The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, I want to go through the top three obstacles I think many options traders encounter. And the reason I use the word “obstacles” to start this off is because I think they are things that everybody is going to run into, but they are things that you can get over or get around. They're not going to hurt you, they're not going to derail your potential success, but they are going to be things that you have to push through or you have to figure out a way around them through consistency, persistence, patience. One of those, you’re going to have to use as a means to push through this obstacle. These come up time and time again not only in our membership community, in the forums, but also through coaching that I’ve done before in the past and just through my own experience of knowing how to trade and having been through many market cycles over the last 10 plus years. The first one for sure is trade count. I think this is an

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is an arbitrage opportunity?” An arbitrage opportunity is nothing more than a transaction or a series of transactions in which you generate a profit without taking any risk. And so, they are far and few between because many arbitrage opportunities get found very quickly and then the trading edge or the arbitrage edge starts to disappear as more and more people start to flood the market. But to give you an example of this… And I think that there is still potentially an opportunity to do this in small cases during expiration week, in particular, during expiration day to generate a profit through an arbitrage type trade following some inverted positions. Again, this doesn't mean necessarily that you take zero risk, but probably as close to zero risk as you could potentially make with a trade. Here's an opportunity… And I've mentioned this before on Facebook Live. I don't k

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “Does trend trading really work?” And this I think is an interesting question because I think a lot of people will often hear terms like – “You have to follow the trend.” or “The trend is your friend.” And in many respects, it can be easy to dismiss this as just regular market banter or squawking from talking heads. The question really is – “Does trend trading actually work? Can you follow some sort of trend system with quantifiable entry and exit points and figure out a way to create gains that are better than just randomly buy-and-hold or some other opportunity?” And so, the answer to this question is I think yes. Yes, trend trading on some level does work. There's been great research that have been done from a number of different institutions. Vanguard has done research on this. Meb Faber has got some great research on this if you search Cambria Investments where they actu

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is proprietary trading?” If you've been looking online or if you've been searching for questions surrounding proprietary trading or prop trader, proprietary trader, etcetera, then this hopefully will help answer the question for you. Proprietary trading is actually very simple to understand because in many cases, if you are a regular retail investor and you're making your own decisions about where you allocate your money and how you allocate your portfolio, you’re effectively already performing proprietary trading. All proprietary trading is, is somebody or some firm trading their own capital for gains. Again, like I said, as a retail trader myself and probably you if you’re listening to this, you already are a proprietary trader. You’re trading your own money for your own personal capital gain benefit. This is different from somebody else trading client money for commi

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, I want to go through the snowball strategy for increasing your wealth. Today’s question actually comes from one of our community members inside Facebook. They asked the following questions, so I’ll read it first and then we’ll talk through it together. They said, “How to generate the snowball effect?” They said, “If you have a $5,000 to $10,000 account size, what steps are required to increase the account on a consistent basis? Example: Do we reduce or kill debt? Do we reduce or kill monthly allocation of capital? Do we trade as much of the account as possible? Do we pick proper strategies, we don't withdraw money, try to collect extra money, etcetera? I’d like to trade every day, but the account size won't let me do it, specifically if I follow any of your recommendations to have between 40% and 50% in cash.” They said, “If you could help me with this topic, it would be great. Thanks.” First of all, I think the

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, I’m going to go through our ultimate quick guide to credit spread option trading. Credit spreads are what I believe to be one of not only the key building blocks of many of the great options trading strategies, but also can serve as a wonderful vehicle for those of you who are trading with a small account or even just getting started with a small account. The beautiful thing about credit spread trading is that it gives you exposure to the high probability, high positive expected outcome of option selling with the defined risk characteristics that many people are initially attracted to when they look at long options like long puts and long calls. With a credit spread trade, all you’re simply doing is selling one option contract and buying another option contract typically further out of the money than the initial contract you sold and in exchange, you’re taking in a net credit between the sale and the purchase of

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to go through the 11 different stock sectors and basically how you can use these to help diversify some of the trading that you do. As many people know, there's a lot of different sectors and industries that you can generally invest in. We know the big broad ones like energy and healthcare and technology, but there's actually just 11 that are the global industry classification standard or GICS and so, this is what most brokerage platforms, most institutions, mutual funds, hedge funds, ETFs use as the main classifications of different industries or stock sectors. Now, when you’re trading options, it's my opinion that you should absolutely be invested across a broad variety of different sectors and industries. I think this helps reduce not only the asymmetric risk from one or two sectors blowing up or making these big moves, but also helps smooth out returns and we’ve seen in back-testing, helps enhanc

