us, these serve as the foundational elements for choosing which investing vehicles, indicators, or systems most appropriately fit your portfolio.
Show notes: http://optionalpha.com/show169
This week we're very excited to share our exclusive interview with Kevin Davitt, a special guest with tons of experience not only as a former market maker, but as the Senior Instructor for The Options Institute at CBOE. As many long time listener's know, we are highly selective with people we choose to bring on as guests for interview and Kevin raises the bar yet again for us with an amazing discussion. During the show we'll touch on everything from his time as a market maker, transitioning to the retail side of trading, though processes on managing positions and controlling risk, and so much more. You're going to love this candid and wide-ranging discussion as much as we enjoyed the time with Kevin.
Show notes: https://optionalpha.com/show168
Did you know that fear has nothing to do with logical or cognitive reasoning? It's actually a completely physical response that originates in our body. We fear to be wrong because that might mean we will be alone and people will leave us, which means that we won't be part of a tribe or community, which means it'll be dangerous and we might die. Okay, that's extreme but taken to its logical conclusion we fear because of conditioning we've had as humans for thousands of years to survive on a physical level.
As options traders, we have fears about trading that manifest in dozens and dozens of ways. Today, as we circle the Halloween season, I wanted to tackle the 27 biggest options trading fears that we hear in our community. And, more importantly, how to overcome and conquer these fears. Just saying them out loud and talking through them together might just be what you need to set yourself free and on the right path as a trader.
Show notes: http://optionalpha.com/show167
Oh, profit targets. The double edge sword of confusion for many traders. Take profits too early and you feel like you left money on the table. Too late and you kick yourself because the trade could have moved against you. And because we've been getting so many questions on when and why we've let positions go beyond traditional profit targets, we wanted to record today's show to talk about the top 3 market setups that would lead us to break profit-taking rules. Yes, you heard me right, and longtime members have known this for years, but we don't always take profits at 25% and 50%. Shocking? Shouldn't be because our Profit Matrix research 2 years ago laid the foundation for holding positions generally longer towards expiration.
Show notes: https://optionalpha.com/show166
When it comes to market signals and timing indicators, the Put Call Ratio is one that naturally jumps to the top of many lists. Because the indicator looks at volume in both put and call options, the logical conclusion is that we can interpret the ratio to signal us from an impending top or possible market bottom. But, is that really the case, and if so, how should we use Put Call Ratios moving forward in our analysis. All this and more on this week's podcast episode.
Show notes: https://optionalpha.com/show165
Personally, I don't like rules. Mostly because I value freedom and flexibility so when someone says that I have to follow the rules I naturally push back. Things that confine me or tell me what to do don't fly well with me. But that only applies to things outside of trading and investing. In the world of investing, and specifically trading options, you need to live by certain rules. Rules that keep you safe and protected from the unknown of the market.
I imagine that the 11 "Golden Rules" I'm going to present in this podcast will cause many of you to push back and challenge their usefulness. Mostly because they'll cause you to trade different than you have in the past, and being different means being uncomfortable. I'm okay with that and I welcome the discussion around them. But don't misinterpret this level of understanding in adoption to also represent flexibility when it comes to these rules. These are "unbreakable" rules for me and should be for you as well.
Show notes: http://optionalpha.com/show164
Since we are option sellers and our edge comes from selling overpriced options out into maturity it's natural to assume that if we want to sell options when IV is high that buying options during low IV markets is a way to make money in the other direction. We get it and understand the rationale argument. When IV is low, and option premiums are cheap, you can and should buy options because they are cheap right? Not so fast bargain-buyer.
This type of thought process and strategy, low IV option buying, has two major problems. And we don't use the word "major" lightly here. Each problem with option buying systems is so important that the probability of getting both problems right or solved is for all intensive purposes, impossible on a long timeline. Curious to know what these major issues are? Let's dive into today's show and find out.
Show notes: http://optionalpha.com/show163
This was a long trade. Maybe not the longest trade we've been involved in, but certainly one of the top ones as this short put option assignment lasted over 5 months. For most options traders looking to make a quick buck, this trade stretches their patience and conviction far beyond a reasonable level. Still, I think that today's case study is important to hear because it proves critical concepts to how we think about trading here at Option Alpha. And what better way to prove something than to show you how we managed the entire position, start to finish, with real money.
Show notes: http://optionalpha.com/show162
It might seem that the markets are a game of price, and while that might be mostly true, what they are is really a game of emotions. With enough self-awareness, the "average" investor can do incredibly well. Better than many sophisticated investors.
There's so much to be said about controlling your emotions and recognizing biases that we could spend hours upon hours dissecting each one. I prefer a more optimized approach which is why I decided to do a podcast specifically on the top 8 biases that investors fall victim to. Once you learn to recognize them, you can then process the emotions behind the scenes so that it doesn't interfere with your trading.
Show notes: http://optionalpha.com/show161
As many of our long-time listeners know, over the years I've become increasingly protective and selective with the guests that I invite to come on the show. Truth be told, we get pitched weekly for people looking to expand their reach. Somethings it's just so off the wall and disconnected to trading that I have to laugh. But this isn't the case with today's guests which I'm super excited to bring on for an interview.
Kevin Smith and Tavi Costa both generously gave their time to join me for an incredible look inside their philosophy and macro models at Crescat Capital, a hedge fund based in Denver Colorado. This is an episode you won't want to miss. In fact, I encourage you to listen to it at least twice to make sure you pick up on all the little details you might have skipped the first time around.
Show notes: http://optionalpha.com/show159
This podcast is a long-time coming but one that needed to be done because we get a lot of questions from newbie traders about how to build an options portfolio with a small amount of starting capital. And while we openly suggest that you really start trading with at least $5,000 or more, as you'll hear me say a bunch in this show, we realize that a good majority of new traders want to start with less. That's why in today's show we'll play "pretend" and assume you absolutely want to start trading with just $3,000.
Inside I'll walk through my though process on building out a portfolio that gives you the highest possible chance of success. We'll cover everything from position sizing, ticker selection, strategies to use, what ranges or targets for setting them up, profit taking and stop losses, and much more. The concepts we'll cover are applicable to any portfolio size so don't think or one second that this show is just for small account traders. If you trade a larger account size you can also pick up a lot of great nuggets of information.
Show notes: http://optionalpha.com/show158
Somewhere, possibly from another planet, this notion of trading options with a high probability of success transformed into a subconscious greed for 100% probability of success trades. And if you think that this mentality doesn't exist in the modern market we are in, you should see the emails we get at Option Alpha on a weekly basis. The truth is that you are going to have losing trades, a lot of them over the course of your career. Sometimes they'll come in groups and bunches that make you question everything you are doing or the strategy/system you are choosing to use. But, the first step on your road to elevating yourself is to ask yourself, "Can I trust the process?".
Show notes: http://optionalpha.com/show157
A couple of weeks ago I was reading the story of the three little pigs to my daughters. And for some reason, I couldn't help but think about the untold story of the three little pigs who traded options? Yes, it's true, many people don't know this but the three little pigs were actually given a large chunk of money from their mother and each decided to trade wildly different options portfolios when they set out on their own. In today's podcast, I'll walk through each of the different portfolios they used and how volatility and variance can impact long-term performance and why it's important that we know the story of the three little pigs that traded options.
Show notes: http://optionalpha.com/show156
Many of our members understand the best times to trade options (i.e. higher IV setups when option premiums are expensive), but should we avoid trading during other market situations? Today's podcast walks through the four general market situations I avoid aggressively trading in and explain why each type requires that you either sit on the sidelines or dramatically scale back your position size.
Show notes: http://optionalpha.com/show155
Everyone loves a good options trading checklist right? Well, here are the 7 questions you should ask yourself before you put on an options trade. Answer each one over the next week and you'll build a strong habit that will keep your positions and portfolio in check before you put your hard earned money at risk.
Show notes: http://optionalpha.com/show154
We get a lot of emails each day - I'm talking hundreds of emails. Naturally, seeing so many questions and comments come through the system, we found that these 17 top questions keep coming up again and again. So, in an effort to help you, and our team reduce the support inquiries, I'm recording answers to each of these questions in today's show.
Show notes: http://optionalpha.com/show153
Assignment for some traders can be scary and cause them to freeze up or throw in the towel. On today's podcast, we'll walk-thru another case study in which we got assigned on our iron butterfly position in TLT not once, but twice. Inside I'll move slowly as we look back at each stage in the trade from the original order entry, adjustments, assignment, and ultimately the covered calls we sold after being assigned stock. This podcast is worth listening to twice!
Show notes: http://optionalpha.com/show152
You're looking at a great setup for a neutral trade, but which neutral strategy do you use? Short straddle or short iron butterfly? It's a question we get all the time and today's podcast focuses exclusively on the trade-offs of using one strategy over the other. And while both strategies are built using the same core short straddle position, the choice of adding protection or not using long OTM options can sometimes lead to analysis paralysis. So, let's clear this hurdle together.
Show notes: http://optionalpha.com/show151
All over the internet, you'll hear stories of why short straddles and short strangles should be avoided at all costs. Stories of how trading "undefined" risk positions can blow up your account when the market moves against you quickly. And while position sizing still needs to be managed appropriately, the fact remains that properly adjusting short straddles and rolling for duration and premium can help turn so-called losers into profitable positions. In today's show, we'll focus on our most recent case study in EWZ in which we turned this losing set of straddles into a $540 winner with a little patience and some mechanical adjusting.
Show notes: http://optionalpha.com/show150
As much as I love options trading and following the financial markets, I enjoy the challenge and process of building wealth. I think about wealth building as a 3-step process in broad terms, possibly in the shape of a pyramid even. And since it's our 150th show, I figured I would take a slightly new angle in today's podcast and discuss what I believe are the most valuable insights I can offer from my own experiences and research on how to manage your money and generate wealth. Plus, we'll use this 3-step or 3-part approach to help frame the conversation as best we can.
Show notes: http://optionalpha.com/show149
For some reason, many traders fear being assigned option contracts as part of an option strategy. Maybe it's the large capital requirement to hold the shares or just the "unknown" around how to manage the position. But, like most things in life, when you slow down and take the time to walk through the position and the mechanics it becomes much easier.
On today's show, I want to once again provide another case study on how we managed a recent assignment on our GLD iron butterfly position. If was fun for me to go back through my own comments and remarks during this 4-month trade and I have no doubt that you'll also find it extremely helpful. We'll take you through each and every step from the initial trade entry, adjusting and inversion, being assigned shares, selling covered calls, etc. No details will be left out and we'll walk through the P&L calculations together step by step. Let's begin, shall we?
Show notes: http://optionalpha.com/show148
No system is perfect. No trader is perfect. You will have losing trades. But it's how you react to those losing trades, or even false positive trades, that defines how long you'll survive in this business. Today's show focuses on what I'm calling the 5x2 "Victim Matrix" in which there are 2 paths you can take follow each and every trading event. Each path has 5 stages or steps. Which path should you choose? Well, it's all inside our latest podcast episode.
Show notes: http://optionalpha.com/show147
Did you ever wonder what an options market maker is thinking or how they see the markets and regular traders like us? After all, these guys are the ones that are making markets in different securities each week. So, I invited one on the podcast to ask him questions and learn more about the “other side” of the business we rarely see. On today show, I have the opportunity to interview former CBOE options market maker and volatility trader David Lincoln. During our time together we discussed everything from how he went from making $100,000 in a day to losing $300,000 in one session to the lessons retail traders like us can learn from the his decades of trading experience. We also dove deep into volatility trading and pricing structures for VXX and UVXY and the strategies you can use to profit following a rise in market volatility. This is an episode you won’t want to miss!
Show notes: http://optionalpha.com/show146
If you trade options and are struggling to find consistency or profitability it's likely because you are breaking, knowingly or unknowingly, some important rules. Rules that are designed to keep you safe, protect your portfolio, and cater to the math and probabilities that drive any options selling system. On this episode, I'll walk thru the 11 common options strategy mistakes you might be making right now. Plus, we'll talk about the core principle or rule associated with each of the mistakes, which will help you quickly correct your trading system and ultimately find success sooner.
Show notes: http://optionalpha.com/show145
Is less more? Often we hear this phrase thrown about with the assumption that when investing you should do less, sit on your hands or trade further out, in order to generate higher profits and better returns. But is this really the case and does the math and data prove this to be the point? We wanted to put this assumption to the test with a couple backtested short straddles in IWM and EFA. No filters, no profit targets, no stop-loss orders; pure option selling strategies. Our goal was to see if trading options 60 days out was more effective or profitable than trading options more actively 30 days out from expiration.
Show notes: http://optionalpha.com/show144
On today's podcast, we bring in a very special interview guest, Larry Connors, and discuss his new book Buy the Fear, Sell the Greed. Larry is an established author in the trading and equities space and I thoroughly enjoyed our conversation about market dynamics, trading psychology, VXX pricing structures, and the future of the industry with regards to automation. As you listen to this podcast interview, notice the very similar structure and thought process that both Larry and I share about creating mechanical data-driven event signals that can be replicated in any market environment. This I believe is why traders who use a more systematic approach end up performing better than those who are driven by their emotions and psychology of the environment.
