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

Hey everyone, Kirk here again and on today’s daily call, I want to talk about why “buy the dip” is terrible investing advice. This is something I’ve mentioned before on a Facebook Live we did a couple of months ago, but it's worth repeating here because we continue to see people fall into this terrible, terrible investing advice trap and that is this “buy the dip” mentality. Where does this come from? This comes from this idea that when the markets go down that that is always the best opportunity to buy up more securities. In fact, recently, just a couple of weeks ago, we heard this with Facebook when they announced earnings that it was a “buy the dip” type of opportunity or if Tesla goes down, it’s a “buy the dip” type of opportunity. But here's the problem with “buy the dip” when you trade options and when you’re truly neutral. Let's assume that your portfolio right now and the stock is trading let’s say around $100. Let’s say your option position around that security is totally neutral. You’ve got position

Hey everyone, Kirk here again and welcome back to the daily call. On today’s daily call, I wanted to tell you guys how you can hack discipline and find success quicker. As simply as I can possibly state it, hacking discipline and finding success comes down to one word and that one word today is accountability. This is something that… This really gets to the heart, truly the heart of why I continue to run Option Alpha. We talked about it before in the past, but it’s worth mentioning again. It’s that I do not need to run Option Alpha. There’s no financial reason for me to run Option Alpha. I don’t need the money. I’m okay. I’m very comfortable in our living situation. I don’t have millions of dollars, but I’m very comfortable doing what we’re doing and I don't need to run Option Alpha. But I’ve often told people… One of the reasons I continue to do this is because I basically have 79,000 accountability partners now. I have got members from all over the world, from all walks of live, different ages and they keep

Hey everyone, Kirk here again and welcome back to the daily call. Today, we’re going to talk about the difference between swing trading and day trading. I think the difference between these two is very subtle, but I think people often get it confused, especially if you’re new to trading, whether it’s options trading or stock trading. But here's the reality. Swing trading to me is the ability to trade a security, whether with options or with stock within a range over a shorter period of time. We’ll not necessarily define that shorter period of time because it could be over the course of a couple of days. It could be over the course of a couple of weeks. I’ve often talked to people and I ask them. “Are you a swing trader?” They say, “Yeah. We swing trade the markets monthly or yearly.” Other people might swing trade the markets on a weekly basis, on a multi day basis. But it’s just this idea of trading the market in its random ebbs and flows. I’ve really honestly consider myself to be more than anything probabl

Hey everyone and welcome back. This is Kirk here again from Option Alpha. On today's daily call, I want to talk about overcoming self-imposed and cognitive limitations. I know that seems like a lot, but I think it’s going to be an interesting concept and topic. Also, today is my daughter’s fourth birthday which is very crazy. I can’t even believe she’s four already. Actually, she’s 16 to some degree, but I’m sure it’ll get much worse as she gets older and into the teenage years. But she’s a wonderful person, I love Molly to death and she makes me laugh all the time, so happy birthday. Again, today, we’re talking about overcoming self-imposed and cognitive limitations. What does this basically mean? This basically means that self-limitations are imposed on us by our brain and people don’t know this. I geek out about this stuff a lot because I’m a student of success, I’m a student of habit, I’m always trying to look for ways to improve and I love the whole self-improvement, self-awareness type of feel right now

Hey everyone, Kirk here again and welcome back to the daily call. Today, I want to talk about how you can learn options trading in three months. This is actually a podcast that we did almost originally is like I think one of the first 10 podcasts that we did on our original weekly show. But the reality is that since then, we've actually released our tracks which if you haven't been through the tracks, if you’re new and getting started with options trading, what we’ve done at Option Alpha is we’ve released three individual tracks. Tracks are basically these guided learning paths that you’re going to go down. It takes you from not knowing anything about options trading all the way at hopefully doing this as a professional business, at home, by yourself or whatever the case is. We’ve divided up these tracks into the three modules or the three different paths that you want to take, beginner, intermediate, advanced. It’s literally designed for you to go from start to finish. Now, I say three months because obvious

Hey everyone, Kirk here again and welcome back to the daily call. On today’s daily call, I’m going to ask you the question – “Do you have kamikaze trading characteristics?” The reason I said this is because I often have called people “kamikaze traders” because I feel like they do basically like one of five things with their trading and it really is like a self-sabotage to their trading success. They basically cut themselves off of the needs, they throw themselves at the mercy of whatever they’re doing and really don't think logically through things. I want to bring these things up not to criticize, but to hopefully bring to your attention maybe some characteristics or some qualities that you might have recently felt or maybe someone who looks like you, acts like you, but is definitely not you in any way, shape or form, a friend that looks like you, acts like you, etcetera might have been doing recently. Again, bring it into the forefront of your mind. The first one I think I think, a kamikaze trading characte

Hey everyone. Welcome back. This is Kirk here again at Option Alpha and welcome back to the daily call. On today's call, we’re going to talk about the pros and cons of using a market order when trading options. I think a market order is a very simple concept to understand. It’s a very simple way to get trades into the market, but I think that there's a lot more drawbacks than there are potential pros, especially for an options trader as opposed to potentially doing this on stocks. Where you find many people using market orders is with stock. Stock I think is okay to do a market order, especially if you’re trading a highly liquid underlying because typically, the bid ask spread and the liquidity is so great that a market order gets filled basically at decent pricing or at market pricing. But where we typically run into issues is when people start using market orders with options. First, let’s understand what a market order is. A market order is basically telling your broker’s platform or your broker that you l

