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 well-researched unimportant trades. And I like this terminology because I thought about this the other day when I got an email from somebody that all of this research that somebody sent me and it was like a book report that I got through email which by the way, I do not read all of those and this one, I was able to very quickly discern the problem in the first couple of paragraphs because basically, what this person emailed me is they said, “Kirk, I’m looking at this trade and it’s got low liquidity, but…” And then a book report kind of followed after that. And what I know to be true and two truisms that I’ve talked about here on the podcast before, is that doing something unimportant well does not make it then magically important. The fact that they did all of this research on this company and why it was going to go the direction it was going to go and why the option trade was so

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 productivity of squeezing oranges. Yes. How in the world does squeezing oranges relate to options trading? But I can promise you that it does if you pay attention and listen to this podcast. When we think about squeezing an orange, what actually happens when we squeeze the orange and we’re trying to get juice out of it? What we realize is that when we squeeze the orange, we get the most juice out of it from the initial squeeze. Say 50%, 60%, 70%, 80% of the squeeze generates all of the potential juice from that orange. But then after we’ve squeezed it and we’re trying to squeeze it harder and harder and harder, the output from the orange becomes less and less and less. If you’ve ever tried to squeeze an orange and if you haven’t, do it today and just send me a screenshot or send me a picture or post it on social media. I’d love to see you guys squeezing oranges and posting it

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, I just want to talk about what a nightmare our account moving process has been from Ameriprise. I’m just going to say like I don’t know how many of these brokerages are still in business and in particular, the process of moving my wife’s 403B account from Ameriprise has literally been a complete and utter nightmare. In fact, at the time I’m recording this podcast, it has now gone on about three and a half weeks that we have been actively trying to move this account from Ameriprise over to TD Ameritrade and the process has been a complete nightmare. And I don’t understand how it’s that case. I don’t understand why there are so many loopholes we have to jump through and different people we apparently have to get approval from because they were the original advisor to the school’s plan when she was a teacher before, but I just don’t understand how an entire industry can be built around this right now and still func

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 shouldn’t avoid trading options in low volatility markets. It’s a big misconception that’s out there, something that we have dispelled previously in our profit matrix research. There’s a number of other companies and hedge funds out there that have also put out research on this that dispel the same common myth and this myth is that in low implied volatility markets, we should avoid options trading, in particular, option selling that now, in low implied volatility markets, the odds and the edge switch to option buyers, but it’s just not the case. The reality is that in all implied volatility levels, the edge is still going to the option seller or the premium seller for the potential risk in the trade long-term. Does this mean that in low implied volatility markets, you could lose money as an option seller? Yup, for sure. You could definitely lose money in low implied volati

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 knowing is not enough and why we must act. This is going to be an interesting one because I often feel like people who actually put their positions on and don’t just have broad opinions are the people who I respect a lot more. And I think I try to do this with my positions because I open myself up every single day to criticism and people looking at the positions or the trades that we make because we publicly make them available after 20 or 30 days and post them on YouTube and put them on our website, all over the place. And so, it’s sometimes hard because you get a lot of criticism like – “Why did you do that?” and “Why did you do that?” and “Didn’t you know that the market was going to go down or sideways or up?” And the reality is that if you know something is going to happen, but you don’t actually act on it, then it’s not necessarily something I want to follow or something

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 it’s okay to have bad days, just don’t have bad weeks. I thought this was actually a really interesting quote and I’ve heard this before and it’s part of my daily affirmations list that I read that it’s okay to have a bad day here and there, but it’s just not okay to have a consistent rhythm of bad weeks. Oftentimes, we’ll have a bad day trading where the market just doesn’t go our way or a position that we were trying to get adjusted, we couldn’t get adjusted in time and it goes completely opposite of what we were trying to do. And that’s fine. That’s going to happen. We know that these events are not going to work out perfectly every single time. The reality is though, is that we can’t have a consistent rhythm of bad days and bad weeks. We need to make sure that we keep ourselves positive, we keep ourselves moving in the right direction and focused on our goals and our outli

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 shouldn’t lose sight of macro-economic trends. Now, by the time that this podcast goes out, very soon or even if you’re listening to it back in the historical archives, the podcast would’ve been out, but we interviewed a great set of guys that run a hedge fund over at Crescat Capital and what I loved about this podcast interview that we did with them was that we focused really on macro-economic timing and models. And I thought this was really interesting because what I often tell people is that you don’t need to know everything about every macro-economic indicator out there, but you should have a good understanding and have your head above water (if you will) of what’s generally going on in the economy and the global markets. And so, when you lose sight of these macro-economic trends, that’s when I think potential black swans hit your account that you didn’t see coming t