Show notes: http://optionalpha.com/show143
Choosing which ticker symbols and option strategies to use when entering new option trades can sometimes seem overwhelming. In fact, many of our pro and elite members continually ask about the rationale behind why we choose one ticker symbol over another or use one strategy over another when building our portfolio. Today's podcast will help you understand the four-step process we use for evaluating how we choose ticker symbols and strategies when creating our options trading portfolio for each expiration. This framework should help guide you into understanding why IV rank is at the heart of our selection process but also why portfolio diversification becomes the true mechanics that govern which tickers ultimately get selected.
Show notes: http://optionalpha.com/show142
Many new options traders worry about what might happen to their portfolio during a short put option assignment scenario. They wonder how they can recover or if they have enough capital to hold onto the stock position. just a few weeks ago we were assigned on one of our short put options in EWZ and were forced to buy stock well above where the stock price was trading at the time. In today's podcast, I want to walk through the entire trade, including the short put option assignment and help you understand how being assigned options impacts your account and how you can still trade around these events by using a couple key strategies.
Show notes: http://optionalpha.com/show141
In the futures trading world, there are two words that sound cool to say but also might be very confusing for new traders; contango and backwardation. Yet, both of these future pricing concepts are very easy to understand once you know the relationship between three key items. In today's podcast, I want to slowly walk through the concept of contango and backwardation while offering a couple different examples to show you how it works in real life and how we might be able to use the awareness of futures pricing as part of an options strategy in our portfolio.
Show notes: http://optionalpha.com/show140
Have you ever gotten the feeling that some of your trades just end up exploding in your face and turn into "massive" losing positions? They just never seem to go the way you thought it would and always demand or steal your attention right? Well, there's likely a couple reasons why this happens and it gets back down to some of the most basic principles of options trading. In today's podcast, I'll walk through the psychology behind many of these "bad trades" and help offer a strategy to help manage them.
Show notes: http://optionalpha.com/show139
We all fear losing money, it's a natural human emotion. Myself included, I fear losing money just as much as the next person. But today I want to try to walk through a rational and logic sequence of questions that I believe, if follow the series, will help you uncover the only true risk in the market to your portfolio - and more importantly how to avoid blowing up your trading account in the process. I'd even dare to say that if you follow my 4 question logic sequence in the beginning of this show, you cannot help but come to the same conclusion about trading options including why the "staying alive" framework all but ensures you'll find success in any market.
Show notes: http://optionalpha.com/show138
I'm going to go out on a limb and publicly declare that this podcast will be one of our top 3 to 5 shows we ever recorded. Aggressive and overly confident, maybe - but I have absolutely no doubt this podcast episode will be a game-changer for hundreds of thousands of options traders. The expected probability paradox for options traders, as I have coined this problem, is one of the most understood aspects of option selling and premium strategies. The root of this problem starts with the misunderstanding of initial strike price probabilities, perfect pricing of option spreads, and the impact of implied volatility on when rates and drawdowns. On today's show, we are going to dive deep into the three main areas of the expected probability paradox to help you understand why option selling, even in its purest form, even if you cannot find perfect pricing, still outperforms the market. We'll also talk about why laddering in some additional active management strategies such as profit-taking and making adjustments or rolling trades helps stabilize portfolios and increase returns. Put simply, skip this show at your own risk.
Show notes: http://optionalpha.com/show137
Implied volatility in option pricing is one of the most critical and yet least understood aspects of this business. Today show focuses on a deep dive into options skew and the volatility smile for both inter-month and intra-month option contracts. in addition, we'll talk very specifically about the impact of skew as expiration approaches and how Vega for near-term option contracts increases dramatically which can make it seem like option skew is predicting a huge move right before expiration - but is it really the case, and does this "predictive power" work in reality?
Show notes: http://optionalpha.com/show136
Are you new to options trading? Do you have a small account and want to start trading iron condors and iron butterflies? Today's podcast will be very important as we help you understand how to calculate breakeven prices on iron condors and other risk defined strategies the correct way. Plus, we'll walk through a multi-month adjustment to an existing IWM iron butterfly in which we nearly doubled the credit received by rolling contracts to the next expiration period.
Show notes: http://optionalpha.com/show135
Today we'll condense potentially an entire semester of financial engineering into a single podcast episode. The goal being to help completely understand how implied volatility works, why we need it, where it comes from, and how we can profit from it as option sellers. This show is a little longer than normal but I think the time spent walking through the foundational elements of implied volatility and it's impact on option pricing are critical for anyone interested in generating long-term income as an option seller. I encourage you also to listen to this episode multiple times if needed. Enjoy!
Show notes: http://optionalpha.com/show134
Nobody's trading or investing journey is a straight road or easy path. We never just magically trip into a perfect system or investing philosophy without a couple bumps along the way. Today's podcast focuses heavily on overcoming the stigma attached to being "wrong" and having the humility and grace to learn from trading mistakes and transition into new habits. In addition, I want to describe in more detail the two major mistakes that I've made over the last couple years with regard to trading that have changed the way I look at positions and my portfolio. Both of these have been discussed before in various formats but never in one place under this topic. I hope that by sharing my story, it helps give you the courage to make changes or alterations to your own options strategy for the better.
Show notes: http://optionalpha.com/show133
With the rising popularity of weekly option contracts, many investors are choosing to trade weekly bull call spread option strategies as opposed to simply going long stock. The thought process is that by trading the weekly contracts you are able to more quickly adjust and profit from moves in the overall market. On today's show, we use our backtesting software to analyze the results of a weekly bull call spread in DIA and its performance compared to a monthly bull call spread in DIA. Naturally, this options buying case study will be very interesting for those investors who feel they have some sort of directional edge when markets are trending higher.
Show notes: http://optionalpha.com/show132
Some traders wrongly assume that if they can't trade unlimited risk option strategies, such as straddles and strangles, that they should just avoid trading altogether. Today however, I want to present four great alternative trades to some of the more common unlimited risk options strategies and help you learn how to convert these trades into their synthetic counterparts. The goal of all conversions is to turn a trade from unlimited risk to defined risk so that the broker will allow it in your account or based on your options approval level. I think that you'll find after you listen to today show it's much easier to trade unlimited risk strategies using a synthetic, risk-defined alternative than you might have otherwise thought.
Show notes: http://optionalpha.com/show131
One of the more advanced techniques options traders use to reduce risk and increase the probability of success of the trade, is to roll contracts from one month to the next. Today's show focuses exclusively on rolling options forward, by showing you two different case studies in TLT and IWM. Both trades took multiple months to turn a profit and multiple rolls of our contracts. I'm going to also go out on a limb and say that this podcast is potentially one of the most favorite ones I've recorded because I truly believe this concept can help change trades that go against you for the better - and turn losers into winners.
Show notes: http://optionalpha.com/show130
Seems most traders constantly struggle with getting option trades filled. And since we never suggest using "market orders" as a quick fix for entry problems, today I'm offering five quick tips for smoother option order execution. It's a simple framework you can walk through the next time you're having trouble getting a trade filled in the market. Hint: #2 is the most common mistake and easiest one to fix right away.
Show notes: http://optionalpha.com/show129
As options traders focused on income generation, it's important that we consistently work towards maintaining a diversified options portfolio. But are there any "earning warning signs" that we are starting to lose our grip and balance? In today's podcast, I've put together four things you can monitor so you don't wake up tomorrow and realize you've got a non-diversified portfolio that's in need of major repairs. These early warning signals can help you adapt more quickly to an ever changing market by making smarter trades and adjustments.
Show notes: http://optionalpha.com/show128
How important is picking the right stock market direction when trading options? Depending on how you trade, it can be either vitally important or not important at all. Today's podcast offers some insight and examples of why higher trading frequency and why averaging down (or up) around the market creates an environment in which market direction becomes more irrelevant the longer you trade. As retail traders, we want to try to replicate more and more frequent "resets" of our overall break-evens which in turn lead to less dependence on the market direction for profits.
Show notes: http://optionalpha.com/show127
You're ready to place an option trade and you're confident the stock is a good candidate. Now what? With dozens of contract months and hundreds of option strike prices to choose from - which ones do you select? In today's podcast, we'll help bring some more light to the "dynamic approach" we now use at Option Alpha for each and every trade we place. The framework and concepts around dynamic contract month and option strike price selection can help dramatically improve your long-term performance and reduce portfolio volatility.
Show notes: http://optionalpha.com/show126
We're all busy; with work, family, school, kids, etc. And although many people might lead you to believe you have to be in front of the screen all day in order to manage multiple option positions, the reality it's not true. Yes, you do need to have access to the markets in order to trade right now (not in the future though), but you don't have to be glued to the computer screen all day. You can use some simple triggers and alerts to keep tabs on your portfolio while you are away or at work and be just as effective, if not more, than working at the trading desk all day. Inside today's show, we'll break down some of the best resources and tips on managing your portfolio with limited time.
Show notes: http://optionalpha.com/show125
Want to learn how to trade options the right way but feeling overwhelmed? It's like this big giant elephant is standing in front of you and you have to figure out a way to consume it. And the best way to do anything in like, like eating the proverbial elephant, is to tackle it one bite at a time. So today, I want to introduce two ways of learning how to trade options; the first using frameworks, and the second using concepts. Both are effective ways to quickly process information, and more importantly, retain the information so you continue to build your knowledge base for trading. Plus, either one I feel could be done start to finish, including coverage of all options trading topics, in less than 90 days.
Show notes: http://optionalpha.com/show124
Selling cheap options with very high probabilities of success makes rationale sense on the outside. I mean, why sell options with a 70% chance of success when you can sell options further out that have a 90% chance of success. No brainer right? Well, not so fast. The options market is fair and efficient - and selling these far out-of-the-money options might look good from a win rate perspective, the total dollar profits you'll generate far under-perform the stock market. Today, we'll use our Options Backtesting software to run two option selling strategies on TLT. The first selling options at the 0.25 delta and the second selling options at the 0.05 delta. Inside we present the results and our analysis as to why selling cheap options could be less beneficial to your portfolio.
Show notes: http://optionalpha.com/show123
At Option Alpha we believe (and the research confirms) that the options trading possibilities for retail investors are nearly endless. Higher returns and better performance for your portfolio, but only if, you cross this one trading bridge first. So many newbie traders learn about options and the stock market and experience a rush of energy and motivation to jump in with both feet and start trading. Naturally, this jolt comes from the expectation of huge returns. But without the proper framework and understanding of how portfolios evolve, all that excitement can quickly turn into burnout and failure. My goal today is to help you cross this proverbial "trading bridge" and learn how to confidently analyze option strategies before putting money at risk.
Show notes: http://optionalpha.com/show122
As options traders we need to focus on the levers that really move the needle in terms of generating income and cash flow for our portfolio. There's no point in doing something if it doesn't contribute to the overall profitability of the portfolio right? It'd be like shoveling your driveway before a huge snow storm. Or washing your car before it rains. The wrong activity for the sake of being active serves no purpose. Today's show resets the foundation for options traders by focusing on the "big rocks" that should take priority. Get this right and you'll set yourself up for success.
Show notes: http://optionalpha.com/show121
Trade long enough and save enough money and eventually, you'll need to make a couple small tweaks to your options strategy as you start managing larger trading accounts. Today's show is all about transitioning your options strategy in a way that optimizes the increased capital you have to invest. If you're not yet at the "large account" level we talk about, don't worry. One, you'll get there over time if you stay committed. Two, the concepts are important for all traders to understand so that you can start planning ahead as your account grows and as you add more funds in the future.
Show notes: http://optionalpha.com/show120
Over the last 10+ years I've seen thousands, and coached hundreds, of traders navigate the markets. And if you study option trader success long enough (and geek out about it as much as I do) then you'll quickly come to realize that success is nothing more than a persistent person with great habits and a clear mind. Today's show focusing on why I believe some traders are frankly always more profitable than others while re-visiting six key areas that differentiate them. I encourage you to take a close look at this list we present today and see what areas you might be able to improve on moving forward. Honestly, the perspective I get from running Option Alpha continues to be one of the driving forces for me to keep pushing forward on all fronts with this platform and community because I can quickly learn and adapt what works and what doesn't to my own trading style by watching and listening to other people. My hope is that today's show does the same for you and helps encourage you to keep pushing forward.
Show notes: http://optionalpha.com/show119
The last couple weeks of trading for many newbie investors was quite the learning experience. The market fell from all time highs quickly and then recovered nearly half of that move in a single week. Still, we got a flood of emails from people who were not well positioned for the drop in equity prices and learned the hard way why you can't practice trading options with large, one-sided trades. One unfortunately person placed a single $6,000 trade in a $10,000 account and felt the full wrath of Murphy's Law. In today's show, I want to get back to basics here for a couple minutes and re-visit some important concepts or frameworks you can use when trading that will help you navigate the next move down in stocks.
Show notes: http://optionalpha.com/show118
It's always good to look back and analyze what happened in the past. Often times it can help shape the future (good or bad) and how you trade moving forward. In today's show, I want to take some time to share my top five options trading psychology lessons I learned over the last 18 months. Many of these I scripted out well before the recent mini-crash we saw in equities so it's fitting to talk about now because my comments might not have hit home without the recent market volatility. Still, I encourage you to share your own lessons in the comments below as I'd love to hear the shifts and progress you are making as a trader.