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to talk about why you should slow down, so that you can speed up. This is probably one of my most favorite topics to talk about recently and it’s something I've been really harping on in coaching and with our members here at Option Alpha for the last two or three years now and it's the concept of just taking time to understand something fully before you just breeze by it because what I see people do all the time, especially in trading, is they get presented with a certain market scenario or maybe it's a trigger from an email from their brokerage and whatever the case is, they end up just blowing right past this wonderful opportunity to learn something about the markets or trading or investing and they think that they’ll just come back and do it later on next time. But inevitably, what ends up happening is that when you breeze by these great opportunities to learn, you end up slowing yourself down in

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to talk about why you should never rush order entry when trading. I often find that both new and experienced traders rush order entry. And what do I mean by this? I mean, when you're trying to place a trade in the market, there seems to be this frantic paranoia about getting the order filled and what that often does is leads people into making either bad decisions or rush decisions or forcing a trade by reducing or increasing their price just to fill the trade, assuming that they’re going to miss some unique opportunity in the market, but this just isn't the case. In fact, order entry is the absolute most important thing that you should focus on when it comes to trading because it's all of the things that you control, your position size, the strategy you’re using, the ticker that you’re trading, the pricing that you get and so, this should never be rushed in the trading process. We often use the same

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What was TARP?” And so, we’re specifically talking about the Troubled Asset Relief Program, what is commonly referred to as TARP. And if you traded through the 2008, 2009 market meltdown, you probably heard TARP all over the place because it was meant to be the saving grace of the market, this new government program that would come in and swoop in and stabilize these financial institutions and major banks. I want to try to break it down here for you guys pretty quickly, so you understand what it was because I probably expect that we’ll see this at some point in the future because it was I think in many cases, renowned as a big success and potentially on the books, maybe it was a success for the government to do this. It definitely averted a crisis, but I don’t know if it [Unintelligible] further down the road, we’re eventually going to have a bigger one out of that. But neit

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What premarket analysis should you be doing?” This is often a question I get many, many times during the week. People are always wondering – “Kirk. What are you doing before the markets open? Do you have a ritual, a routine? What are you checking? What are you not checking? What type of premarket analysis and thought processes should we be going through?” And the reality is I don't do that much and that should come hopefully as a breath of fresh air because I think oftentimes, people can get down a rabbit hole of new stories and market-breaking coverage, all these things that [Unintelligible] talk about on TV. And so, I try to keep my morning routine very, very small, focused and minimal at best. Usually, what I do in the morning is simply track premarket futures. There’s an easy way to do that. You can do it through your brokerage account. You can do it through Bloomberg or

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What are junk bonds?” In the world of bond investing, there is a rating scale for the value or the security of the underlying bond that you might be interested in. And so, we typically look at these rating agencies, though you can always take it with a grain of salt because there’s a lot of corruption in rating agencies during the 2007, 2008 market collapse, but many of the rating agencies I think have probably cleaned up themselves just a little bit, but they offer these ratings for different bonds that are being issued in the market and the ratings are just a way for investors to look at potentially, the amount of risk or return or fees that are associated with every bond that gets issued. If you’re starting to invest and you hear the term “investment grade” or “junk bonds” or “midgrade bonds”, this is what we’re talking about. It’s this rating scale. You’ve got Moody’s an

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about how to use an insider trading report. We’re not talking about the illegal version of insider trading reports which is really bad, where you can go to jail if you're distributing insider information, but we’re talking about the insider trading information that we can garner from SEC form number four and this is basically a form that many people who are insiders or have a significant equity stake in different publicly traded companies have to file any of their distributions, sales, options exercise, purchase, any of that stuff, they have to file with the SEC. And so, it’s really cool because what you can actually see is you can see what insiders in the company are doing. In particular, I like to glance at this if I’m ever invested in a stock or if I’m ever looking at a particular stock. I would definitely be interested in seeing what insiders are doing. Are the CEO and the chairman

