The Option Alpha Podcast

Show notes: http://optionalpha.com/show173We're excited and honored to have a very special guest this week on the podcast, Richard Hudson, co-founder of the London and Brussels-based Science Business Publishing Ltd. He's the co-author of The (mis)Behavior of Markets: A fractal view of risk, ruin & reward which he wrote with famed Yale/IBM mathematician Mandelbrot. Our discussion frankly should be required listening for any investor and was recorded in January of 2020 immediately preceding the market crash that occurred just weeks later.

Show Notes: http://optionalpha.com/show172This week on the podcast we're doing something a little different and turning this podcast episode into a full-blown audiobook. Today I'm recording the newest book we released entitled "Mastering Covered Calls". I encourage you to pick up your copy now, did we mention it's 100% free, and follow along as you listen to this audiobook. We've included dozens of charts, tables, and graphs to help as part of this new book and we hope you enjoy listening or reading your copy.

Show notes: http://optionalpha.com/show171Today on the show we welcome special guest, Rob, who's the co-author on our recent research report on Covered Calls. On the show this week we go over the top three performance insights we learned from our massive study on Covered Call Performance. If you trade covered calls right now or plan on using them at any point when dealing with assigned stock, then this show should be required listening.

Show notes: http://optionalpha.com/show170Factor-based strategies and trading systems are all the rage these days. We've been promoting these for many years now but it seems that more and more investors are catching on. As a result, we wanted to cover the 5 critical factors that your trading strategy should have. To us, these serve as the foundational elements for choosing which investing vehicles, indicators, or systems most appropriately fit your portfolio.

Show notes: http://optionalpha.com/show169This week we're very excited to share our exclusive interview with Kevin Davitt, a special guest with tons of experience not only as a former market maker, but as the Senior Instructor for The Options Institute at CBOE. As many long time listener's know, we are highly selective with people we choose to bring on as guests for interview and Kevin raises the bar yet again for us with an amazing discussion. During the show we'll touch on everything from his time as a market maker, transitioning to the retail side of trading, though processes on managing positions and controlling risk, and so much more. You're going to love this candid and wide-ranging discussion as much as we enjoyed the time with Kevin.

Show notes: https://optionalpha.com/show168Did you know that fear has nothing to do with logical or cognitive reasoning? It's actually a completely physical response that originates in our body. We fear to be wrong because that might mean we will be alone and people will leave us, which means that we won't be part of a tribe or community, which means it'll be dangerous and we might die. Okay, that's extreme but taken to its logical conclusion we fear because of conditioning we've had as humans for thousands of years to survive on a physical level.As options traders, we have fears about trading that manifest in dozens and dozens of ways. Today, as we circle the Halloween season, I wanted to tackle the 27 biggest options trading fears that we hear in our community. And, more importantly, how to overcome and conquer these fears. Just saying them out loud and talking through them together might just be what you need to set yourself free and on the right path as a trader. 

Show notes: http://optionalpha.com/show167Oh, profit targets. The double edge sword of confusion for many traders. Take profits too early and you feel like you left money on the table. Too late and you kick yourself because the trade could have moved against you. And because we've been getting so many questions on when and why we've let positions go beyond traditional profit targets, we wanted to record today's show to talk about the top 3 market setups that would lead us to break profit-taking rules. Yes, you heard me right, and longtime members have known this for years, but we don't always take profits at 25% and 50%. Shocking? Shouldn't be because our Profit Matrix research 2 years ago laid the foundation for holding positions generally longer towards expiration. 

Show notes: https://optionalpha.com/show166When it comes to market signals and timing indicators, the Put Call Ratio is one that naturally jumps to the top of many lists. Because the indicator looks at volume in both put and call options, the logical conclusion is that we can interpret the ratio to signal us from an impending top or possible market bottom. But, is that really the case, and if so, how should we use Put Call Ratios moving forward in our analysis. All this and more on this week's podcast episode.

Show notes: https://optionalpha.com/show165Personally, I don't like rules. Mostly because I value freedom and flexibility so when someone says that I have to follow the rules I naturally push back. Things that confine me or tell me what to do don't fly well with me. But that only applies to things outside of trading and investing. In the world of investing, and specifically trading options, you need to live by certain rules. Rules that keep you safe and protected from the unknown of the market. I imagine that the 11 "Golden Rules" I'm going to present in this podcast will cause many of you to push back and challenge their usefulness. Mostly because they'll cause you to trade different than you have in the past, and being different means being uncomfortable. I'm okay with that and I welcome the discussion around them. But don't misinterpret this level of understanding in adoption to also represent flexibility when it comes to these rules. These are "unbreakable"

Show notes: http://optionalpha.com/show164Since we are option sellers and our edge comes from selling overpriced options out into maturity it's natural to assume that if we want to sell options when IV is high that buying options during low IV markets is a way to make money in the other direction. We get it and understand the rationale argument. When IV is low, and option premiums are cheap, you can and should buy options because they are cheap right? Not so fast bargain-buyer. This type of thought process and strategy, low IV option buying, has two major problems. And we don't use the word "major" lightly here. Each problem with option buying systems is so important that the probability of getting both problems right or solved is for all intensive purposes, impossible on a long timeline. Curious to know what these major issues are? Let's dive into today's show and find out.

