The Option Alpha Podcast

Show notes: http://optionalpha.com/show54If you’re an experienced options trader, then today’s show is for you because this week we’ll be talking about portfolio margin and how it could help enhance your returns. Yes, portfolio margin isn’t for everyone (you’ve got to have at least $125k in equity to qualify and three years of experience trading options), but the ability to upgrade your margin account to this portfolio risk model is incredibly powerful.With portfolio margin, your broker is assessing each new option trade risk on the overall portfolio impact vs. an individual basis that happens in traditional margin accounts. They are asking the question, "How much risk does this new trade add to the overall portfolio?" More often than not, it means less margin required for new trades when you’ve already got offsetting positions.So, how does portfolio margin help? Well, when you have to put up less cash in margin to hold a position that takes in the same premium, it means you can generate a higher re

Show notes: http://optionalpha.com/show53What if there was an options strategy that took just 1 hour per month to implement and actually beat the S&P 500 benchmark index both in performance and with less overall portfolio volatility? What if that one strategy was available to any trader, regardless of your account type or size? You see, I believe you work too dang hard for your money and it doesn’t take a fancy financial planner or sophisticated mobile app to help you generate higher returns with less risk. All it takes is less than 1 hour per month. Yes, less time that it takes you to aimlessly scroll through your Facebook or Twitter feed. Well, you can stop day dreaming because it’s a reality and in today’s podcast episode I’ll walk through the exact strategy that beat the market. No fluff. No smoke or mirrors; just cold hard facts. I’m sick and tired of people trying to tell me that options trading doesn’t work because today’s episode crushes every one of these unsubstantiated myths about trading. List

Show notes: http://optionalpha.com/show52Doesn't it just sound so cool even saying it: Robo Advisors. And although some of these automated investing companies have been around for 5+ years now, the recent rise in popularity of robo advisors like Wealthfront and Betterment is alarming.If you haven't been keeping up with the latest FinTech craze, robo advisors are simply the next logical Wall Street sequence or disguise for money management. Instead of having a financial planner or "human" directing your portfolio, a computer algorithm or "robo advisor" makes investment decisions on your behalf. You input your age, current portfolio value, risk tolerance, etc. and the algorithm automatically determines the optimal allocation of stocks, bonds, cash, ETFs, emerging markets, and so on. All the number crunching and modeling are supposed to ensure that your portfolio is accurately diversified and theoretically safe. The robo advisors lure being that computers are never emotional and can

Show notes: http://optionalpha.com/show51You're in a trade that's going bad and are thinking about adjusting your position. But before you do, how would that adjustment impact your overall portfolio management? Would it make your portfolio more bearish, more bullish, or have little effect at all?Asking yourself this question above before adding or adjusting your positions gets to the heart of today's podcast episode. Too often I find that options traders who spend the bulk of their time concentrating on single trades that go bad, without any regard for the overall portfolio impact, actually cause more harm than is intended. They become so narrowly focused on making sure "this trade" doesn't lose money that they completely forget about the rest of the portfolio that is profitable.Maybe they have a bearish trade that's going against them as the stock market rallies. And the first natural thought is to adjust this trade and protect them from the impact of the market rallying. B

Show Notes: http://optionalpha.com/show50One of the foundational elements of my personal trading style with options is the belief that the stock market is random. Random meaning that we can't gain an edge picking a direction. And for years, this assumption has been more or less accepted by the public and academia.  In the last couple months, the theory or hypothesis around random financial markets has repeatedly been challenged, which is a good thing. A countless number of people have tackled the issue and published their findings on random market behavior. I wish I could link them all up here, but it's just not possible nor realistic. Therefore, my goal on today's show is simply to present what I believe to be the best research on the topic of market efficiency and predictability.Admittedly, I scheduled this show as a follow-up to Show 49 where we backtested 15 different option buying strategies during the last market crash. And the reason is that I wanted you to recognize how much "perfe

Show notes: http://optionalpha.com/show49 Do you think that there will be a stock market crash soon? Maybe in the next six months to 1 year?If you are looking for the ultimate strategy to profit from the next stock market crash, then today’s latest podcast is for you. We went to 2007 and backtested 15 different put option buying strategies to see which combination produced the most profitable results during the last market crash.Honestly, we’re due now for a serious correction or recession soon, so this show might just come at the best possible time. Recall that we did the hard research into “How Often Markets Crash” in Show 15 and found that 21 times since 1928 stocks fell at least 20%. That’s essentially once every four years, and it’s been eight years since the last significant market correction.Naturally, we know that the best way to play a stock market crash, if we knew one was coming, is by purchasing put options. But which put options do you buy? How far out to you go for the expiration day? What strik

