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 diversification is not about increasing the quantity of tickers. I think a lot of people get diversification wrong and the regular thought process on diversification that you hear for most investors is – “Well, diversification just means spreading your investment across different ticker symbols.” But it’s not just about increasing the quantity of tickers that you’re trading because ultimately, what you could do is spread your basket across a bunch of different tickers that end up being in the same sector or industry or just highly correlated to one another. The other thing about diversification is that it’s not necessarily diversifying, so that when you win on one, you lose on the other. That type of diversification is not effective or beneficial to a portfolio. What you want is you want diversification across uncorrelated asset classes. You want ticker symbols in your portfol