Show notes: http://optionalpha.com/show163This was a long trade. Maybe not the longest trade we've been involved in, but certainly one of the top ones as this short put option assignment lasted over 5 months. For most options traders looking to make a quick buck, this trade stretches their patience and conviction far beyond a reasonable level. Still, I think that today's case study is important to hear because it proves critical concepts to how we think about trading here at Option Alpha. And what better way to prove something than to show you how we managed the entire position, start to finish, with real money.

Show notes: http://optionalpha.com/show162It might seem that the markets are a game of price, and while that might be mostly true, what they are is really a game of emotions. With enough self-awareness, the "average" investor can do incredibly well. Better than many sophisticated investors. There's so much to be said about controlling your emotions and recognizing biases that we could spend hours upon hours dissecting each one. I prefer a more optimized approach which is why I decided to do a podcast specifically on the top 8 biases that investors fall victim to. Once you learn to recognize them, you can then process the emotions behind the scenes so that it doesn't interfere with your trading.

Show notes: http://optionalpha.com/show161As many of our long-time listeners know, over the years I've become increasingly protective and selective with the guests that I invite to come on the show. Truth be told, we get pitched weekly for people looking to expand their reach. Somethings it's just so off the wall and disconnected to trading that I have to laugh. But this isn't the case with today's guests which I'm super excited to bring on for an interview. Kevin Smith and Tavi Costa both generously gave their time to join me for an incredible look inside their philosophy and macro models at Crescat Capital, a hedge fund based in Denver Colorado. This is an episode you won't want to miss. In fact, I encourage you to listen to it at least twice to make sure you pick up on all the little details you might have skipped the first time around.

Show notes: http://optionalpha.com/show160Newest platform updates.

Show notes: http://optionalpha.com/show159This podcast is a long-time coming but one that needed to be done because we get a lot of questions from newbie traders about how to build an options portfolio with a small amount of starting capital. And while we openly suggest that you really start trading with at least $5,000 or more, as you'll hear me say a bunch in this show, we realize that a good majority of new traders want to start with less. That's why in today's show we'll play "pretend" and assume you absolutely want to start trading with just $3,000. Inside I'll walk through my though process on building out a portfolio that gives you the highest possible chance of success. We'll cover everything from position sizing, ticker selection, strategies to use, what ranges or targets for setting them up, profit taking and stop losses, and much more. The concepts we'll cover are applicable to any portfolio size so don't think or one second that this show is just f

Show notes: http://optionalpha.com/show158Somewhere, possibly from another planet, this notion of trading options with a high probability of success transformed into a subconscious greed for 100% probability of success trades. And if you think that this mentality doesn't exist in the modern market we are in, you should see the emails we get at Option Alpha on a weekly basis. The truth is that you are going to have losing trades, a lot of them over the course of your career. Sometimes they'll come in groups and bunches that make you question everything you are doing or the strategy/system you are choosing to use. But, the first step on your road to elevating yourself is to ask yourself, "Can I trust the process?".

Show notes: http://optionalpha.com/show157A couple of weeks ago I was reading the story of the three little pigs to my daughters. And for some reason, I couldn't help but think about the untold story of the three little pigs who traded options? Yes, it's true, many people don't know this but the three little pigs were actually given a large chunk of money from their mother and each decided to trade wildly different options portfolios when they set out on their own. In today's podcast, I'll walk through each of the different portfolios they used and how volatility and variance can impact long-term performance and why it's important that we know the story of the three little pigs that traded options.

Show notes: http://optionalpha.com/show156Many of our members understand the best times to trade options (i.e. higher IV setups when option premiums are expensive), but should we avoid trading during other market situations? Today's podcast walks through the four general market situations I avoid aggressively trading in and explain why each type requires that you either sit on the sidelines or dramatically scale back your position size.

Show notes: http://optionalpha.com/show155Everyone loves a good options trading checklist right? Well, here are the 7 questions you should ask yourself before you put on an options trade. Answer each one over the next week and you'll build a strong habit that will keep your positions and portfolio in check before you put your hard earned money at risk.

Show notes: http://optionalpha.com/show154We get a lot of emails each day - I'm talking hundreds of emails. Naturally, seeing so many questions and comments come through the system, we found that these 17 top questions keep coming up again and again. So, in an effort to help you, and our team reduce the support inquiries, I'm recording answers to each of these questions in today's show.