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

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 DNA of an options trader. And so, to me, the DNA of an options trader is really two things. This kind of stands for two things. There’s the first type of trader which is the “do nothing” approach trader which literally just sit on the sideline and they don’t actually engage in the market or when they do engage in the market, it’s very sporadic. They might make a couple of trades here and there, but they’re really looking for that perfect opportunity, that perfect window to make a position or to enter a trade and we know that that’s not always going to come. By default, their “do nothing” approach or mostly “do nothing” approach leads them down a path where they make fewer and fewer trades and the problem with this is that as they make fewer and fewer trades, each and every one of those trades becomes more and more important. I’ve often used the analogy before, but it’s worked

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 options traders are addicted to prediction. And it’s not necessarily just prediction in and of itself. It’s really surrounding this whole idea of seeking certainty and trying to avoid things that are uncertain, so everyone and especially traders and investors are addicts for prediction. And we’re trying to figure out where things are going to go and where they’re not going to go and what possibly it could be. Things like the weather, right? We try to forecast out the weather, but we all know that forecasting the weather even just a couple of days in advance is really almost impossible to get it totally accurate. But we try to do that. We try to forecast stocks or who will win the Super Bowl, what President is going to win the election, what’s for dinner this week. We forecast everything and we’re trying to create a level of prediction that gives us certainty and helps us avoid

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 procrastinators are incredible winners. Yeah, I actually said it. Procrastinators are highly successful people and incredible winners and they’re winners because as being a procrastinator, they continue to put things off until the point at which they have no time which by default, is exactly what they wanted to do. Their brain is so hardwired to be a procrastinator that they literally are doing exactly what they want to do which is put things off until there’s no time left because they’re a procrastinator. And that doesn’t mean that they’re bad people. It just means that they’re literally hardwired to do this. They’re actually winning at the thing that they want to do on a subconscious level. Now, we all know people who are like this, right? Your brother, your sister, your in-law, maybe a spouse where they just seem to put things off until the last moment, but the reality is t

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 late expiration reversals and why they are more common than you think. I think a big misconception in this industry is this idea of getting out of a position quickly or too quickly before you actually reach expiration, but the reality is that the probabilities are calculated all the way to expiration. Now, I tell people this often in email when they email in say three weeks or two weeks before expiration and the position’s going sideways or it’s not profitable. They ask, “Should we get out of the position? Should we adjust the position?” Many times, you shouldn’t do anything because the probabilities did not say it was a 70% chance of winning three weeks before expiration. The probabilities suggest that it’s a 70% chance of winning at expiration and that’s a really important distinction because many people think that if a position is losing and it’s two weeks before expiration tha

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 gold’s massive rally lately and why it has stalled. And not necessarily why it has stalled, but just the interesting concepts around stalled moves like this that we typically see as options traders and what it might mean to you going through some of the examples that we’ve seen in the last month and a half or so in trading. The time I’m recording this podcast, it’s the end of July. We’re coming up on the FED announcement. Everyone’s expecting that the FED is going to cut rates by some margin and it’s just now what’s going to be the guidance moving forward. And so, obviously, that could move the markets, but what we’ve seen generally in the gold market over the last say two and a half months or so is we’ve seen a lot of sideways action in trading. And so, that two-ish months that we’ve seen in gold of sideways trading is followed by this massive rally that gold has had. Gold was or

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 two best times to start trading. And this actually comes from an old proverb, but you probably heard this before, but the best time to plant a tree is not only today, but also 100 years ago. The idea around trading is there’s only two best times to start trading. The best time was probably 20, 30 years ago. You could actually start the process of trading, even 10 years ago or five years ago, sometime before in the past. But the second best time to start trading is today because as soon as you start trading today, you start setting yourself up for success in the sense that you start building out your trade count and your allocation that works in your favor once you start to apply the law of large numbers. Now, you can only get to 100, 200, 300, 400, 500 trades if you start making trades today. The best time to start trading was 10 years ago or five years ago or sometime before

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 those people who are great starters, but poor finishers. And look, I admittedly put myself into this camp as well because we all have been down this path where we try to start something and we are super, super motivated, we do all the right things, we set ourselves up for success and then for whatever reason, we just fall off the man wagon, right? And so, I’ve done this before a number of times with definitely meditation in the morning. I do really good for a couple of weeks and then I start to fall and then I have to get back on the horse if you will and regroup and start building new habits again. That’s a continuous one for me. I know a lot of people who have the same thing with eating and going to the gym or physical fitness and especially in the world of options trading, it’s very easy to get very excited and then quickly just fizzle out. And so, when I talk about this, it’s