Hey everyone, Kirk here again and welcome back to the daily call. On today’s call, we are going to answer the question – “What is Theta decay in options trading and more importantly, how does it work or what do you need to be aware of?” Put very simply, Theta decay is one of the Greeks that’s involved in option pricing. Now, it doesn't tell you what an options price is, but rather, tells you what the options price could do over time as different factors change. Theta specifically refers to the time decay aspect of an option contract. I always think about it as E for Theta and T for time decay. That’s just a very simple way to associate them together. The time decay aspect or Theta decay of an options contract basically means that as options contracts near expiration, near their expiration date, they start to lose value at a faster and faster pace. It’s because the option contracts are wasting assets, meaning they have a finite life. They expire or end their life cycle at different expiration dates in the futu

Hey everyone. Welcome back. This is Kirk here again at Option Alpha. On today’s daily call, we’re going to answer the question – “How many stocks should you watch or trade at a time?” I think this is a hot topic because people get started into trading and not quite sure what activity level they should have with stocks or options. Should they be watching just the indexes or ETFs or should you be watching everything all at once? Now, on the furthest extreme, we know that we can’t just watch one individual stock or ETF. We know that we have to be watching more than that if we want to get a good idea or a breath of the market. On the other furthest extreme, we know that we can obviously watch everything, so what do you watch? I think the short answer to this is you watch the things that are liquid and the things that are tradable. That’s what I watch. I’ve narrowed down our watch list over time to about 80 or so tickers that are on the list. That doesn’t mean that we monitor each and every one of them every singl

Hey everyone, Kirk here again from Option Alpha and welcome back to the daily call. In today’s daily call, we’re going to answer the question – “Does buying or selling options affect the stock’s price?” I think I got that right. I checked with my wife. That’s affect, not effect. I hate those two different words. That’s why I like options trading and math where you’re better than writing and grammar. But anyways, I think the question comes up a lot because people think that the options market drives a stock’s price. The reality is that in most cases… I would say in most cases because I rarely doubt that this is ever the case. But who knows if people see option activity and then as a result, change their dynamic in buying stock. But options are derivatives of stock pricing and stock underlyings which means that they derive their value from stock, but they are not necessarily tied to the stock’s price. In fact, we see this a lot where an option contract will go up and down in value because of the implied expecta

Hey everyone, Kirk here again and welcome back to the daily call. On today’s daily call, I want to talk about our investing activities outside of the stock market and how we invest in rental property, particularly the newest 34% ROI investment property deal that we just picked up literally last night, so this is fresh on my mind. But many people have often asked and we often do talk about what we do on the outside of options trading, although the vast majority of what we do is obviously tied up into options trading. What we have done previously and have continued to do for I think like going on seven years now, we’ve continued to buy rental property at really all stages of our life. When me and my wife first got engaged and we’re engaged to be married, we actually bought one of our first rental properties. The first property that we truly own together as a married couple eventually which was just a small condo outside of DC and then just have continued to buy rental property here and there as we find good dea

Hey everyone, Kirk here again and welcome back to the daily call. On today’s call, we’re going to talk about what to do when your short leg of a put spread is assigned. First of all, I think a lot of people actually just first freak out. Maybe that might be the first thing that most people do, is they just freak out which is not what you should do. You should not freak out obviously. It's totally manageable. You can work through it. There’s nothing to freak out about. Maybe the first step is – Don’t freak out, take a deep breath, calm down, maybe walk away from the computer or email for a minute and then come back. The reality though is (and we’ve said this before, but it's worth saying again) most of our positions that we trade, the vast majority do not go through assignment on our short strikes. When we go back and track it, it's like 1% or less over time that we actually get assigned and most of that assignment happens closer to expiration. It's totally something that's not likely to happen, although I wil

Hey everyone, Kirk here again and welcome back to the daily call. On today’s daily call, we’re going to answer the question – “Should you run all option trades through the trade optimizer?” This question comes from David Tunney who asked this question and he said he was looking at the trade optimizer and the toolbox software and just wondered like – “Do we run all of our trades through the optimizer?” The short answer to this is – Yes, we do. Other than the fact that now I’ve run so many trades through the optimizer, I’m generally getting a better feel for what works in different market environments. I would say though that – Do you need to run all of them through the optimizer? You can totally guess and you can totally wing it and do it. But the reason that we built the optimizer and the reason that we did so much back testing was so that we had a better understanding of when and where trades would be more efficient or optimized as far as strike prices, profit targets, stop losses if any stop losses, etceter