Show notes: http://optionalpha.com/show117
One of the most popular and widely used options greek is Delta. And while I believe that you can't necessarily learn about option pricing and option greeks in a vacuum as they all work together to represent potential price action for changing market conditions, having a solid understanding of how Delta works is important both in entering new positions and managing your basket of trades in a portfolio. Today's show dives a little deeper into the lead greek and covers both a basic understanding of what Delta is and how it works, plus some more high level insights into how I used Delta to enter our recent trade in XLE.
Show notes: http://optionalpha.com/show116
You've targeted a stock or ETF setup you like and want to make a directional trade. Maybe some technical indicator alerted you to a possible turn in the underlying or you just needed to hedge your portfolio with a new trade. Whatever the case, you are now left wondering why type of options strategy to pick. How do you decide between trading debit spreads vs. credit spreads and when should you use each style? In today's podcast, I'll walk through the different market environments and setups that might work best for each.
Show notes: http://optionalpha.com/show115
As with many things in life the 80/20 principle can help guide and focus our attention on the most important aspects of options trading. In particular, trade entry and executing an options order correctly is critical to your success. I've often said that great entries save you from having to be good at everything else, like adjustments and rolling contracts. Today, I want to help you avoid five of the big mistakes you can fall subject to when placing a new trade. Some a small fixes while others will require a little more work on your part, but ultimately help you reduce risk (hint: it's the last tip in the show).
Show notes: http://optionalpha.com/show114
Short straddles and short iron butterflies are some of our most profitable option strategies, and a consistent staple when trading in our PRO and ELITE membership levels. However, when it comes adjusting these positions and going "inverted" it can cause even the most experienced traders to freeze up. In today's podcast I wanted to walk through the process of managing inverted option positions and help you understand what numbers to track and how the pricing, profits, and risks work so you can confidently go inverted on your next challenged trade.
Show notes: http://optionalpha.com/robinhood
Often times people ask me why I continue to run Option Alpha and give away so much free content, courses and training when we could easily charge for it? And the simple answer is that I'm in it for the relationships I build, the people I meet, and the investors lives we change by teaching them how to have more confidence and place smarter trades. Today's guest needs no introduction in the investing world as the company he co-founded is the fastest growing, and quickly becoming the largest, online brokerage in the US - Robinhood. I was fortunate enough to finally get an interview with Baiju Bhatt and talk about their latest announcements, of which include free options trading and a whole new web-based platform. Plus, we talked about the future of online trading, blockchain technology and Robinhood's overall mission for the average investor. It's an exclusive interview you can't miss and I hope you enjoy it!
Show notes: http://optionalpha.com/show113
Often times when new traders go through their first couple earnings cycles and experience large moves in the underlying stock, it can feel almost natural to want to buy contracts via a long straddle earnings option strategy as opposed to selling options the way we teach here at Option Alpha. In today's show, I'll preview some of the new research we've been doing in the field of earnings trading and cover the results from three major companies we backtested; Apple, Chipotle, and Facebook. I think you'll find as you listen this episode that your confidence in sticking with these trades for many earnings cycles will go up dramatically.
Show notes: http://optionalpha.com/show112
Depending on where you started your options education, trade frequency was either glossed over or talked about in-depth. Here at Option Alpha, we've suggested for almost a decade now that to find success you need to be placing trades almost daily. But does this frequent trading activity classify us as "day traders" in the options market? If so, what are the implications that could impact your account? If not, how do we increase our trade frequency if we are not day trading options? In today's show, I present my overall framework as to why we feel, and our research confirms, that consistently averaging around the market price through move active trading ends up being more consistent and reliable long-term.
Show notes: http://optionalpha.com/show111
You made an options trade and the position has gone well, leaving you with a nice fat profit as expiration approaches. Now the question becomes, what do you do with these cheap out of the money option contracts you sold? Do you buy back your penny options or let them expire worthless? Are there risks to do one over the other and when should you lean one way or not? On today's show I'll talk through what our research shows about exiting trades early, when to just leave them on to expire worthless, and who it all impacts your bottom line profit and loss.
Show notes: http://optionalpha.com/show110
Why do we still believe that magically someday we'll have some inside scoop or tip that alerts us to market tops and bottoms? As hopefully rationale adults we often get lured into a false sense of understanding in the financial markets brought on mainly by the media and talking heads. Today I want to help you become a better options trader by not watching the market, focusing and more systematic trading setups, and providing the single most important case study in market prediction in the last two decades. If you pay attention closely I think you'll come to the realization that not knowing what's going on in the markets, and simply adjusting quickly along the way, is much more profitable.
Show notes: http://optionalpha.com/show109
Unlimited risk option strategies get a bad rap in the investing community among newbie traders. And while our backtesting research has shown that unlimited risk positions like short straddles and short strangles generate the best overall returns, you might be restricted in trading them because of your account type or just fear the big potential drawdowns. In either case, on today's podcast I want to conceptually walk through how you could covert these strategies into their risk-defined counterparts and limit your exposure. As always, there's no free lunch in the market so if you limit your risk you have to give up something else and we'll discuss the trade-offs on the show together.
Show notes: http://optionalpha.com/show108
If you trade options longer than ten days you'll undoubtedly run into a scenario where you get challenged by a stock moving either higher or lower against your position. When this happens the first question many people ask is "Do I start rolling up strike prices and adjust the position or work on closing out the trade completely at a loss?" Naturally, we are in the camp where we believe, and our backtesting confirms, that rolling your strike prices closer to where the stock is trading and taking in additional net credits ultimately gives you the best opportunity to either profit or reduce risk on the position. On today's podcast we'll explore this topic more deeply with a very detailed example and walk through so you understand conceptually how it all works moving forward.
Show notes: http://optionalpha.com/show107
Today I've very excited to bring one of our very own Option Alpha family members on the show, MACDDaddy aka Robert. He's been a member for many years and someone I continue to seek advice from in many areas. During the show we'll dig deeper into the "Wheel Selling" option strategy which has created some fairly long and in-depth forum threads lately and warrants a little more attention from our weekly podcast.
Show notes: http://optionalpha.com/show106
As some point or another new option traders worry about their option contracts being assigned. Namely short call options getting short stock assignment. But it's never as bad or horrifying as it may seem and in today's latest show I want to walk through our TLT iron butterfly trade in which we ended up getting assigned 200 shares of short stock just days before expiration.
Show notes: http://optionalpha.com/show105
The further the markets continue to run higher, the greater the risk that another major market correction or market crash will happen in the near future. After all, as we pointed out in Show #15, the stock market has fallen 9 times at least 30% which is once every 10 years. Right now we're riding a 10-year bull rally that's losing steam fast. So, how do you protect your portfolio in a down market? That's the question and today's show will give you the answer.
Show notes: http://optionalpha.com/show104
On today's newest podcast I want to turn the conversation a bit and focus on pairs trading with options. And this isn't the traditional pairs trading that you might have heard about before where you short one stock and buy another related stock to profit from any trending differences or divergences in the underlying price. Instead, I want to talk about how you can use some very basic portfolio and stock beta concepts to make smarter, more efficient decisions about which securities you use for options trading. Moreover, I want to give you the knowledge to feel comfortable taking directional trades so long as you know how to create "paired trades" that still give you an overall neutral stance relative to some benchmark index. This show is a little more advanced but I think you'll find it helpful.
Show notes: http://optionalpha.com/show103
Even after discussing and outlining the general process for how to pick the right stock options strategy in previous podcast and videos, I continue to get members who are confused how it should work and the steps one might take. I ultimately believe that in most cases you might be over-thinking it especially when it comes to choosing tickers and market direction.
Today's podcast should help clear the air while also giving you concrete examples using a simple Iron Condor strategy. Finally, we'll talk in-depth about the new requirement to have a dynamic approach to your trading via our Trade Optimization Software to tweak and perfect your entries.
Show notes: http://optionalpha.com/show102
When selling options, often I get a question or inquiry from members of our community with regard to how far out of the money we should sell our options and set our positions. Now, I typically target around the 70% probability of success area for my short option selling trades, but others have often wondered that if given the choice why we don't just sell options at the 90% probability of success level? I mean if 70% is good, 90% has to be better right?
Well, it's clearly not that easy. As you go further and further out of the money selling options, the premiums you receive erode quickly. This begs the question, are you selling options too cheap or do you actually need to take more risk and come a little close in when selling? In today's show we'll dive deep into this question and present two different case studies which might help shed light on the topic.
Show notes: http://optionalpha.com/show101
I believe that on some level every new trader dreams of trading options full time and not working a regular job. The reality is however, that you're need a lot of capital before you make the leap to full time trading and that means you'll have to learn how to effectively trading options while working your day job. Hard as it may seem at first, working full time and trading options is not that complicated nor is it impossible if you're smart about your time and the strategies you focus on. In today's show I want to cover 10 questions that our community members asked with my answers as to how I suggest working options trading into your busy work schedule. Note also that I also work a full time job as a stay at home dad to two little girls while running our massive community of 60,000+ traders. I've also had to learn to be incredibly efficient with my time actually making trades just like you.
Show notes: http://optionalpha.com/show100
Not only is today special because we're releasing our newest research report called The Profit Matrix but also because as soon as this show goes live we'll have crossed more than 1,000,000 downloads on the podcast. Crazy coincidence but it's true and very humbling, so thank you to all of you who have supported and listened over the last couple years. In this special show, we're going to talk in-depth about our new game-changing research report in which we analyzed and compiled results from more than 21 million backtested options strategies. Plus, I'll answer the biggest question that came out of this body of work on how we should (or shouldn't) change the way we trade options in the future.
Show notes: http://optionalpha.com/show99
The investing world in the next 5-10 years is going to look dramatically different. In fact, the shift to automated trading is already happening at the highest levels and with the biggest hedge funds. So, why is this happening? Why can't we just ignore it? And what can we do now to position ourselves to take advantage of automated trading systems now? Today's show is very high level but I think you'll enjoy the topic but it's a big wave of change that's coming our way and if you don't recognize the shift happening now you'll get washed up on the shore.
Show notes: http://optionalpha.com/show98
The markets are evolving faster and faster as the introduction and use of computer-driven or data-driven trading systems start to hit exponential growth rates. So, the question becomes, is this the end of systematic risk and market uncertainty? To put it bluntly, no - in fact, never will we reach a point at which there isn't some sort of systematic risk that we have to price into our options trading. And these future expectancy models are where the opportunity will be. I believe that markets will eventually become flatter and more volatile which means that the traders and investors who can harness these sideways markets will ultimately outperform everyone else. Those who can manage risk, not eliminate it, through the use of data-driven software tools and technology will be the ones left standing and in today's show, I want to dive deeper into these higher level concepts you need to recognize.
Show notes: http://optionalpha.com/show97
Today we're going to use our new Trader's Toolbox and options backtesting software to test win rates when selling options. Because the truth is many people have this huge "rub" with options trading and expected vs. actual win rates. They assume that if we place a new trade with an initial probability of success of 70% that the trade will win at exactly 70% over the long-term. As you'll see today, that's just not the case when you account for the implied volatility premium inherent in the options market. So tune in as we look at two different SPY short strangle backtests.
Show notes: http://optionalpha.com/show96
Today we wanted to use our new options backtesting software under our Trader's Toolbox to run some credit spread backtests on DIA. Namely, we were trying to determine if selling options during higher implied volatility markets actually generates a higher net credit for the position or not? Plus, we tweaked the allocations just a bit as well to see how different positions sizes impacted returns, drawdowns, and sharpe ratios.
Show notes: http://optionalpha.com/show95
It's finally here! After years of research, development, and testing the doors are open to purchase access to our incredible new options backtesting and trade optimization software we're calling the "Trader's Toolbox". Given that we've now got a whole suite of tools and scanners for you to use we have to consolidate it under one roof which is why we believe having a Toolbox is the clearest and logical route. You can learn more about the new software release including demos for by clicking here.
Show notes: http://optionalpha.com/show94
Apple (AAPL) is by far one of the most loved and favorite stocks to trade for investors. Often times people will email me asking how they can use option buying strategies to go long AAPL stock. So, in today's show, I wanted to reveal the results from our call bull spread backtest we ran on AAPL and how changing the long strike prices impacted the overall returns and drawdowns of a bullish strategy like this. If you've ever thought of buying options, you need to hear this show.
Show notes: http://optionalpha.com/show93
How far out should you go when entering a new options trade? 10 days, 30 days, 60 days? Does it change based on the strategy you are using or the market situation you are in? All great questions we aim to answer and in today's newest case study we'll look at how options trading timelines and duration impacted the returns of this EEM straddle backtest. Plus, we'll cover some of the overall performance and variance metrics we ran on both strategy setups using our backtesting software that launches next week.
Show notes: http://optionalpha.com/show92
I've said it for years, position sizing matters in a high probability system. Much more so that you would believe and today's show is the first in a new mini-series we are doing leading up to the launch of our new backtesting software. Inside we'll cover a case study using and iron condor backtest we ran on TLT including the impact on returns that altering the position size had on the portfolio.