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 an interesting concept that I think was presented to me in a book that I was reading. I literally can’t even say the title of the book because it would use curse language and I know that this podcast is always one that doesn’t have explicit language. But the author is Gary John Bishop, so if you want to go look up the book, you can. It’s a really, really cool book actually. Both of these books have been really amazing to listen to in here. But one of the things that he said in the book which really resonated with me was this idea of – You have the pain you are willing to deal with. And I don’t know why it was just like that particular way he said it, but if you think about it, the idea of choosing what type of pain you’re in is really empowering because if you don’t choose anything, that becomes a choice. Not choosing is a choice. If you’re in pain right now because you feel unhea

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “Should you avoid trading ETFs with dividend assignment risk?” We recently went through… In fact, we always go through this every three months or so for most of the ETFs that we trade. We go through this period where they go through dividend assignment. And so, as a result of that one or two or three-day period where it gets really, really active with positions, we have to analyze whether our positions are at risk of assignment or not. In some cases, they are and in some cases, they’re not. This means that in some cases, it might be more beneficial to close the position and move on and just continue trading it the next month. The question always pops up which is why I’m doing this podcast, “Should we just avoid ETFs with dividend assignment risk?” And the simple answer to this is absolutely not. Dividend assignment risk is but one small, small component of things that we

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 you’re building wealth every day, but for whom? And I thought this was a very thought-provoking question, one that I read in a book recently and I thought I would bring it on here to the podcast because I think it could allow you to maybe step outside of your shell for just a moment, look at the bigger picture of what you’re doing and really make sure that in totality, all of the activities that you do create a net opportunity for you to build wealth for yourself and your family and the people you care about more so than other people. Now, does this mean that it’s bad to help other people and to work for a company where the company is making money and you’re getting paid as an employee? No, it doesn’t. But it means that you should be looking at all of the activities that you do on a daily or yearly basis and ask yourself the question, “Am I generally building wealth for myself

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 number one lesson investors should take away from Uber’s failed IPO. And I do think it was a failed IPO. I think in many respects, they were anticipating to do a lot better and clearly, they did not do as well as they expected especially right out of the gate. And this is a really good learning opportunity for a lot of investors because I think what many people assume is that when a company IPOs, even companies as big as Uber and as publicly known as Uber, that when the company IPOs, that immediately, it’s a great opportunity to make quick cash. And we’ve seen this time and time again where people buy into the IPO just to see massive losses quickly in the first couple of days of trading and the problem with this is the assumption that all IPOs are this great environment to make a quick buck. But when you look at Uber’s failed IPO and many other IPOs… You can just single in out

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer a question, “Should you wait for a bounce to start selling covered calls?” This is a big one. And the one that I struggle with honestly as well a lot of times is if we get assigned a series of put options and we get basically put the stock and now, we’re long stock, if we decide to hold the stock, the usual trigger for me is to start selling covered calls immediately, but many times, we’ve actually been in a situation where we wait for the stock to have a little bit of a bounce or rally before we start the process of selling covered calls. Now, using covered calls is a great technique to reduce the cost basis on the shares, bring in more credit, ultimately lower your breakeven point to give you an opportunity to take the position off at a profit. And we’ve done a lot of podcast on this process and how we do this on the weekly show, so if you want to go back through the weekly podcast, we ha

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 SPX options settlement. When you’re trading options and you start gravitating towards larger products like SPX compared to SPY, the option settlement can be just a little bit different. I want to talk specifically about how SPX options are settled because I know that there’s a lot of confusion out there about it and it could probably help you and in many cases, it could help you avoid something that you wouldn’t have expected otherwise relating to the last trading day versus the actual settlement value. The first thing you have to understand about SPX options is that they’re cash-settled. These are European-style. You can’t exercise them early because there’s nothing really to exercise. You don’t get underlying shares of SPX because SPX does not trade underlying shares. It’s all cash-settled. This actually makes it a little bit easy because a lot of people like trading SPX. You do