Show notes: http://optionalpha.com/show48 Options approval levels are options trading restrictions placed on your brokerage account to prevent or allow you from entering different options strategies. Most new traders, and admittedly some experienced traders, often don’t know which trading level they are in or even that levels exist. Still, you should always reach out to your current broker and check with them directly to be sure.While trading approval levels and names can vary from broker to broker, there are usually 4 main levels that you’ll encounter. In today’s episode, I’ll first help you understand why brokers have these levels and the types of options strategies you’re allowed to trade in each of the four. Plus, I'll help answer some common questions I get from members about either applying for a trading level to start with or moving to a higher approval level. Towards the end I'll share some tips and suggestions after talking with 6 different options trading brokers about new strategies or ta

Show notes: http://optionalpha.com/show47One of the key elements of becoming a more successful trader is the ability to absolutely master options trading risk management. And, contrary to what you might assume, it comes down to a couple simple things. Namely, determining and sticking to an optimal position sizing range for each trade and never allocating your the full value of your account at one time. In simple terms; don’t invest too much money in each trade and always have money left over.My goal today is simply to help you trade with more confidence. The type of unwavering confidence to go out and start placing trades without the fear of losing or the fear of blowing up your account. For me, confidence comes from understanding the underlying math and reasoning behind optimal position sizes. Too often you’ll hear or see other traders spout off allocation ranges without any clear direction on WHY they chose that range. If someone told me that I should allocated just 10% of my account towards each trade I’d

Show Notes: http://optionalpha.com/show46Tax day has come and gone that doesn’t mean that we can’t start preparing in advance for next year by looking ways to reduce or minimize our tax exposure.Today’s newest episode is Part 2 of 3 all about options trading taxes based on the questions that our members submitted.We’ll continue to dive deep into your most requested topics and questions to make sure we’re getting the correct answers for you so that you can confidently move forward. Sure, taxes can be a little scary on the outside but our hope is that this mini-series will help give you some clarity.Finally, if you have additional questions that we didn’t cover in Part 1 or Part 2 there’s still an opportunity to get your questions answered in our final segment. All you have to do is add your question to the comment section below the show notes and we’ll add it to the queue.

Show Notes: http://www.optionalpha.com/show45Did you get flagged as a Pattern Day Trader? Concerned about what can happen if you make too many day trades in a short period of time?In this session of The Option Alpha Podcast, I'll clearly lay out the not-so-scary Pattern Day Trading Rules (PDT) that you can often run into if you're an active trader in either stocks or options.Now, personally speaking, we rarely (if ever) run into an issue with the PDT rules because we aren't day traders. We are position traders meaning that we'll enter options trades for a couple weeks to a couple months. We may have an opportunity to close a trade early for a profit but we never enter positions with the intent of closing them the same day.That said, there are tons of questions on what is classified as a "day trade" in the eyes of the regulators. How much money you need in your account to be exempt from the PDT rules and what happens if you get margin called.Lucky for you I'll walk through ev

Show Notes: http://www.optionalpha.com/show44Options traders often reference the "Greeks" which include delta, gamma, vega and theta of their underlying positions as a way to measure the sensitivity of an option's price to market movements.And while looking at option greeks can be helpful, there's also a big misconception about them... one that trips a lot of traders up early on in their career.Most traders falsely assume that the "Greeks" are part of an options price - but they are NOT part of option pricing. Option greeks are used only to estimate what an option price might do reacting to specific market changes.Seems like a simple error but the resulting consequences could be the difference between winning and losing on your next trade.In today's show, I'll run through each for the four major options greeks and tell you which ones you should be focusing on as you plan your next trade and how checking the greeks can help with choosing the right options strategy.

Show Notes: http://optionalpha.com/show43Back in mid-2014 we surveyed our members and it completely changed our business.We overhauled our video training, threw out all the junk and added more in-depth modules and PDF guides that everyone had been asking for. The result was an almost explosive growth in our ability to reach and train people. Realizing just how powerful this was in 2014 I wanted to survey our members again to see if there were any “missing link” that we needed focus on.After sending just 2 emails we got back 1,378 completed surveys. Truth be told there was actually 4,503 responses but only 1,378 were considered 100% complete. Upon reading through the pages and pages of responses I also decided to reach out to 68 people for phone interviews and to learn more about how they trade options and what struggles they were having.In the end, the last couple of weeks analyzing the data and reflecting on the interviews has made it clear that as a company, Option Alpha is on the right track but could do s

Show Notes: http://optionalpha.com/show42The Stochastics indicator has long been a favorite for investors and could arguably be one of the most popular technical analysis indicators.Today I’m going to show you the results of our backtesting analysis on the Stochastics Indicator and I think you’ll find it extremely useful wWhether you’ve used it before to trade or if this is your first time looking it up.Now, unlike the results we saw in  Show 41 of the podcast, today’s mini-case study did see a positive correlation between win rate and overall net profitability of the indicator after making a small change to the way we generated signals.Learn more about SIGNALS: http://optionalpha.com/signalsAs we’ve been trying to prove with case studies on the  Simple Moving Average,Absolute Price Oscillator and today with Stochastics; there are clearly winners and losers that we found as part of our 20-year technical analysis research report.