Show notes: http://optionalpha.com/show91
In today's show, I wanted to take a step back and give everyone an overview of what we've been working on here at Option Alpha and what we have planned over the next couple months. More specifically I wanted to officially announce that our new options backtesting software will be released publicly on June 1st. And as mentioned before too many people, as soon as the new software goes live the cost of the Lifetime Membership will go up by $1,000.
Options backtesting software is something that has been terribly done in our industry and we've worked really hard (and invested a ton of money) to make sure it's done right. After many months of development, I'm proud to say that we've made it not only powerful but simplistic and intuitive enough that anyone can use it. More importantly, it allows you to stress test option strategies before putting real capital at risk.
I'll dive more into the details and everything it includes a little more during today's show. Plus, I'll hint at some new research reports we've already been working on that will be released in the next couple months.
Show notes: http://optionalpha.com/show90
We're now in the heart of earnings season for the current quarter and with hundreds of companies set to announce their performance, we're presented as options traders with tons of opportunities to profit from the volatility crush that occurs after an announcement. But these fast (and often violent) moves in the underlying stock in the session following the announcement can often scare and confuse investors trading options.
In today's show, I want to walk through my strategy for filtering and finding good stocks to trades, strategies we like to use and how to set them up, as well as my thoughts on exiting trades shortly after the market open. If you've ever wanted to jump in and make some earnings trades, you'll want to tune in and take lots of notes. Don't forget, we've also got a free course and PDF guide to earnings trades available for members inside our education platform.
Show notes: http://optionalpha.com/show89
It's been over a year since we released our game-changing report on technical analysis indicators called SIGNALS, and since then I haven't talked more about how we are using technical analysis in conjunction with our options trading. So, I wanted to revisit this topic on the podcast today because I still see a lot of simple, easy to correct, mistakes being made by both new and experienced traders when it comes to ready signals generated from technical analysis.
Show notes: http://optionalpha.com/show88
Newbie traders and investors who make the transition over from stocks to options often become overly confident and excited that magically they've discovered the "Holy Grail Of Investing" in a high probability option trading system. Surely no system or investing methodology is perfect and options trading has its own challenges. The goal for me today in this new show is to present both the benefits and drawbacks of a high probability investing system like the one we teach (and execute personally) here at Option Alpha.
Show notes: http://optionalpha.com/show87
Losing trades are part of the game - they are going to happen and it’s a reality we must all face. And I believe what sets really great traders apart from those who are average at best is the ability to cut a loss by making smart adjustments. Adjustments that reduce risk and extend the trading timeline.
In today’s show, I’ll cover the 3 option adjustment principles you should follow if you’re considering adjusting a short premium, option selling strategy like an iron condor, iron butterfly, strangle, straddle, etc. These guidelines will help make sure you’re always focusing on the most important aspect of trades adjustments which isn’t to make money, it’s to cut the size and magnitude of the loss down as much as possible.
Show notes: http://optionalpha.com/show86
Trading inverse ETFs and leveraged ETFs are becoming more and more popular with retail traders. Maybe it’s the appeal of quick profits with 2X and 3X leveraged securities like FAZ (Ultra Bear 3X Financials) but the should we adjust our options strategy for these unique products? I think we should for good reason.
In today’s newest podcast I’ll cover the three different ways you should adjust your options strategy when trading these products to take advantage of their mostly negative pricing structure and hedging potential. While we don’t trade these often by any stretch here as part of our income strategy, there are instances where they become useful and we’ll cover that specific setups in the show. Enjoy!
Show notes: http://optionalpha.com/show85
Legging into spread trades and complex option strategies is a popular way for traders to get quicker fills. However, is this legging technique really the best approach or should we be doing things a little different when entering or exiting trades? In today’s show I’ll discuss my thoughts on approaching legging into and out of spreads and the benefits and risks of doing it or not as part of your trading system.
Show notes: http://optionalpha.com/show84
For years we’ve talked about the need for increasing your trading frequency. In today’s podcast, we want to re-introduce the concept of stacking or laddering option trades over time and price. More importantly, we’ll talk about why our extensive backtesting (and current experience) proves that when you break down your trade entry into smaller and smaller chunks, the overall performance of the trading system increases dramatically.
Show notes: http://optionalpha.com/show83
A casino's edge ranges from 0.5% for blackjack to as high as 17% for some slot machine games. Now, of course, this edge may or may not play out on the first, second, or tenth roll of the dice. But they are not in it for the short-term game. You see, the casino doesn't have to beat every player every time. They just know that they'll win their mathematical edge so long as enough bets are placed each year.
It's precisely why casinos offer huge incentives to get you to come back with free show tickets, free meals or even free hotel rooms. It's why the force table limits on how much you can bet on each hand and why they give you free drinks for playing. While you might think it's just them being nice, it's not. It's an investment they know pays huge dividends. In fact, on average casinos spend up to $45 each hour to keep you sitting in your seat and betting money.
Now, I frankly don't care if you like or hate casinos because the reality is that it's an insanely profitable business model based on simple math and expected outcomes. As options traders, we can learn a lot about how we should run our own trading business from casinos. In today's show, I want to walk through some of the most important takeaways that you can apply right now to your trading system and invite you to open your mind and try to see the big picture strategy.
Show notes: http://optionalpha.com/show82
We can't control the stock market - yet many of you try to will or hope stocks to move up or down as needed for your position to make money. Eventually, you'll come to realize that it's an impossible dream and the harsh reality of transiting from novice to professional investor requires a more consistent and systematic approach. The question then becomes, "What can I control?" and "How can I adjust or hedge a position that moves against me?"
In today's show, we'll look at one of our recent bear call credit spread trades in which we still lost money, but was able to cut the loss by 37% making some simple trade adjustments. Yes, you heard me right, we're going to do yet another case study on the lessons learned from an options trade that overall, net-net lost money. Unlike many other traders who are afraid to show you losing trades, I'm completely open to them because I know it offers an excellent opportunity to learn and grow from my experience.
Show notes: http://optionalpha.com/show81
Fundamental investors are like the wooly mammoth; big, strong, powerful, yet destined to become extinct in the future. And while there is absolutely nothing wrong with the core beliefs and activities of fundamental investors, I just personally believe that the same passion and hard work could be applied to the options market with much better results and less risk. Besides, even Warren Buffett, the biggest advocate for fundamental investing and long-term investment strategy is by many standards the single largest options seller in the market today.
Nobody asks him about his $5 billion dollar short option trades, do they? Not yet anyway since we'd love to have him on the podcast.
In today's latest show, I want to present the case as to why I believe that more "old school" fundamental investors should become professional options traders instead. In fact, you'll see that there are many similarities between options trading and a long-term, buy and hold stock investor. Plus, I'll quickly rant about the "Netflix Effect" and how technology and social media is rapidly changing the landscape for all businesses in the future.
Show notes: http://optionalpha.com/show80
Your option strategy payoff diagram is an ever evolving and changing animal. Unlike stocks which have one-dimensional payoff graphs, either upward or downward sloping, and theoretically unlimited holding periods, option strategies are impacted by cubic pricing events. Namely, time decay (Theta), implied volatility (Vega) and interest rates (Rho) which can cause your payoff diagram to shift, mold, and bend as these additional pricing elements change with the market.
In today's podcast, I want to help you understand how these three Option Greeks could have a significant impact on the way your payoff diagram looks now vs. at options expiration. In the end, I think it'll help give you more confidence and patience if you understand how option pricing works when holding positions that initially move against you but ultimately will turn out to be profitable.
Show notes: http://optionalpha.com/show79
Today's podcast is all about learning how to trade calendar spreads. And while newbie traders might find them a little difficult to understand conceptually at first, I think you'll find our talk today to be incredibly helpful as we break down these time spreads from start to finish. During the show, I'll walk through setting up and building calendar spreads, the impact of implied volatility and time decay, how to adjust and exit as well as the best market setups for these low IV option strategies.
Show notes: http://optionalpha.com/show78
I know one of the key elements to successful options trading long-term is maintaining an investment portfolio that is consistently balanced. And when I talk about balance, I'm not talking about 80% stocks and 20% bonds - that's portfolio diversification. Unlike traditional investment strategies that favor 99% of the portfolio invested in long equities and bonds with minimal short exposure, what I'm specifically referring to here is the concept of trading a mix of bullish, bearish and neutral positions all the time which gives us a much smoother and solid equity curve.
One of the best ways to measure overall portfolio balance is to beta-weight the portfolio to a benchmark index like the S&P 500 (SPX or SPY). This metric gives us an apples to apples look at how the portfolio as a whole would perform when the market moves higher or lower. And once you start monitoring the beta-weighted portfolio you'll notice that sometimes your positions can become unbalanced and lopsided.
In today's podcast, we'll give you four option strategies or techniques we use to help re-balance a portfolio that's gone out of wack. Of course, having a completely delta neutral portfolio is always the goal, but never the destination, and our talk about maintaining balance and neutrality should help as you continue adding and adjusting your option trades this year.
Show notes: http://optionalpha.com/show77
Options expiration week can be a scary time for some traders as they struggle with fears about short option contract assignment. And while the reality is that most options are not assigned, it still creates anxiety and confusion about what to do with short positions that are in-the-money. On today's podcast, I'll walk through the most recent OCC stats on options expiration including the #1 reason why you shouldn't be afraid to hold positions that go in-the-money even during expiration week.
Show notes: http://optionalpha.com/show76
Our #1 core value here at Option Alpha is that options trading education comes first before anything else. I believe that you have to crawl before you can walk in this business and it's why all of our trading courses, guides, and checklists, podcasts, webinars, etc. are completely open and free. Still, I understand that options trading can be overwhelming and confusing at times with so much to review and consume. Recently, I found myself in the same situation with a development project for the website, and I thought that it would be a great discussion for the podcast and potentially help you in your options education journey.
About a month ago I was hitting a brick wall in rolling out some improvements and changes to the Option Alpha platform. There was so much to do, and I didn't know where to start first. We needed to update SEO stuff, website navigation menus, page layouts, servers, etc. Needless to say, I was overwhelmed with the workload and assumed it would take months to finish. On the recommendation of one of my coaches (yes I have coaches too!) I implemented a couple of deadline and phase strategies that I cover in the show.
The result is that my team and I finished all of our updates and enhancements much faster than I expected and are off to the next project for you all. And as simple as these strategies might sound during the show, I promise you that they made the world of difference for me in quickly educating myself and organizing my time and activities and I know it'll help you if you take action today.
Show notes: http://optionalpha.com/show75
I've been trading publicly on Option Alpha for more than eight years now, and I'm still baffled by the number of investors who get absolutely shocked when option trading portfolio drawdowns occur. I'm talking ALL CAPS emails, mind blown, ripping their hair out shocked that a trading system wasn't a 100% probability of success. And while losing money is by no means "fun" or "exciting," it is, however, part of high probability trading systems.
In fact, you are guaranteed at some point to have a drawdown or streak of losing trades. It shouldn't come as a surprise, and it's why we are so big on balancing portfolios and trading small positions to minimize the impact on your account. Even though we know we'll have portfolio drawdowns from time to time, we also know that we'll end up generating above average returns if we stick with it long enough.
The concept of trading in a positive expected outcome system and being persistent through drawdowns isn't based on my opinion or assumptions; it's backed by math and the 44,801 backtested option strategies I'm going to cover in today's show.
Many of you know that over the last year we've been building and developing options backtesting and optimizing software that is going to be a complete game changer for traders just like you. In this show, you'll finally start to see just a small glimpse of the power behind backtesting and modeling hundreds of thousands of option strategies. It was by far one of the most anticipated shows for me to record and I hope you find incredible value in listening.
Show notes: http://optionalpha.com/show74
Most newbie option investors start trading with small brokerage accounts. Whether by choice or necessity, the average investor opens up their account with approx $10,000 according to most brokers. And while this isn't a small amount of money by any means, it does limit your ability to trade more aggressive options strategies like straddles and strangles.
In today's podcast, I want to help you understand how you can still trade these more aggressive and profitable options strategies (synthetically with small tweaks) even if you've got a small account or are trading in and IRA. Specifically, I'll answer a bunch of common questions I get from new PRO members including; What if I can't trade straddles and strangles? How do I adjust the trading alerts to fit my portfolio? Should I scale position sizes down or up (# contracts)? What about spread width - go wider or more narrow? What if the commissions are eating too much into the profit after closing at 50%?
Sure, it might take a little more time to grow and mature an account but don't jump ahead or try to "game" the system. Eventually, the math and probabilities always play out the way they should, and you've got to learn how to build profitable strategies today if you plan on still being around in five or ten years from now.
Show notes: http://optionalpha.com/show73
What does great pricing look like when trading short strangles? Is it collecting a certain raw dollar amount? Or a certain percentage of the stock price? Without a doubt, these are tough questions to answer for newbie options traders and hard to answer without some context. And while comparing pricing on different risk defined option trades, like credit spreads and iron condors, is pretty straight-forward and easy, it can become difficult to recognize great pricing with undefined risk option strategies like short strangles.