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 your feelings got you in trouble. Your feelings always get you in trouble with investing. And don’t lie to me because I know. I’ve been there too. We’ve all been in the same situation where we’ve gone through an event where we had some sort of gut-wrenching feeling that made us act a certain way and that ended up to be a terrible decision. But the problem with investing is that a lot of times, we’re forced by just most of the technology that we use right now to make decisions based on feeling, things like, “I think that Apple is going to go higher.” or “I think that Facebook is going to go lower.” or “I think that the reaction to some government report is going to be this which is going to cause the market to do X, Y and Z.” right? All of these feelings that you have about the market mostly get you into trouble and the same thing could be said not only about trade entry, but a

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 death of retail investing. Now, we know that this has been coming and I’ve been saying this for many years now, but the death of retail investing is coming faster and faster and faster and what we know traditionally from history is that retail investing has had a couple of shifts in power. We’ve seen originally in the early 1900s up until kind of like the mid mid-1900s, most of the power was consolidated in the brokerages and the banks, so you couldn’t really do anything as a regular retail investor unless you had a broker or a bank or a relationship. You would call them, you would send in your orders and they would get executed in the market. And as we started to gradually make our way towards let’s call it the last 50 years of the 1900s, we started to see a shift in the way that people traded and invested. They started to not require necessarily a bank to do all their transa

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 prosperity and scarcity. Today’s topic actually kind of peeked my interest because I was listening to another podcast and the guest that I was listening to on the interview there basically said, “As far as I know, the government keeps printing money, so we’re always going to have this abundance of money.” And I thought to myself at the time, “Well, that’s a pretty interesting idea.” Because a lot of people, they have a problem with other people’s prosperity and I think this actually comes from a sense of scarcity or a scarcity mindset that if someone else has something, therefore, I cannot have something, but it’s just really not the case. And if you really come from the mindset of prosperity and growth and not from a scarcity or a victim mindset, then you’re probably never concerned with what other people have or at least you shouldn’t ever be concerned with what other people hav

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to actually look at another simple Apple call option example. We actually did this a couple of podcast back. I thought it was good, we could look at another one again here today and look at call options in Apple. Apple is a really popular stock. Everyone loves call options. We’ll look at it in two different cases. We’ll look at a simple selling of a call option and then we’ll look at option buying examples. And again, the idea behind doing this is just so you get at least some frame of reference for how this might work in the real world. We talk a lot in theory here about how option pricing works and how option contracts work, but sometimes it’s really important just to kind of get a real world example of what’s going on and what we could potentially do with an option contract. Remember that options are meant to be there to let you choose how you want your risk payoff diagram to ultimately look like.

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 abundance occurs in stages. This is actually really interesting and very timely for this because at the time that I’m recording this right now, my daughter caught a caterpillar like many, many weeks ago and the caterpillar is finally going through like all of its cocoon stages and it’s starting to break out and starting to try to break out of its shell and become this butterfly, right? And so, she has been wanting to go into the little cage that we have setup for it and try to help, right? She sees… And she’s a kid and she’s five years old and she sees that this thing is kind of struggling and pushing on the sides and it’s not really breaking out just yet, but she wants to go in there and she wants to help. She wants to peel back kind of the layers and help this butterfly get out and she wants to see basically all of her hard work in taking care of this caterpillar come to fru

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 Delta of an option contract. Delta’s an incredibly important Greek for option pricing and for options traders in general. In fact, if you’ve listened to any of our podcast or watched any of our videos anywhere online over the last 10 years, you’ve probably heard me say that word, Delta a number of times and that’s because we use Delta as a good guidepost and reference for building out strategies and using different trading techniques. Now, what many people don’t know or they falsely assume is the reality, is that the Greeks are part of an option’s price, but the Greeks are actually not part of option pricing at all. The Greeks are only used to estimate what an option price might do in the future reacting to a specific market environment change. All Delta is trying to do is Delta is trying to basically tell us what amount of money the option contract will move based on an expec

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering a common question we get which is – “The stock moved the right way, but my option lost money?” And so, this is a common question that people get, especially people who are starting out trading. Even some experienced options traders I think fall quickly into this little pitfall of not understanding really what’s happening with the position or just maybe losing sight of what’s happening with the position. But let’s say you get into a position and you’re anticipating that the stock is going to make a big move higher and you get that big move higher, but your option contracts lose value. And this can be frustrating, I get it, because you’re positioned for that move, you’re expecting that move and then you actually predict or assume that the stock is going to go higher and you do it correctly, but you get a loss in value for your option contract. This can be tough because it’s probably one