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. On today’s daily call, we are going to answer the question – “Can one big losing options trade wipe out your account?” The short answer to this is maybe. I’ll say this real quick before you exit the podcast and stop listening. It’s that it definitely, 100% is determined upon your trade size. I would say if you’re listening to what we do and we say 1% to 5% of risk per trade, then one big losing trade should never wipe out your account, really never wipe out your account. Now, I’ve seen a lot of people where they have had their accounts totally wiped out and guess what? They should, frankly speaking. I’m speaking to you if you’ve had these big trades and you know that they’ve been big trades and you got greedy and you know you got greedy. Don’t lie to me and tell me that you didn’t know it was going to happen, that you assumed it wouldn’t happen. That’s like taking all of your wealth and buying lottery tickets and assu

Hey everyone. Welcome back to the daily call. On today’s daily call, we want to talk about the two major reasons why you shouldn’t trade covered calls. Now, we talk about covered calls before on this podcast, also on our regular podcast. Covered calls are a great way to transition from stock trading to options trading. In fact, it’s something that I suggest that people do or at least start exploring because it's a very smooth bridge between the two I guess ways of trading, the two systems of trading. But the two major reasons why you shouldn't trade covered calls the more you learn about them even though you might start doing that initially as a good bridge or a good segue into options trading, is that one, stock is still incredibly inefficient and capital intensive. This is the first reason. Stock requires a ton of capital to purchase and to do a covered call, you have to own at least 100 shares for each covered call that you sell. For us, stock is incredibly inefficient and very capital intensive. Especiall

Hey everyone, Kirk here again at optionalpha.com. Welcome back to the daily call. On today’s call, I want to do something a little bit different. I recently got a question from somebody who had listened to our original podcast, podcast show number 24 which was a long time ago, a couple of years now, maybe three years ago that we actually released this show and we talked about what I was doing in peer to peer lending, specifically with my lending club account which is where I had done a lot of peer to peer, P2P investing activity. I wanted to do a podcast where we did an update on this. I think it’d be important to talk about because I think I’ve made some changes to the way that I do things and I think that might be helpful. The original show like I said was number 24, so if you want to go back and listen to it, you can. I’m going to cover just the highlight of where things were at the time. But at the time that we did the show, we were generating after adjusted for losses on notes which if you’re not familia

Hey everyone, Kirk here again at optionalpha.com and welcome back to the daily call. Hopefully you guys had a really good Thanksgiving yesterday. Today, I figured why not talk about how Option Alpha makes money. I think that this is an interesting question, one that we… I don’t know if we've talked about specifically like this in a targeted format. We talk about it all the time because people ask and people ask via email and so, I have lots of responses where I tell people how we make money and I think it's important to just openly tell you guys where we’re at because if you’re part of our community or want to be part of our community, should you know? I would want to know. I often ask people who are running other websites like, “How do you make money? How do you keep the lights on? How do you generate income, etcetera?” I want to first take a step back and tell you the progression of where Option Alpha is because I think it’s important that you understand how things have progressed over time. I’ve actually b

Hey everyone, Kirk here again at Option Alpha and happy Thanksgiving. On today’s daily call, we’re going to be answering the question – “Should you only trade highly liquid options?” First before we begin, very happy Thanksgiving to you. If you’re listening to this on Thanksgiving, I appreciate the support on a holiday. That is by no means what I expected. But my goal and my promise to you guys has always been to get out a new show every day, so Thanksgiving is no exception. But I want to take one moment to say I do appreciate each and every one of you. This has been a long, long journey for me and something I plan on doing for a long time. I thoroughly enjoy being here. I love running Option Alpha. I love meeting the people and interacting with a lot of people online. It’s definitely a work of passion for me for sure and something that I don't necessarily consider to be work because I like doing this. I like talking about the markets and so hopefully, you enjoy everything that we do. Again, I just want to sa

Hey everyone, Kirk here again and welcome back to the daily call. On today's call, I want to briefly just let you guys know how you can get your options trading questions answered. People have questions all the time and I totally get it and I love that people have so many different questions that they ask. I literally get different emails every single day, hundreds of them, but I do get different emails. The thing that I want to let you guys’ know is I want to answer your questions. I want to answer them as best as I possibly can. There’s two ways that I suggest that you contact me if you want to get your questions answered or hear them here on the daily call podcast. The first way is you can just simply reach out to me on social media. That's through Twitter, Facebook, Instagram, YouTube, whatever you want. We’re everywhere at Option Alpha. Just reach out to me. Leave me a comment, leave a question. We’ll try to make sure that we get it answered or at least, queued to get answered in one of the daily calls o

Hey everyone, Kirk here again and welcome back to the daily call. On today’s daily call, we’re going to talk about how to setup an iron condor trade. Iron condors are more complex, more advanced option strategies. It’s a more complex with I guess an asterisk because it's really just a couple of more contracts. It’s actually a very simple strategy. But for a beginner, it might be a little bit overwhelming, so I want to talk through the basics of how we set it up and then I would give you some guidance on how you can figure out what strike prices to use, how far to go out, how wide to make you spreads, etcetera. The basics of an iron condor is really this. The whole strategy pins itself on capturing the stock within a range. I think about an iron condor as basically this big net and we’re trying to let the stock move, but still stay within our ranges, our range bound net. We’re trying to capture the stock and catch it inside of a bigger than normal range. To use and start using some numbers to put this into ter