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 private investment?” A private investment is actually just the complete opposite of a public investment. As options traders and as stock investors, we generally trade in the public markets. This means that all the options and all the stock of all of these underlying companies and ETFs and indexes are publicly available. Anybody with a brokerage account can come into the public pool and make an investment or purchase stock, purchase options, sell stock short, sell option contracts in the public environment. When you switch over now to private investments, private investments are done on a one-by-one basis and this is many times where real estate transactions happen, this is where many business transactions happens on a person-to-person or business-to-business basis where people are dealing with each other individually. You can still make private investments. There’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 why you cannot exercise an option without the money to actually hold stock. This is actually really kind of a two-part question today because I think what people often have as a misconception is that when they get assigned stock or when they trade an option contract, they have to have the money in place to hold the stock and that’s not necessarily the case. The reality is that if you trade option contracts and you don’t have the underlying capital to hold the stock, that doesn’t mean that you can’t trade the contracts. It only means that if you are assigned or if you exercise the contracts, you’ve got to be able to have the capital in your account to continue the trade. Now, brokers know that in many cases, a lot of people sign up for a brokerage account with $3,000, $5,000, $10,000 and that’s not enough to hold stock in all of these different option contracts. This is why brokers

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 – “How to fix a losing short call option trade?” As we’ve talked about yesterday where we’ve talked about fixing a losing short put option trade, today’s discussion is exactly the same, except it’s in reverse. And again, as a disclaimer, we’re assuming here that you did all of the right things before you actually entered the short call option, things like properly adjusting your position size that you’re not taking on too much risk, selling options probably close to the money, but not necessarily at the money or far, far out of the money, so somewhere around a 15, 20-ish Delta potentially, you’re selling options out of the money and you’re using the right risk metrics. Now, assuming you’ve done all of these things right, there’s again, two ways you can fix a short call option trade or hedge the short call option trade. The first way is to create a spread. Creating a spread woul

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 – “How to fix a losing short put option trade?” This first, is assuming that you’ve done everything right up into the point of actually entering the short put option trade. Things like properly adjusting your position size, not incurring too much margin relative to your account, so that you don’t over-allocate it. This means selling a put option probably fairly far out of the money, not necessarily a 10 Delta, but maybe a 15 or a 20 Delta, so not right at the money, but fairly far out of the money. And assuming all of these things are in place and the stock starts to go against you, there’s potentially a couple of things you can do to fix or adjust/hedge your put option trade. The first thing you could potentially do to hedge the position is simply to buy a put option at a lower strike price than the put option that you sold. This will in effect, create a credit spread trade an

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 – “Why did my call options decline on positive earnings?” This is a very common thing to happen for new traders who are playing a potential big move after an earnings event. And so, many times, people will buy call options heading into an earnings event, expecting a very big move in the underlying stock and in many cases, they might actually get the very big move in the underlying stock. Maybe the stock gaps up 5% or gaps up 3% or has a big rally during the day because of a positive earnings announcement. But the problem that they see is they see that their actual call option that they purchased declined in value. And so, the question now is – “Well, why did that happen?” When you pick the direction right and you have a call option kind of ready to go, waiting for a big move in the underlying security and you get that big move, why do you then potentially lose money becau

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 StockTwits launches their first commission-free trading platform. This is actually no surprise to me and in fact, I talked about this a number of months ago. My prediction is coming true that I thought that at some point in the future, all brokers are going to start gravitating towards this commission-free trading model and StockTwits being another new brokerage that’s now coming out is going to be offering commission-free trading. Now, at the time that I’m actually doing this video and this recording, there’s actually no platform that I can see. The only thing I see on their website is that the new trade app is coming and I just have to be informed of updates. I don’t know what it looks like. I don’t know exactly how it works or what the actual underlying background is, but they definitely tout it as being commission-free trading experience for stocks and potentially maybe op

