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 out of the money call options are a terrible investment. I know I’m going to get a lot of pushback on this podcast potentially, but the reality is and the research 100% proves and backs that out of the money call options are a really bad investment and a terrible stock substitute. Now, while a lot of people will use out of the money call options as a means to generate a “quick buck” trading in the market, the reality is that a consistent stream of buying out of the money call options ultimately is going to lead to negative expected returns. Now, this should come as no surprise, honestly. Because of the implied volatility premium and because of the premium that’s embedded in buying options out of the money and on the further ends of the spectrum, we should naturally assume that the stock is going to make a less than expected move and therefore, cause these out of the money call