In today's podcast, I examined eight different short strangles across a mix of ETFs and individual stocks. I recorded everything from the current stock price and implied volatility ranking to the premium collected and the margin required for each one lot strangle. My goal? Discover which option trades had the best pricing on a relative basis given that every short strangle we analyzed had the same 70% probability of success.
Show notes: http://optionalpha.com/show72
You've entered a new option trade with a high probability of success - but you also know that a 70% chance of success doesn't mean it's a sure thing. As soon as your order fills the stock starts to move against your position - just your luck right? And each subsequent day the stock continues to trend closer and closer to your strike prices, threatening your position. At this point, you're starting to get pretty emotional about the whole thing and don't know what to do or how to adjust it.
When do you pull the trigger and make an adjustment? Do you do it now or is it too soon? If you wait, what if you miss an opportunity? How much time is left until expiration? Are you taking in enough of a credit to reduce the overall risk? Is it worth it to even adjust at all right now?
Believe me; I get it, and I know that these are just some of the questions circling in your head when presented with this situation. That's why in today's podcast episode I'm going to take you through three specific triggers you can implement right now to help you start making smarter, more unemotional option trade adjustments when a stock starts moving against you. You'll also hear why I favor trigger #1 over the others as it's a more mechanical and systematic.
Show notes: http://optionalpha.com/show71
For years now I've talked about the concept of exiting option trades early and taking money off the table as a way to both improve your win rates and increase overall profitability. Still, I'll often get emails and questions about the legitimacy of exiting trades early vs. letting profitable trades go all the way to expiration and "milking it for all its worth" as some members have put it. Honestly, I can't blame anyone for questioning it because on paper it sounds crazy. Close a trade early for half the potential profit, and you'll make more money - who would believe that right?
Today, we'll present another case study that proves why the two biggest misconceptions about exiting trades early are completely wrong. Not only will you see why taking profits before expiration increases your win rate but you'll also hear how it helps reduce the magnitude of drawdowns and increase your average profit per trade. Once you see the results of these four backtested short strangles in TLT, a major bond ETF, I'm confident you'll quickly change your opinion and start implementing some of the automatic profit targets we suggest in your own portfolio.
Show notes: http://optionalpha.com/show70
We’ve reached yet another options expiration week, which can sometimes cause many traders to freak out as they worry about positions that are still lingering in their portfolio. And with the deadline for expiration quickly approaching it's no wonder why many people are incorrectly managing trades with the fears of assignment knocking on their doorstep. Either rushing to close position that shouldn't be closed or waiting too long to act and putting them at risk of a massive "gamma move" in the underlying option's price.
Typically by the time we reach expiration week we've closed positions that hit our profit target and adjusted positions that have gone against us. But as we near the third Friday of every month, we have to come face to face with the realization that some trades just haven't worked out as we might have hoped. In today's episode, I want to help you create a checklist for deciding which positions to close or roll during options expiration week. In particular, I want to walk you through my thought process on which trades I focus on closing first and how I ultimately decide if a position should be rolled to the next expiration month.
Show notes: http://optionalpha.com/show69
Regardless of your current account size or trading experience level, you should be putting some serious thought into how you plan on scaling your options strategy over the next few years. Especially if you’re looking to generate a consistent monthly income from options trading, you probably realize that having $10,000 in your account won’t be enough to generate profits to replace your current job or salary - or if this was a shock to you, sorry for the reality check but it’s true. Still, you need to plan ahead for the changes that will accompany having more cash.
In today’s show I’ll walk through the 3 biggest tips I have for anyone who’s looking to grow their 6-figure account. As with any regular business, the products and strategy for trading are going to change and shift as you grow. The core principles remain the same (i.e. selling options, taking advantage of high volatility, etc.) but the way you could about capturing profits and utilizing capital will need to be tweaked so that you’re always trading options as efficiently as possible.
Show notes: http://optionalpha.com/show68
Naturally, if you’ve started trading options for any reasonable amount of time you’ll run across the VIX index. Or as it’s commonly referred to, the “Fear” Index. And while the concept of tracking and trading volatility with the VIX might sound intimidating at first, trust me, it’s not all that complicated and just requires a little common sense.
In today’s podcast, we’ve brought on a very special guest, Mark Sebastian, a former floor trader, hedge fund manager and the guy behind OptionPit.com. What’s great about Mark is that not only does he have a lot of experience as an options trader, but he’s also got a lot of specialized knowledge when it comes to the VIX and volatility products like VXX, UVXY, and VXZ that I know you’re going to love.
During the show, we’ll talk about the history of the VIX, how the index is priced, how the VIX futures term structure accounts for mean reversion and some simple strategies you can use to trade volatility with a higher probability of success. So, don’t be afraid to dig into this podcast this Halloween - Mark and I have some yummy volatility treats waiting for you (okay I just had to throw that in there given the release date).
Show notes: http://optionalpha.com/show67
In most investing or online trading circles, it's common place to hear people tout the need for "stop loss" orders to theoretically protect your portfolio. And while there is no doubt that stop loss orders help mitigate large drawdowns from time to time, the question I never see asked is, "What am I giving up by implementing a stop-loss order as part of my trading system?" You see, all too often traders and financial educators are quick to harp on the "need" or "requirement" for having continuous and always present stop loss orders in place.
Still, we all accept this golden rule as an undeniable investing truth, because, well, it's always been something you're told to use. Today, I'll challenge this long-standing requirement for stop loss orders when trading option strangles. Until now, nobody has built a system to backtest this variable on the scale and scope that we have here at Option Alpha. Sure, you've likely seen one-off backtesting research segments elsewhere, but nothing as specific and targetted as what we've created.
In today's show, you'll discover how one simple tweak to the way you trade options generates average annual returns that are 87% higher, win rates that are 2X higher, all while making fewer trades and spending less on commission costs. Sounds pretty far-fetched, doesn't it? Well, it's not, it's just a small sample of the backtesting results we've been compiling over the last year that can help you make smarter, more profitable trades starting today.
Show notes: http://optionalpha.com/show66
Paper trading has its place in the investing world, but it likely isn't as useful as many brokers and financial gurus make it out to be. In fact, I'd even argue that if you are currently paper trading you're probably not using the virtual platforms to get the optimal experience out of them. Now, I won't deny that paper trading does have some benefits in helping traders learn the mechanics, but the drawbacks, in my opinion, outweigh the perceived usefulness.
In today's newest podcast episode, I'll walk you through all the major pitfalls new investors make when trying to paper trade stocks and options. And if you're still adamant about paper trading, that's fine too because I'll help you get 10x more results from your paper trading activities by accelerating your learning curve with a few simple tweaks. Ultimately, at some point, you've got to make the jump into real money trading and the sooner you do the better off you'll be. There's no substitute for real-world, real-money experience in this business.
Show notes: http://optionalpha.com/show65
If you're even remotely interested in personal finance or wealth building, you've likely heard of Todd Tresidder from Financial Mentor. If you haven't yet, well, then we've got a special treat for you today as Todd joins the Option Alpha podcast in this exclusive interview. Naturally, he's got an incredible resume having spent much of his time in the Hedge Fund space before retiring at age 35, but it's the actionable and real-world investing experience that backs up all the accolades he receives.
In today's show, Todd and I dive deep into traditional equity portfolio allocations, inherent flaws with buy and hold logic, bond market bubbles, statistical and mathematical risk management systems for investing, and the importance of compound growth rates. And while Todd covers each area with such a simplistic and rationale approach, don't be fooled by the power behind the system and thought process. These principles are critical to your financial success moving forward.
Show notes: http://optionalpha.com/show64
Nobody’s a perfect trader - not by any stretch. We all make mistakes, and when we own up to them, we dramatically increase our ability to overcome them in the future. With more than 35k members in our community here at Option Alpha, I've seen every possible situation and mistake you could come up with - and today we're going to go through what I know are the top 15 1/2 options trading mistakes people are making right now.
Trust me; it wasn't easy to narrow these down to 15. Truth be told, I wanted to start rattling off more than 30, but I knew that I had to focus on only the most critical areas that could help shift or alter your trajectory. And of course, I'll make sure also to cover and talk openly about my shortcomings and challenges as a trader. In the end, my hope is that you recognize just one area where you are struggling and put together a plan of action to overcome it by the end of the week.
Show notes: http://optionalpha.com/show63
A little over a year ago now the CBOE released its first round of options-based strategy performance benchmark indexes. Since, they’ve slowly increased the number of trackable option strategies on their website. Each strategy index is "designed to highlight the long-term utility of options as risk management and yield enhancing investment tools” and really helps bring some context to options trading for the little guys like you and me.
In today’s show, I’ll highlight some of the more interesting strategy based index performance metrics I know will help you in your options trading journey. This includes; SPX Covered Combo Strangle, VIX Tail-Risk Hedge, SPX Protective Puts, and the SPX Monthly vs. Weekly Put Selling showdown. Plus, I’ll give you a little more information on some the options backtesting we’ve been doing here at Option Alpha and the up-coming release of our proprietary backtesting software soon.
Show notes: http://optionalpha.com/show62
At least 2-3 times per week I’ll get an email from someone along these lines; “Kirk, why can’t we just buy the best dividend stocks right before the company pays the dividend, and then sell the stock the next day and keep the profit?” Seems like a cool idea, and I’ve definitely seen many smaller blogs peddling this idea to investors, but it might easier said than done.
In today’s show I’ll help you understand the four most important dates you need to know when it comes to dividend investing, including a complete rundown of the fictional arbitrage opportunity that dividend investors are continuously searching for during the ex-dividend date. Plus, I’ll give you an alternative strategy for purchasing the stock at a discount, while reducing your tax liability, as well as the impact of dividend payments on options pricing.
If you’ve got a friend or trading buddy who hasn’t made the jump to options yet and is still cashing “dividend stocks” and “dividend strategies” then this show might be the kick in the butt they need to start options trading. And of course, if you’d share it with them I’d be incredibly thankful!
Show notes: http://optionalpha.com/show61
I’m just going to come right out and say it - today’s show is going to blow your mind. Not because we are talking about some crazy complicated strategy or options pricing model, but because we’re talking about a dead simple system for selling options every day that generates 22% per year since 2009. And what’s so fascinating for me, the host of the show, is how calm and cool our special guest is talking about his strategy. It’s just so mechanical and systematic it’s almost boring (well not for me but maybe some people might think so).
In today’s show I’ll be interviewing an incredible trader, real estate entrepreneur and patriot. You’ll hear how this former Army Officer who served in Iraq in 2003, subsequently awarded a Bronze Star, used his “options” experience in real estate to start selling covered calls. Eventually he transitioned into selling credit spreads on the major indexes and continues to generate consistent income with an annual average return of 22% per year. So yeah, you should listen to today’s show - and of course forward it to at least 3 other people you think need to hear it right now.
Show notes: http://optionalpha.com/show60
What if I told you that Warren Buffett, yes that one, is actually just an options trader in disguise? Actually, he’s not disguising anything since his entire strategy and philosophy is all publicly available and linked below. But, that the $5 billion dollar options trading strategy he is using right now has the exact same core methodologies that we use here at Option Alpha, i.e. option selling.
Unfortunately, this strategy and business setup is not commonly talked about in the media. Everyone ignores the 50,000 short put options he sold on KO or the 3-month short puts he sold before acquiring Burlington Northern Santa Fe. They are big trades that tell us a lot about the way he uses options but the media won’t cover those because it’s not “mainstream” enough to reach the masses. Lucky for you, we’re covering it today for you.
In today’s show, I’ll help you understand why his most profitable business, which grew from $41 billion to $88 billion, is the insurance business and how you can apply the same principles to your own investment portfolio. Plus, I’ll walk through his biggest option trade that occurred during the height of the 2008 market collapse in which he sold short put options on 4 major market indexes around the world. If this show is even remotely helpful today, please consider sharing or sending it to just one friend or colleague you think might benefit from listening.
Show notes: http://optionalpha.com/show59
It's easy for traders, myself included, to talk about our profitable trades. I mean who doesn't want to talk about making money right? But we know that we can't win on every trade and today I'm going to cover an in-depth case study on our EWZ short strangle.
We started building the EWZ position with short strangles back in late November and ending making more 27 trades over the course of five months to adjust and hedge the position. It was by far one of our longest held positions, but at the end of the five month period we ended up turning a paper loss of $2,538 (the most we were losing at any one point) into a real loss of just $330. An 87% reduction in the loss.
It took a lot of confidence in our adjustment strategy as well as patience to let the market cyclicality play out, and my hope is that today's show helps you understand the overall adjustment philosophy that helped turn this trade around. Sure, it would've been great to highlight a case study where a trade went from a loser to a winner. That just wasn't the reality with these short strangles, and yet, I'm still happy with the results even though we lost money after everything. Plus, if it helps you avoid or reduce risk on the next options trade you make, well then I've accomplished my mission.
Show notes: http://optionalpha.com/show58
One of the most challenging aspects of options trading for most people is in finding the best stocks and setups to trade. And I completely understand since there are thousands of stocks from which to choose. So, how do you filter down to a handful of just the best stocks with the best trading potential?