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 daily expiration option contracts are coming. We’ve all heard about the big trend in weekly options contracts that have really been kind of growing in popularity, but the reality is that the next iteration from weekly contracts is going to be daily expiration contracts. Yes, contracts that open and/or expire on the exact same day. Now, this I think will be a big trading vehicle for a lot of people in the market and I’m interested to see how this plays out in the future because I think the market for options is going to continue to grow and I think that daily contracts actually do serve a very unique purpose which I’ll talk about here in a second. The reality is though, is that it’s already happening in the Euronext AEX index options. They did actually release a couple… I think it was a couple of months ago or even a couple of years ago. They released some daily index products

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 – “Can I be assigned on an option contract even if it’s out of the money?” This is a common question that a lot of people have and I think the root of this question is just the fear of assignment. Most people actually fear that when the option contract goes in the money, that immediately, the option contract is going to be assigned. Now, we know that’s not the case and we’ve talked about this a number of times before, not only on this podcast, but also through our training and courses on the website. But now, the question is – “Even if an option contract is out of the money, do we still have risk of assignment?” Now, technically, yes, it could be assigned. You could get a random assignment from the option buyer. But is this likely to be the case? In all circumstances, probably not. I would say the actual reality of this happening is probably very, very small, maybe under 1/10th

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, I’m going to talk about why I think that real estate prices will go down in the near future. I briefly touched on this actually in the podcast yesterday, but I think I want to spend a little bit more time on this because I think it is important and maybe we’re probably at the top of a business cycle or a market cycle, especially in real estate prices and I think there’s a couple of catalyst that could lead real estate prices lower. Not necessarily in all areas. I think there are some areas obviously that will not see as big of an impact or potentially no impact, but a lot of areas that have been built up or there’s been a lot of hype around I think will probably be the new real estate market kind of mini crash areas, maybe markets that were similar to Las Vegas or to Florida in 2008. Those markets were really built up. There was a lot of oversupply, a lot of things that really kind of led those markets lower. We’r

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 we’re selling some of our real estate investments. At the time that we’re recording this, in June of 2019, my wife and I have already started the process of selling a bunch of our real estate investments. Now, it should come as no surprise because we’ve talked about it many years ago that my wife and I invested in real estate and we continue to snowball that same little investment that we’ve had into real estate multiple times now into multiple properties. This is something that she kind of manages. She runs this on her end. She’s really good at it. She’s actually learned the entire business from scratch. And being a teacher, she had no background in finance and does really well with real estate investing. But what we’ve learned over the past couple of years is that many of our properties have gone up a decent amount in value and by no means are we making a killing on a lot of

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why liquidity is still critically important as an options trader. I think we’ve talked about this a number of times even on the daily podcast here, but it still comes up a lot which is why I’m doing the show today, that liquidity is a real major, important factor in how you should be choosing your ticker symbols and the underlyings that you’re trading. A lot of times, I’ll see people send over comments or I’ll even see comments inside the forum or the Facebook group or just online, of people trading pretty large position sizes and what I would call fairly illiquid markets or even just new markets. Recently, there’s been a huge slew of new IPOs coming onto the market, companies like Lift and Zoom and now that those options contracts are being traded in those highflying tech companies, a lot of people are starting to pile into those. The problem with that is that because they are so n

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 college degree should I get to work at an investment bank?” This is kind of a piggyback off of yesterday’s podcast where we talked about the fact that you don’t need a degree to trade or to be in the investment space. The natural progression then is – “Well, if I don’t need necessarily a degree, what degree do I need if I need any to work in an investment bank?” And I talked about it yesterday, but I’ll reiterate it today. I don’t think necessarily, you always have to have a finance degree. Now, this could be totally different and I’m not connected to this space like I was 10 plus years ago when I was working in it, but even then, when a lot of people went to work at an investment bank, they didn’t necessarily have a finance degree or a degree in economics. There were a lot of people who had history degrees or psychology or physics or some other science degree and I thi

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why you don’t need a finance degree to trade professionally. A big misconception I think in this industry and I get why people have this misconception, is that you need a finance degree specifically to be able to either work on Wall Street or to be able to trade professionally. But the reality is (and even more so today than it was even say 10 years ago or 15 years ago) is that you don’t need a finance degree to trade or work on Wall Street or work in investments, any of the above. In fact, I’ll even use a quick example of that like really proves this point and was really kind of actually shocking to me at the time because I didn’t know any better kind of working from school and going to work on Wall Street for Deutsche Bank. A lot of the people that worked in our M&A department with us actually did not have finance degrees. Now, were there a decent amount? Of course. There was