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be going through our ultimate quick guide to margin buying. When we talk about margin buying, we’re specifically referring to buying stocks on margin with your brokers and obviously, this requires a margin account to do this. You can’t do this in an IRA or a retirement account. But all margin buying is and it should really be renamed as just borrowing with a loan to purchase stocks and it's all it is. You are actually using a loan to thereby, increase the capacity in which you have to purchase stocks. Now, obviously, this comes at a cost and so, margin rates can be pretty high in some cases for many brokers, but brokers do allow you to purchase stock by borrowing funds from the brokerage to increase your trading capacity. For example, if you have a $10,000 account, you could purchase obviously $10,000 worth of stock because you have $10,000 in cash, but in many cases, the broker will give you basi

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is a breakout when trading stocks?” A breakout is just simply on a stock chart, where it looks like the stock is now moving into a new territory, a new level (if you will) and it's starting to move there quickly. And so, typically, what people look for is they look for a trigger or a confirmation that something has changed dramatically in the stock price. Now, these breakouts can occur in either direction. You could have a bullish breakout where a stock has a large move higher or you could have a bearish breakout where a stock has a large move lower. But visually on the stock chart and specifically, if you use candlestick charts, you can see this more often than not. You'll see a string of days where the stock is generally range bound and you have these small candles and small wicks and then you have this one massive day that just engulfs or encompasses many other days

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why the best place to invest never changes. This topic is something that’s I’d say near and dear to my heart because I love learning about different investment vehicles. I’m a student of finance, history of finance and investment and markets and cycles and what I’ve learned over time and definitely over my experience not only trading, but also investing in private companies, real estate, stocks, everything, IPOs, I've learned that one thing really never changes when it comes to investing and it comes down to finding a place where you can get the highest risk-adjusted returns. And so, this is really a key because it's not just about getting the highest returns. I think many people would look at investing and say, “The best place to invest is where you can get the highest return.” But it’s not just about return. It's about the highest risk-adjusted return, factoring in components li

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about the best stocks to buy. Oftentimes, people always ask me or they’re searching online and I see these results pop into the Option Alpha search bar, but everyone's looking for the best stocks to buy. And so, I wanted to offer at least my opinion when it comes to actually purchasing stock. I think the first thing I would say is that if you are going to purchase stock, it’s okay to have really big convictions, but do it in small doses. Oftentimes, I think people get really wrapped up in a particular company or a particular sector and they’re very bullish, they’re very optimistic on them and that's okay. That's a big conviction. But just do it in small doses. Don't over-allocate. As always, as a general rule of thumb, don’t over-allocate into any one particular sector or company or industry just in case the bad things that could happen, happen to that particular company or sector or in

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about how you can get started trading options in a Roth IRA the right way. A Roth IRA is just simply a retirement account which you’ve already pre-paid your taxes. And so, you basically cleared the tax hurdle pretty early in the process. And this is why I really like Roth IRAs, is that you pay taxes, you then contribute what's left over after taxes to this IRA account and as a result, now you have a vehicle that grows tax-free and the distributions later on are tax-free as well. When you get started trading options in your IRA, the first thing I think you have to understand is that you have to play the long-term math and the reality is that you’re forced to do this anyway. The beautiful thing about trading options in an IRA account is that you might have to be trading for 20 years or 30 years or 40 years before you actually come to a point at which you can start taking distributions and

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about which option strategy to use and why. I think one of the biggest challenges for most traders is the question of – Which option strategy do I use? And while many people would default to using the exact same strategy in every environment, I think that what you have to do is you have to choose the strategies that work best in whatever environment you are currently in and that sometimes can mean tweaking an existing strategy or using a different strategy altogether. What I see people doing more often than not is they use the exact same strategy no matter how far they are from expiration. For example, they would sell a 30 Delta strangle and it doesn’t matter if implied volatility is low, it doesn’t matter if implied volatility is high, it doesn’t matter if they’re 30 days from expiration or two days from expiration, they’re selling a 30 Delta strangle. And while that might work over th

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, I want to cover my top three benefits of trading. Now, when I talk about these three things and I'm talking about trading, I mean broadly speaking. This includes all types of trading. Whether you want to trade stocks, whether you want to trade options or futures or Forex, I think any trading capacity has these three things that become to me, what are some of the most critical benefits of trading. The first is agility. Agility is a lot of things wrapped up in one. It's the speed and the flexibility to move between different products very quickly. The ability in a trading environment to stop trading oil and immediately within two minutes, start trading natural gas or gold or silver or some index or tech company is unprecedented. There's no other place in the world as an investor where you can quickly move such a large chunk of capital and money from one industry sector or security to another in literally the snap