In today's podcast episode, I'll help simplify the process for you because I can almost guarantee that you're overthinking it. Finding the best stocks for options trading is actually very easy when you know what to look for and have a solid understanding of what your portfolio "needs" to maintain it's balance. Master these two points, and a little technical analysis if necessary, and you'll find that the possibilities are wide open.
Show notes: http://optionalpha.com/show57
We already know that you want to learn how to trade options and generate a consistent income. What we didn’t know, as well as we do now, is that we had some pretty specific gaps in our previous courses that made the process of learning how to trade confusing. And because we always want to improve and perfect our training here at Option Alpha, a couple of months ago we surveyed thousands of members in search of the "missing links" to our program.
After more than 1,378 detailed survey responses and 68 one-on-one phone calls with PRO & ELITE members, we decided to completely overhaul our training courses from start to finish. I'm not talking about adding another video here or there; I'm talking about creating an entirely new training program with a defined path and specific, measurable goals. Plus, it had to be 100% free and 10,000% times better than anyone else's paid program.
Not to pat ourselves on the back or anything, but we nailed it! People love this new training series. I mean all-caps, smiley face emoji, freaking LOVE IT!
Today I'd like to introduce you officially to the NEW Education Tracks at Option Alpha. Don't let the names fool you though because these tracks were meticulously curated to help you hit certain objectives in your options trading journey. Although they've been available for current members for a while now, I thought it was worth the taking the time on the show to help you understand the thought process behind each track as well as offer my best tips and advice for setting and hitting your goals as a trader.
Show notes: http://optionalpha.com/show56
With more than 32k option traders in our program now, I can tell you honestly that I've seen just as many 7-figure IRA accounts as I have 7-figure margin accounts in the last eight years. Many new traders think that trading options in an IRA account limit your ability to make money and generate income. They hear stories about all the "restrictions" brokers place on new accounts that prevent you from making high probability trades and quit before actually learning how to work within the system.
But does trading in an IRA account vs. a traditional margin make or break successful traders? Given all of the favorable tax advantages that an IRA account has, it'd be rash to write them off as you start or continue your career trading options. Yet, that's what most traders do. They blindly assume that margin accounts offer the best opportunity to make money. And although brokers restrict certain activities by law, the reality is that using your IRA account for options trading can be incredibly beneficial.
In today's show, I'll roll through my Top 7 Tips for IRA traders to help you leverage your IRA to trade options. Plus, I'll present examples of how you can convert the undefined, or naked, options strategies that we often trade as part of our PRO and ELITE membership levels into their "IRA Approved" counterparts. Enjoy!
Show notes: http://optionalpha.com/show55
Market neutral, delta neutral, or balanced portfolio; call it what you want but the concept of making money regardless of where the stock market goes has been a long-time goal for many traders. But what happens when your portfolio becomes unbalanced? What are the best hedging strategies you can use to get back to a neutral stance?
In today’s show, I'll walk through three different portfolio scenarios and offer my advice on the best hedging strategies to use to help re-balance your positions. You'll hear which options strategies to use if you're too bullish, too bearish or completely lopsided. Plus, I'll help you learn how to hedge stocks that don't have tradable option contracts.
Of course, it all starts with a solid understanding of how to determine what yur portfolio looks like on either a beta-weighted or delta-weighted basis. It's enough anymore to just have a couple of bearish trades and a couple of bullish trades. You have to determine what the net impact of each position is in the overall portfolio. If you can do that, you'll be well on your way to consistently generating income with options regardless of the market direction.
And as always, if you've got questions on portfolio management or hedging trades, add them in the comments section below, and I'll make sure to reply personally to every single one.
Show notes: http://optionalpha.com/show54
If you’re an experienced options trader, then today’s show is for you because this week we’ll be talking about portfolio margin and how it could help enhance your returns. Yes, portfolio margin isn’t for everyone (you’ve got to have at least $125k in equity to qualify and three years of experience trading options), but the ability to upgrade your margin account to this portfolio risk model is incredibly powerful.
With portfolio margin, your broker is assessing each new option trade risk on the overall portfolio impact vs. an individual basis that happens in traditional margin accounts. They are asking the question, "How much risk does this new trade add to the overall portfolio?" More often than not, it means less margin required for new trades when you’ve already got offsetting positions.
So, how does portfolio margin help? Well, when you have to put up less cash in margin to hold a position that takes in the same premium, it means you can generate a higher return and free up additional capital for more positions. Still, this fairy tale could also be a curse in disguise if you don’t manage your account properly.
In today’s show, you’ll discover how brokers “stress-test” positions based on percentage moves in the underlying stock or ETF, how they think about concentration risk, and how margin “kick-backs” could increase exposure even when you exit trades. Don’t have $125k in equity and think you're going to skip this show? Better thing twice because the tips and advice in this show will put you light years ahead of everyone else as you account balance grows.
Show notes: http://optionalpha.com/show53
What if there was an options strategy that took just 1 hour per month to implement and actually beat the S&P 500 benchmark index both in performance and with less overall portfolio volatility? What if that one strategy was available to any trader, regardless of your account type or size?
You see, I believe you work too dang hard for your money and it doesn’t take a fancy financial planner or sophisticated mobile app to help you generate higher returns with less risk. All it takes is less than 1 hour per month. Yes, less time that it takes you to aimlessly scroll through your Facebook or Twitter feed.
Well, you can stop day dreaming because it’s a reality and in today’s podcast episode I’ll walk through the exact strategy that beat the market. No fluff. No smoke or mirrors; just cold hard facts. I’m sick and tired of people trying to tell me that options trading doesn’t work because today’s episode crushes every one of these unsubstantiated myths about trading.
Listen in and if you think this episode would be helpful to someone else, please help us spread the word here at Option Alph by sharing it with them. I mean how often can you share something online that actually helps someone make more money, with less risk? You just might become their new best friend!
Show notes: http://optionalpha.com/show52
Doesn't it just sound so cool even saying it: Robo Advisors. And although some of these automated investing companies have been around for 5+ years now, the recent rise in popularity of robo advisors like Wealthfront and Betterment is alarming.
If you haven't been keeping up with the latest FinTech craze, robo advisors are simply the next logical Wall Street sequence or disguise for money management. Instead of having a financial planner or "human" directing your portfolio, a computer algorithm or "robo advisor" makes investment decisions on your behalf. You input your age, current portfolio value, risk tolerance, etc. and the algorithm automatically determines the optimal allocation of stocks, bonds, cash, ETFs, emerging markets, and so on. All the number crunching and modeling are supposed to ensure that your portfolio is accurately diversified and theoretically safe.
The robo advisors lure being that computers are never emotional and can often make better decisions than humans. And since you don't have to hire a certified financial advisor that charges a higher fee, you'll save money with lower fees and other premium features like automatic rebalancing, tax-loss harvesting, etc. Now, while I generally agree with the premise of what robo advisors are trying to accomplish, I believe that they are incredibly inefficient it helping the average investor or retail trader.
In today's podcast, I'll help you understand exactly why these robo advisors are not the investing wave of the future and why you should steer clear of them. I'll even prove that some of the most popular and widely "respected" robo advisors underperform the benchmark S&P 500 index despite what you might read on their website homepages. I think the results and data we present might make you think twice about investing your money with them.
Show notes: http://optionalpha.com/show51
You're in a trade that's going bad and are thinking about adjusting your position. But before you do, how would that adjustment impact your overall portfolio management? Would it make your portfolio more bearish, more bullish, or have little effect at all?
Asking yourself this question above before adding or adjusting your positions gets to the heart of today's podcast episode. Too often I find that options traders who spend the bulk of their time concentrating on single trades that go bad, without any regard for the overall portfolio impact, actually cause more harm than is intended. They become so narrowly focused on making sure "this trade" doesn't lose money that they completely forget about the rest of the portfolio that is profitable.
Maybe they have a bearish trade that's going against them as the stock market rallies. And the first natural thought is to adjust this trade and protect them from the impact of the market rallying. But, if this is your only bearish trade in a portfolio full over five other bullish trades, why bother? Sure, adjusting this trade would help reduce risk in the single position, but the overall portfolio is already super-bullish that you'd just be putting yourself in an even bigger pickle should the rally halt and reverse course.
Today's episode challenges the popular saying, "What's good for the goose is good for the gander" because, in our opinion, the health of the overall portfolio is more important than any one, single option trade. Sorry little goose, we love you, but I'm okay sacrificing a couple of geese for the welfare of the flock.
Show Notes: http://optionalpha.com/show50
One of the foundational elements of my personal trading style with options is the belief that the stock market is random. Random meaning that we can't gain an edge picking a direction. And for years, this assumption has been more or less accepted by the public and academia.
In the last couple months, the theory or hypothesis around random financial markets has repeatedly been challenged, which is a good thing. A countless number of people have tackled the issue and published their findings on random market behavior. I wish I could link them all up here, but it's just not possible nor realistic. Therefore, my goal on today's show is simply to present what I believe to be the best research on the topic of market efficiency and predictability.
Admittedly, I scheduled this show as a follow-up to Show 49 where we backtested 15 different option buying strategies during the last market crash. And the reason is that I wanted you to recognize how much "perfect timing" had an impact on the results of that case study. In Show 49, we only backtested the put buying strategies for two years assuming you were 100% right in calling the impending market crash.
If you expanded the timeline out to 3 years on either end - i.e. you're not a market wizard and can't time the crash precisely, then each and every scenario lost money. In fact, each backtested put buying strategy only made money during Sep & Oct of 2008 at the height of the collapse. During all of 2007, you would have lost on average 56% of your capital waiting for the crash to happen.
Be honest with me now; how likely is it that you would have actually held through a 56% drop in your account balance before you called it quits? And that was assuming you had near perfect market timing! Still, the traders who sold options didn't try to time the market, eventually won. Sure, they may have experienced a draw down in 2008 if there were not positioned correctly, but even still they would have made money trading through the crash.
As you listen to the show, I want to challenge you to ask yourself the following pressing questions about investing; Is the stock market random? If it is, why should we care so much about picking a random direction? If it isn't, and indicators are present to predict future moves, can I even uncover the non-random patterns? How much time or money would it take to profit under the assumption of randomness vs. non-randomness? What trading strategies fit my personal style the best?
Show notes: http://optionalpha.com/show49
Do you think that there will be a stock market crash soon? Maybe in the next six months to 1 year?
If you are looking for the ultimate strategy to profit from the next stock market crash, then today’s latest podcast is for you. We went to 2007 and backtested 15 different put option buying strategies to see which combination produced the most profitable results during the last market crash.
Honestly, we’re due now for a serious correction or recession soon, so this show might just come at the best possible time. Recall that we did the hard research into “How Often Markets Crash” in Show 15 and found that 21 times since 1928 stocks fell at least 20%. That’s essentially once every four years, and it’s been eight years since the last significant market correction.
Naturally, we know that the best way to play a stock market crash, if we knew one was coming, is by purchasing put options. But which put options do you buy? How far out to you go for the expiration day? What strike prices work best? Are there some general trading rules we should follow?
Today, we'll answer all of these questions and more during our first little sneak peek inside the backtesting research that we'll be launching later this year.
Show notes: http://optionalpha.com/show48
Options approval levels are options trading restrictions placed on your brokerage account to prevent or allow you from entering different options strategies. Most new traders, and admittedly some experienced traders, often don’t know which trading level they are in or even that levels exist. Still, you should always reach out to your current broker and check with them directly to be sure.
While trading approval levels and names can vary from broker to broker, there are usually 4 main levels that you’ll encounter. In today’s episode, I’ll first help you understand why brokers have these levels and the types of options strategies you’re allowed to trade in each of the four. Plus, I'll help answer some common questions I get from members about either applying for a trading level to start with or moving to a higher approval level.
Towards the end I'll share some tips and suggestions after talking with 6 different options trading brokers about new strategies or tactics you can use if you’ve been denied after applying for a higher trading approval level. After listening to the podcast today, if you find success using what you’ve learned please post a comment below the show notes. Tried a completely different approach that got you higher trading approval? Add that as well and share it with the rest of the community.
Show notes: http://optionalpha.com/show47
One of the key elements of becoming a more successful trader is the ability to absolutely master options trading risk management. And, contrary to what you might assume, it comes down to a couple simple things. Namely, determining and sticking to an optimal position sizing range for each trade and never allocating your the full value of your account at one time.
In simple terms; don’t invest too much money in each trade and always have money left over.
My goal today is simply to help you trade with more confidence. The type of unwavering confidence to go out and start placing trades without the fear of losing or the fear of blowing up your account. For me, confidence comes from understanding the underlying math and reasoning behind optimal position sizes. Too often you’ll hear or see other traders spout off allocation ranges without any clear direction on WHY they chose that range.
If someone told me that I should allocated just 10% of my account towards each trade I’d ask them why? Why this range and not something higher or lower? What’s the reasoning behind 10%? Rarely will you get a straight answer.
The reality is that if you consistently enter high probability trades and stick to the optimal position sizing range we reveal, the odds of completely blowing up your account at any point is 1 in 28 trillion.
In today’s show, I'll walk you through the math behind why I’ve said, for 8 years now, that you should never allocate more than 1-5% of risk per trade. It’s not just some cool numbers I pulled out of thin air. There’s a mathematical and logical approach and I’ll break it all down in today’s latest show.
