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 why you should buy insurance when the skies are sunny. I’ll use this little analogy and obviously, we’re relating this to options trading premium. In particular, in today’s podcast, we’re talking about buying option premium, put option premium when we want to protect our long stock portfolio. Now, full disclosure, I don’t hold long stocks in my portfolio. We would only hold stocks if we were assigned and then we try to manage out of it. Everything that we do is options trading specific and we don’t feel like holding long stock is an efficient use of capital. But having said that, a lot of people do use long stock in their portfolio and so, the question always comes up – “How do we buy insurance? How do we protect ourselves from the downside?” The little analogy that I’ll use today is that of a hurricane or a storm on the horizon. Let’s say you have a house or you own property in o