Today I’m going to give you a very special sneak peak inside our new technical analysis backtesting report called SIGNALS.Learn more here: http://optionalpha.com/signalsSpecifically, we’re going to look at how the Absolute Price Oscillator performed over the course of 20 years, testing 223 different stocks and the subsequent signals generated from those trades. What’s the point of telling you all this? There’s no hiding that this is meant to be a little bit of a teaser for you because I think everyone could benefit from reading it.There’s no hiding that this is meant to be a little bit of a teaser for you because I think everyone could benefit from reading this research report but even if you don’t buy a copy of SIGNALS then this 1 tip we’re going to cover today will help you think more strategically about how you trade in the future.Show notes page: http://optionalpha.com/show41

Grab your copy here: http://optionalpha.com/show40We Backtested More Than 17.34 Million Stock Trades Over 20 Years to See What Really Works...Discover the specific indicators that generated winning trades 82% of the time and outperformed the market by 2,602% on average.Read the Entire Report in Just 30 Minutes. Get insights from 12 months of backtesting research of more than 1,476 different technical analysis indicator variations.Option Alpha's TOP 5 Indicators. We revealed our Top 5 indicators (with specific settings) that resulted in the highest overall returns, safety and consistency long-term6 Optimal Settings Cheat Sheets. Specifically designed to be your “quick reference” directory with the optimal indicator settings for each of the eight dominant performance metrics we tracked.25 Real-World Portfolio Simulations. See how various simulated portfolios were able to outperform the market by more than 2,602% on average.Grab your copy here: http://optionalpha.com/show40

Do you remember the feeling you had the first time you were introduced to  technical analysis or stock charting indicators in general?You were probably at some weekend stock market seminar or watching a video online, and everything just clicked in your mind. The volume signaling that more buyers were present in the market to drive up the price, or the lines showing where support and resistance were; it all just made logical sense.Forget reading reports and company filings digging for great stocks to buy. You finally had the tools you needed to conquer the markets and really start making money. Technical analysis was the “magic” bullet that all the pros were using, and now you were on the inside.Still, shortly after your introduction to technical analysis, in the back of your head a little voice asked, “Does this stuff really work?” It might have been immediately after your moment of glorious realization, or it could have been days or weeks later, but I guarantee it happened – because it happened to me too.Hon

For years, I've had members ask me about options trading taxes, ways to reduce your taxes, the best legal structures, international trading taxes and hundreds of other questions on the subject.Recently I decided to survey just our PRO and ELITE members to find out what questions they wanted specifically answered when it came to trading taxes. What were the hot-button issues they had and subsequently never found an answer to?After hundreds of responses I compiled a long list of questions I would get answered for you...Today we're releasing Part 1 of a three-part series all about options trading taxes. And to help facilitate the discussion we've invited CPA Brandon Hall on the show we specializes in securities taxation to get professional answers.Once we are done with this mini-series we'll also be compiling and releasing a guide on trading taxes to our members. Plus, if you have any follow-up questions you'd like Brandon to answer or be included in our next show, please add them to the

Part of our mission here at OptionAlpha.com is to offer the highest level of transparency possible in order to help you gain more confidence in your own options trading system.This week we launched our newest feature after spending more than 5 months developing a propriety portfolio tracking software that monitors and reports key statistics and metrics in real-time. This software tracks and categorizes real money trades, not paper or backtested trades.Want to see the most recent stats updated in real-time each day? Just head over to the Option Alpha Performance page.In today's show, I want to introduce our overall findings and numbers to you (both the good and the bad) and explain how this has already shaped my outlook and trading strategy moving forward.As part of our higher level memberships, we stress that options trading is just a game of numbers and statistics. Your focus should be on placing lots of small, high-probability trades that captures the long-term overstatement of implied volatility.Hence

I'm crazy excited to finally bring you my interview with Aram Basmadjian from TradeWithAram.com because it's such a genuine and honest conversation with a guy who continues to grow in his education and love of trading.In fact, he was hesitant at first to come on the show because I reached out to him after emailing back and forth for many months during his time in our membership. But I know that his story and investing journey would be invaluable to both new and experienced traders who listen to this show.As we move through the interview you'll hear his strategy for both short term weekly trades and longer term positions that he enters. Plus, we'll cover some of the major indicators he uses for a "collective" determination in future market direction.Ready for another amazing interview with a real trader who's making it happen each month? Let's dive into the show with Aram.Quote: "You develop your own style by taking the best of everyone else and put a little of your

This week during the FinCon expo in Charlotte I had the opportunity to sit down with "The Options Playbook" author Brian Overby.Brian is also the Senior Options Strategies from TradeKing and this 40+ min LIVE interview covers so much it's hard to summarize it here.Plus, as a very special gift Brian signed 2 copies of his hard copy book for you all. All you have to do is 1) share this podcast on Twitter or Facebook and 2) add your comment below with the #1 thing you took away from the show (the "ah-ha" moment you had).If you're ready for strategy questions, account tips and a real live trade example with SPX options then let's get started. . .