Show Notes: http://optionalpha.com/show46
Tax day has come and gone that doesn’t mean that we can’t start preparing in advance for next year by looking ways to reduce or minimize our tax exposure.
Today’s newest episode is Part 2 of 3 all about options trading taxes based on the questions that our members submitted.
We’ll continue to dive deep into your most requested topics and questions to make sure we’re getting the correct answers for you so that you can confidently move forward. Sure, taxes can be a little scary on the outside but our hope is that this mini-series will help give you some clarity.
Finally, if you have additional questions that we didn’t cover in Part 1 or Part 2 there’s still an opportunity to get your questions answered in our final segment. All you have to do is add your question to the comment section below the show notes and we’ll add it to the queue.
Show Notes: http://www.optionalpha.com/show45
Did you get flagged as a Pattern Day Trader? Concerned about what can happen if you make too many day trades in a short period of time?
In this session of The Option Alpha Podcast, I'll clearly lay out the not-so-scary Pattern Day Trading Rules (PDT) that you can often run into if you're an active trader in either stocks or options.
Now, personally speaking, we rarely (if ever) run into an issue with the PDT rules because we aren't day traders. We are position traders meaning that we'll enter options trades for a couple weeks to a couple months. We may have an opportunity to close a trade early for a profit but we never enter positions with the intent of closing them the same day.
That said, there are tons of questions on what is classified as a "day trade" in the eyes of the regulators. How much money you need in your account to be exempt from the PDT rules and what happens if you get margin called.
Lucky for you I'll walk through everything step by step so you have the confidence to trade around these irritating rules.
Show Notes: http://www.optionalpha.com/show44
Options traders often reference the "Greeks" which include delta, gamma, vega and theta of their underlying positions as a way to measure the sensitivity of an option's price to market movements.
And while looking at option greeks can be helpful, there's also a big misconception about them... one that trips a lot of traders up early on in their career.
Most traders falsely assume that the "Greeks" are part of an options price - but they are NOT part of option pricing. Option greeks are used only to estimate what an option price might do reacting to specific market changes.
Seems like a simple error but the resulting consequences could be the difference between winning and losing on your next trade.
In today's show, I'll run through each for the four major options greeks and tell you which ones you should be focusing on as you plan your next trade and how checking the greeks can help with choosing the right options strategy.
Show Notes: http://optionalpha.com/show43
Back in mid-2014 we surveyed our members and it completely changed our business.
We overhauled our video training, threw out all the junk and added more in-depth modules and PDF guides that everyone had been asking for. The result was an almost explosive growth in our ability to reach and train people. Realizing just how powerful this was in 2014 I wanted to survey our members again to see if there were any “missing link” that we needed focus on.
After sending just 2 emails we got back 1,378 completed surveys. Truth be told there was actually 4,503 responses but only 1,378 were considered 100% complete. Upon reading through the pages and pages of responses I also decided to reach out to 68 people for phone interviews and to learn more about how they trade options and what struggles they were having.
In the end, the last couple of weeks analyzing the data and reflecting on the interviews has made it clear that as a company, Option Alpha is on the right track but could do so much more and needed to pivot. We could be so much more impactful than we already are if we focus on depth not width in our training.
In today’s show, I wanted to give you a little insight into the things we’re working on here at Option Alpha that we know will help you make more money trading options in the future. And in the process, I talk about my conversations with the people I interviewed, why I was shocked at the questions they asked, and finally the 3 new “Tracks” we’ll be rolling out soon based on the feedback we got.
Show Notes: http://optionalpha.com/show42
The Stochastics indicator has long been a favorite for investors and could arguably be one of the most popular technical analysis indicators.
Today I’m going to show you the results of our backtesting analysis on the Stochastics Indicator and I think you’ll find it extremely useful wWhether you’ve used it before to trade or if this is your first time looking it up.
Now, unlike the results we saw in Show 41 of the podcast, today’s mini-case study did see a positive correlation between win rate and overall net profitability of the indicator after making a small change to the way we generated signals.
Learn more about SIGNALS: http://optionalpha.com/signals
As we’ve been trying to prove with case studies on the Simple Moving Average,Absolute Price Oscillator and today with Stochastics; there are clearly winners and losers that we found as part of our 20-year technical analysis research report.
Today I’m going to give you a very special sneak peak inside our new technical analysis backtesting report called SIGNALS.
Learn more here: http://optionalpha.com/signals
Specifically, we’re going to look at how the Absolute Price Oscillator performed over the course of 20 years, testing 223 different stocks and the subsequent signals generated from those trades. What’s the point of telling you all this? There’s no hiding that this is meant to be a little bit of a teaser for you because I think everyone could benefit from reading it.
There’s no hiding that this is meant to be a little bit of a teaser for you because I think everyone could benefit from reading this research report but even if you don’t buy a copy of SIGNALS then this 1 tip we’re going to cover today will help you think more strategically about how you trade in the future.
Show notes page: http://optionalpha.com/show41
Grab your copy here: http://optionalpha.com/show40
We Backtested More Than 17.34 Million Stock Trades Over 20 Years to See What Really Works...
Discover the specific indicators that generated winning trades 82% of the time and outperformed the market by 2,602% on average.
Read the Entire Report in Just 30 Minutes. Get insights from 12 months of backtesting research of more than 1,476 different technical analysis indicator variations.
Option Alpha's TOP 5 Indicators. We revealed our Top 5 indicators (with specific settings) that resulted in the highest overall returns, safety and consistency long-term
6 Optimal Settings Cheat Sheets. Specifically designed to be your “quick reference” directory with the optimal indicator settings for each of the eight dominant performance metrics we tracked.
25 Real-World Portfolio Simulations. See how various simulated portfolios were able to outperform the market by more than 2,602% on average.
Grab your copy here: http://optionalpha.com/show40
Do you remember the feeling you had the first time you were introduced to technical analysis or stock charting indicators in general?
You were probably at some weekend stock market seminar or watching a video online, and everything just clicked in your mind. The volume signaling that more buyers were present in the market to drive up the price, or the lines showing where support and resistance were; it all just made logical sense.
Forget reading reports and company filings digging for great stocks to buy. You finally had the tools you needed to conquer the markets and really start making money. Technical analysis was the “magic” bullet that all the pros were using, and now you were on the inside.
Still, shortly after your introduction to technical analysis, in the back of your head a little voice asked, “Does this stuff really work?” It might have been immediately after your moment of glorious realization, or it could have been days or weeks later, but I guarantee it happened – because it happened to me too.
Honestly Now, How Reliable is Technical Analysis for Stock Signals?
Yet doesn’t it seem fair to ask about the reliability of technical analysis in today’s market right? With all the hype around technicals and the money being invested purely based off stock charts and volume indicators, we should know what works or what doesn’t?
However, there has not been one conclusive report on the reliability and performance of various technical analysis indicators published that we’ve seen. Not one.
So, I decided to finally do the research myself. . .
During the initial planning phases leading up to this massive research report, my team and I found many different software services that offered the ability to backtest stocks and indicators one at a time. But in my opinion, everything was too narrow in focus. Nothing I found gave me the ability to split test hundreds of indicator settings, over an extended period with hundreds of different stocks.
The 3 Big Questions about Technical Analysis Indicators We Asked 12 Months Ago
Therefore, my team and I set out to create the most comprehensive backtesting report imaginable answering the three biggest questions investors had when it came to technical analysis:
- Is Technical Analysis more reliable than randomly picking a stock’s direction?
- If so, can you generate excess returns above just holding SPY on a consistent basis?
- If so, what are the specific indicators and settings that work best long-term?
While I knew it would require an enormous commitment, I also was aware that it would help transform the way hundreds of thousands of investors, just like you, think about technical analysis.
Imagine being able to finally know which technical indictors are the most reliable, most consistent and most profitable…
After 12+ months of backtesting, analyzing more than 17.34 million individual trades, and investing nearly six figures into data, software, and four new employees, I am thrilled to finally launch our report this coming Monday, January 18th.
http://optionalpha.com/show39
For years, I've had members ask me about options trading taxes, ways to reduce your taxes, the best legal structures, international trading taxes and hundreds of other questions on the subject.
Recently I decided to survey just our PRO and ELITE members to find out what questions they wanted specifically answered when it came to trading taxes. What were the hot-button issues they had and subsequently never found an answer to?
After hundreds of responses I compiled a long list of questions I would get answered for you...
Today we're releasing Part 1 of a three-part series all about options trading taxes. And to help facilitate the discussion we've invited CPA Brandon Hall on the show we specializes in securities taxation to get professional answers.
Once we are done with this mini-series we'll also be compiling and releasing a guide on trading taxes to our members. Plus, if you have any follow-up questions you'd like Brandon to answer or be included in our next show, please add them to the comment section below.
http://optionalpha.com/show38
Part of our mission here at OptionAlpha.com is to offer the highest level of transparency possible in order to help you gain more confidence in your own options trading system.
This week we launched our newest feature after spending more than 5 months developing a propriety portfolio tracking software that monitors and reports key statistics and metrics in real-time. This software tracks and categorizes real money trades, not paper or backtested trades.
Want to see the most recent stats updated in real-time each day? Just head over to the Option Alpha Performance page.
In today's show, I want to introduce our overall findings and numbers to you (both the good and the bad) and explain how this has already shaped my outlook and trading strategy moving forward.
As part of our higher level memberships, we stress that options trading is just a game of numbers and statistics. Your focus should be on placing lots of small, high-probability trades that captures the long-term overstatement of implied volatility.
Hence, our performance metrics that we'll walk through in this podcast will focus on win rate, average profit/loss, time held and IV differential which to us represents the ability to generate consistent income.
http://optionalpha.com/show37
I'm crazy excited to finally bring you my interview with Aram Basmadjian from TradeWithAram.com because it's such a genuine and honest conversation with a guy who continues to grow in his education and love of trading.
In fact, he was hesitant at first to come on the show because I reached out to him after emailing back and forth for many months during his time in our membership. But I know that his story and investing journey would be invaluable to both new and experienced traders who listen to this show.
As we move through the interview you'll hear his strategy for both short term weekly trades and longer term positions that he enters. Plus, we'll cover some of the major indicators he uses for a "collective" determination in future market direction.
Ready for another amazing interview with a real trader who's making it happen each month? Let's dive into the show with Aram.
Quote: "You develop your own style by taking the best of everyone else and put a little of yourself into it."
http://optionalpha.com/show36
This week during the FinCon expo in Charlotte I had the opportunity to sit down with "The Options Playbook" author Brian Overby.
Brian is also the Senior Options Strategies from TradeKing and this 40+ min LIVE interview covers so much it's hard to summarize it here.
Plus, as a very special gift Brian signed 2 copies of his hard copy book for you all. All you have to do is 1) share this podcast on Twitter or Facebook and 2) add your comment below with the #1 thing you took away from the show (the "ah-ha" moment you had).
If you're ready for strategy questions, account tips and a real live trade example with SPX options then let's get started. . .
Being a consistent, profitable options trader doesn't take much.
In fact, I'd even go as far to say it takes very little time and effort on a weekly basis. Yet, we've been told in the media (and through other publications and websites) that you have to have lots of money, trade fast or day trade to make it in this business.
It couldn't be further from the truth.
In today's episode, I want to help show you what it really takes and how you can start to implement simple tweaks to your daily routine to become more consistent and profitable.
Plus, we'll cover a recent trade we made in APC with a 70% chance of success selling options far away from the current stock price.
In this session of The Option Alpha Podcast I had a chance to interview Sarah Potter, Author of How You Can Trade Like A Pro and founder of www.shecantrade.com. This self-taught trader will share her story and why this former futures trader quickly migrated over to options trading because of the better fit with her lifestyle.
You'll hear Sarah's strategy for only trading weekly options on "hot" or "popular" stocks as opposed to monthly contracts. Plus, we will dig deeper into how and why she chooses to use multiple timeframes when trading including the weekly, daily and 60 mins charts. It's a can't miss episode!
I completely underestimated the power of how to set financial goals until about a year and a half ago.
Since then I've changed the way I look at and set goals in all areas of my life (not just financially) and it's made a huge difference.
In today's podcast, I want to really take the time to walk through the Top 10 mistakes people make in the goal setting area which can dramatically alter your chance of hitting and achieving your goals.
Again, I wasn't much different from most people who set silly goals at the beginning of the year just to let them wither away and die 2 months later.
But I made a huge commitment to myself, and my family, that goal setting would be dramatically different for me in 2014 and since then it's changed my life in all areas.
I encourage you to post your goals in the comment section below and share them with everyone here. I'll be posting mine here after a few people comment and share theirs.
You know the name, and the legacy.
But what you don't know about Michael Jordan and his impressive career might actually help you become a more successful options trader.
I know what you're thinking already. Kirk, how on earth does basketball relate to trading options?
You see on the outside they don't but once you dig down a little deeper you'll find that the best basketball players have very similar qualities to the best traders.
I've been on a mission studying what true "success" looks like and when I discovered a little more about Michael Jordan's struggles and victories I knew it was too good not to share with you.
You've got a stock position that you want to protect (or shield) from any impending market sell-off or crash.
But buying protection or insurance typically costs money right?
And in nearly all cases you've been told to buy put options that are far OTM. The only problem is that these options tend to expire worthless (which is why we sell them here at Option Alpha) and if you have to purchase them each month the costs can rack up over time.
In today's show, I'll help you think about option strategies a little different then maybe you have before. Specifically I want to show you how to use different options strategies as building blocks to pay for and finance other protective strategies for your portfolio.
It's no secret that the long-term average investor returns are pretty low. In most cases, the little guy rarely beats the market and for good reason.
Frankly we are horrible stock pickers though we consistently try to find hidden value in playing directionally. Long-term this always underperforms an efficient market and the market standard portfolio (i.e. the S&P 500 Index).
So what do we do about this? How do we change our mindset given the glaring stats that the media pushes in our faces daily.
I believe the first step is to recognize the 3 biggest excuses that average investors have. Rarely spoken these excuses typically manifest in the subconscious part of the brain.
My goal on this podcast is to bring out these excuses, shine light on them and help you move past them so you can become even more successful as an options trader.
Finding great option trades can be tough sometimes, and I get that. That's why in today's podcast I'll show you 10 detailed trades all under $100 of risk each that you can make right now.
Plus, we mixed it up with a little bit of everything; bullish & bearish strategies, high & low volatility trades, stocks & ETFs, etc. And for less than $1,000 of overall risk you could have a completely diversified and balanced mini-portfolio of options trades.
My goal is to prove that making high probability trades doesn't require having a huge portfolio to start with or taking a lot of risk. In fact, you'll find that I'm an advocated of small positions regardless of your portfolio size. But by the end, you'll see that trading options for income is a completely viable strategy even if you are not starting with thousands and thousands of dollars.
In the past couple years inverse and leveraged ETFs have been some of the most highly traded securities because of their seemingly "cool" concept for speculation. I mean where else can you get such high exposure to financials or gold than with a 3X bull/bear ETF?
In this session of The Option Alpha Podcast I'll going to dig deep into how these products are both structured and priced so that you have a complete and full understanding of the "drag" they carry before investing.
No this is not to say that you shouldn't trade inverse and leveraged ETFs because I have before and will in the future. Instead, my goal is to make you smarter about how they derive their pricing so that your timeline for trading them might be adjusted or altered.
I never promised this podcast would be a walk in the park, so if you are ready to be challenged and take your training to the next level then let's get started.
You’ve often heard us talk about the important of trading liquid options until you are blue in the face right? In this session of The Option Alpha Podcast we’ll put a real dollar figure to this concept and show just how much “slippage” is costing you trading options that are illiquid.
Specifically markets that show a bid/ask spread of just $0.20 could end up costing you more than $3,840 each year - and that’s just the cost of getting into or out of the trade!
Throw in the risk that the stock doesn't move the way you want it and you can easily see why most traders dig themselves into a whole even before the trade has a chance to work for them.
Yet, often times we focus too much on our commission costs and rarely if ever do you “feel” the pain that slippage costs your portfolio. It’s time we start worrying less about commissions and more about slippage by focusing on only highly liquid options and underlying stocks.
In this session of The Option Alpha Podcast I have the great pleasure of interviewing long-time trader and industry veteran John Carter - founder of SimplerOptions.com.
One of the many benefits of doing this podcast has been the opportunity to meet and connect with other traders with whom I admire and have followed for years. John has been on my short list of those to contact for this podcast (with many more coming that you all will enjoy!)
What's so great about his story is that he never had the "traditional" schooling to trade options. He knew he wanted to figure out how the market worked (and make money in the process) and has been on a constant quest to learn and grow. It's this self-awareness and willingness to change and adapt along the way that makes him such a great guest for our show.
In this session of The Option Alpha Podcast I'm going to actually take a look at unique investment outside the stock market that is comparable to how we should be trading options.
My hope is that you'll clearly see how being successful with Peer-to-Peer (P2P) Lending is extremely similar to the requirements for long-term options trading success. In fact I'd even go as far to say that most investing requires the same underlying fundamentals for success regardless of where you money physically goes.
Of course 2 years doesn't make a trend but the connections between these two markets are fascinating. So tune in as I take you though my personal account with Lending Club over the last 2+ years.
Don't forget to add your comments at the bottom of the show notes and let me know your thoughts since this episode was slightly "outside the scope" of what we normally do.
Investing money can be scary (no doubt). . .
In this session of The Option Alpha Podcast I want to help you overcome the 3 biggest fears that people have when they start trading options. You see, as kids we were scared of all kinds of things; monsters, our siblings, "Dad" etc.
As adults now we still get scared and when we combine the "unknown" with our hard earned money it becomes a nightmare. If I were to ask most investors about options trading their default response would be things along the lines of "it's too risky" or "it's way too complicated".
But the honest truth is that these are excuses under the cover of fear; 3 in particular which haunt most new and experienced traders alike.
You could be going through these right now or have gone through them in the past. Regardless, I'll bet with 100% odds of success that you'll experience these emotions again in the future at some point.
Where's the good news Kirk? Right here because I'm going to help you get past these hurdles in today's show.
Fear #1: I'll Go Broke
Fear #2: I Need More Money
Fear #3: I'm Not Smart Enough
In this session of The Option Alpha Podcast we talk with long-time trader Kim Klaiman from SteadyOptions.com. As you'll hear in this interview, Kim's goal is to trade trade variety of non-directional trades with low correlations.
One topic that we dive into a little deeper is the strategy of buying straddles pre-earnings to profit from the rise in implied volatility. And while I personally prefer to trade the IV crush you'll hear Kim's take on how his backtesting research has found some likely candidates where IV does consistently rally ahead of earnings.
In this session of The Option Alpha Podcast I want to help you be a better trader even if you are currently still working a full-time job. Because the reality that even though I stay at home with my daughter, she's a full time "boss" if you know what I mean.
So over the last year and a half I've had to change and adapt my own trading style to be even more efficient and productive. This means cutting back and hyper focusing in on the things that really matter in order for me to be successful.
Today I'll share 7 smart tips to help you save time while still working your day job. Try 1 or 2 out this week and let me know how it worked out.
In this session of The Option Alpha Podcast we'll have an in-depth talk about trading commissions and broker fees. Specifically, people always ask me about commission and with more members now than ever it’s becoming more and more important to negotiate great commission rates.
So I'm here to help you save money by getting your trading commissions reduced. And I give nearly the same answer to everyone each time they ask but there's a special twist on how I did it and why it dropped my rate by 17%. Ready to reduce your commission costs? Let's go then!
In this session of The Option Alpha Podcast I had a chance to flip the script on Joshua Belanger from www.OptionSizzle.com. A former CME runner in Chicago, Josh has been a long time industry trader both on the professional and retail level.
What's so great about his story is that over the last 10 years he's been able to learn how markets work from many different angles including being a broker, raising private equity, managing money, and running orders on the CME floor. During our interview he'll explain how his overall trading plan has evolved and also opens up about his more specific strategy for looking at (and profiting from) unusual options activity.
In this session of The Option Alpha Podcast I'll explain why you shouldn't be afraid of the assignment and exercise process when it comes to trading options. You see, all too often it's just a lack of understanding as to how the process really works. Who are the parties involved? How do they select who gets assigned? How long do I have to manage my new risk?
I'll answer all of these questions and so much more in today's show and by the end you'll finally be empowered with all the information you need to professionally handle assignment. Plus we'll go through 2 very cool post-earnings trades we made in HAL and MS which still have very high implied volatility even after announcing their earnings.
In this session of The Option Alpha Podcast I completely break-down one of the worst trade alerts we've ever seen using a debit spread. And it honestly gets to the heart of why I started this website and blog more than 8 years ago; because there are still horrible companies and services out there publishing crap that doesn't help investors.
In this show we'll compare and contrast this unnamed company's call in NFLX vs a trade we look at live in HPQ. At the end you'll be the judge and add your comments below to let me know what you think of both - which one would you choose? You don't have to choose our trade, I seriously want to hear if you believe this is a good trade in NFLX coming up.
In this session of The Option Alpha Podcast I had a chance to interview Henrick Santander, the guy behind http://www.the-lazy-trader.com who currently works a full-time job but is passionate about creating a trading system that fits his lifestyle.
You'll hear how this long time Cuban (of 26 years) moved to Canada and is now trading very successfully each year making smart bets in the major indexes like SPX and RUT. Plus, we'll talk through his most recent SPX iron condor trade including his complete logic behind the entry, strike selection, risk management, etc.
Ever wonder how often going back in history the stock market "crashes"? I mean we know that cyclical markets means another one will eventually happen (it's just a matter of time) but when? Or how often?
We did the research for you and analyzed the market data going back to 1928 (as far as we could get it). In this podcast we'll take a look back in time for you and present our case study findings. You'll finally have a clear understanding of how often stocks "crash" and also how bad we are as investors at predicting the next possible move.
In this session of The Option Alpha Podcast I'll explain why most traders think stop-loss orders help manage risk and protect them when in fact they end up creating more losing trades. Using the "Lazy Trader" program I'll show you with concrete numbers on live trades how a stop-loss order would create 50% more losing trades than if you did nothing at all and let the trade stay a loser all the way through expiration. You probably think I'm absolutely crazy for saying this, but listen in and see what the facts say about option probabilities.
When you start to trade more often and with more positions, remaining as neutral as possible will help smooth out your returns over time. This doesn't mean that you can't get directional (betting on a move up or down in something) but it does mean that you have to know how to re-balance your portfolio. We've shown before that using SPY beta weighting is a great start and in today's show we'll continue that discussion with additional underlying asset correlations. Know how these work will help if you ever start building targeted strategies in a particular sector/industry - like Oil, Technology, Social Media, etc.
In this session of The Option Alpha Podcast I'm going to change the way you think about buying stock forever. Because just buying shares isn't effective anymore and with the help of options you can both increase your probability of success and reduce risk (and net cost basis). But first I'll need your help with my "Financial Planner Challenge." If we are going to change the way people invest we have to educate the so-called market experts because I guarantee that 99% of financial planners have no clue how to use options to increase returns and reduce risk for their clients. Plus, I'll show you a current example using NFLX with hard numbers of how you could reduce the cost of buying stock by 1.5% each month and still keep an 11% upside potential. Sound awesome? Let's go. . .
In this session of The Option Alpha Podcast we are going to help you finally create an easy to use 3-step system for picking the best option strategy. Unlike most traders who try to fit their favorite strategy into every market situation, you'll find out why after asking just 2 simple questions we can eliminate the possible universe of options strategies by 80% to the best possible traders for that specific situation. Remember that in this game, strategy trumps direction every time.
In this session of The Option Alpha Podcast I'll give you a step-by-step guide to the top 7 things you should check before you make another trade. And this is not some quickly thrown together list; these are strategic steps that will help you make more decisive action when it comes to picking and filtering good trades from bad trades. Each checklist item is placed in perfect order so that you can quickly figure out if a trade is worth your time analyzing or not.
In this session of The Option Alpha Podcast we are going to cover the 14 stages that all investors go through with their emotions. Understanding that traders have specific emotions which have varying magnitude, is critical to learning how either you or another investor might behave. Thankfully there is a cyclic process of psychology that explains the relationship between our feelings and our judgments. And we'll show you to remove yourself from this cycle so that you can master the markets as a non-emotional trader.
In this session of The Option Alpha Podcast I'll answer one of the biggest questions I get when it comes to trading options with probabilities. You see with probability trading there can be this misconception that it's all a "Zero-Sum" game. But today I'll show you how you can break this cycle and start making more money with non-traditional thinking about how you close winning or losing trades. This show will make you think hard about how you trade.
In this session of The Option Alpha Podcast we're going to have a very advanced conversation about implied volatility (IV) and why understanding IV is critical to gaining and edge in the market. Plus we'll use a very specific example with YHOO and HAL both that have IV of 32% but when we apply IV percentiles we find out that you should be trading these stocks completely different. Buckle up - this one is intense!
In this session of The Option Alpha Podcast I'll show you with real data why if every new trader was doing this 1 thing different they'd make more money. Plus I'll relate this to how why casinos have table limits because they know that limiting how much people gamble is actually more profitable for them long term. And finally we'll tell you why you should never be afraid of trading options once you hear this bankruptcy stat.
In this session of The Option Alpha Podcast I'll start a huge discussion on why I think you don't need charting or technical studies to be successful trading options. Plus I'll use YHOO & INTC as examples.
In this session of The Option Alpha Podcast I'm going to give you a complete step-by-step guide to learning how trade options in 3 months. You'll learn to focus on 1 concept each week for 12 weeks.
In this session of The Option Alpha Podcast I'll cover some key foundational concepts about Call and Put options contracts by highlighting a classic simulated real estate deal.
In this session of The Option Alpha Podcast I'll cover one of the biggest misconceptions around trading and investing - account size. I'll explain why having more money actually makes you place worse trades.
In our 1st session of The Option Alpha Podcast I'll cover a little more about my trading background and how we got this far from such a small blog to start. Plus my goals and expectations for this podcast.