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, I’m going to talk about why broker’s platforms suck and what we are going to do about it. This honestly has become to me, a really nagging thing and that is that I have to explain to people all the time why one broker or another broker can't do something. This happens with Thinkorswim, this happens with Tastyworks, with Trade Station, with Schwab, with Robinhood, everything and I feel like I have to always explain why their broker platform to some degree and in some areas, sucks what they do really well, but what they really suck at. And it's hard because a lot of these broker platforms are not built for the full-time options trader or for the person who’s focused on full-time options trading. One of the things that we’ve been doing and we’ll be releasing very soon in the next month, month and a half here has been our own platform for auto-trading. Now, it’s not going to be just auto-trading. It’s going to have

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to help answer this question and that is – If you’re losing too much money trading, you need to solve this one problem first. I truly mean that it's one problem. You only have one real major issue when it comes to trading and that trading problem that you need to solve is better order entry and that's truly it. Now, that encompasses a lot of things, so I don't want to oversimplify and say, “Hey. You just need to make better entries.” That encompasses a lot of different aspects which I can quickly touch on. But the idea here is that if you are doing a bad job trading and you’re losing money, it's probably because you're just flat out entering the wrong trades. Now, I see this a lot because the concept here is that better order entry saves you from having to do all the other things that you are probably doing right now and it allows you to focus on the most important, biggest leverage item that you can

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 protecting the golden eggs and the goose that lays those golden eggs at the same time. This is honestly one of my favorite stories. I think about this story all the time when it comes to investing and trading and just generally in life. I think this is a good story and it comes out of seven habits of highly effective people. If you haven't read that yet, it’s definitely one of my, I guess top five books. I’ve read it three times now. I have it on audio. I listen to it all the time, at the gym when I’m working out, when I go for walks, if I’m just sitting in the morning and kind of doing my meditation routine. I listen to that book all the time. One of the stories that he tells in there is the story about a farmer. And so, this farmer finds this golden goose who's laying all these eggs. And so, every day, the farmer goes out and the goose has laid a golden egg and obviously, the fa

Hey everyone. This is Kirk here again from Option Alpha. Welcome back to the daily call. Today, we’re going to be talking about why this market that we are in right now just became one of the top six longest bull markets for stocks. I want to spend a little bit of time going through some of the data on the top six longest running bull markets in really, kind of our modern era or modern history. Basically, going back to 1950 is where we pulled all this data from. And so, we took a look at all these bull market runs and kind of analyzed them. And so, we put together the top six or so with these bull markets and the one we are in this month just crossed through and has become the longest-running market ever that we've ever had, the longest bullish expansion that we've ever had. Now, of course, this can always continue on further, but you just have to ask yourself what's the risk reward features of the market that we’re in and where does that change your dynamic if you're a long-term equity investor. There's six

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 geography bias investing and why it actually is a real thing. Now, you may have not ever heard of this, but the idea behind geography bias investing is that people who live in different parts of the country here in the US or even different parts of the world have completely different investing biases based on where they live. You would think to yourself, “Well, okay. That makes rational sense if I live in a town that is say Silicon Valley in California. I might be more up to invest in technology.” But on the other hand, people you would think are more rational in a sense that everyone would invest in say the indexes or they would try to invest in the same general broad global portfolio. But one quote that I’ve heard before… I don’t know if I’m going to butcher the quote or not, but it's the idea that if everybody owns everything, then nobody owns anything. And so, this idea behind

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’ll never be great at something you only do once. I don't actually know where this came from. I had it written down on my notebook and I was just kind of reviewing it just the other day and I’ve scripted this out to have this call today and talk about it because I wanted to revisit this because I think it’s an important topic not only for trading, but just generally, I guess. If you do know who is, I guess the author of this quote, let me know because I couldn’t find it online. I tried to search. Usually that does the trick. But I don’t know who said this first. But it's a great quote and it's really important on the options trading side because what I think I see a lot of people do is they try really, really hard and I respect this. They try really hard to understand the markets. They try really hard to get into their first couple of trades, setup their account and do all

Hey everyone. This is Kirk here again from Option Alpha. Welcome back to the daily call. Today, we’re going to answer the question, “Can options be assigned before expiration?” There are two things we have to cover in this quick little podcast. The first, of course is the difference between American-style and European-style option contracts. Really quickly, American-style contracts are basically all of the contracts that we generally trade on a regular basis. Those would be your contracts for Apple or Google or Netflix. Many of the ETFs, practically all of the ETFs are American-style. And so, what that means is that those option contracts could potentially be assigned before expiration or you could choose to exercise your contract if you’re a long option buyer before expiration. The European-style option contracts which are more of the index style contracts, only assignment can happen or exercise can happen at expiration. That’s the difference. Again, most of the option contracts that you’d be trading on a re

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 Netflix’s earnings expectations and why they were grossly optimistic. This I think is just more of a little bit of a case study in I guess understanding the market around earnings events. I have a little bit more experience than maybe some other guys in this industry on this because I used to be an analyst. I had a responsibility to cover REITs and all of these different REIT sectors, multi-family and industrial and corporate office, all of it. I have experience in going through these earnings cycles after knowing a little bit more about the company than maybe the average Joe. I had the ability to sit down and talk with the CEO and the CFO and we had models that predicted where the company was going to go. What I continue to tell people all the time is that even though we might have sat down with the CEO and we knew exactly what the company was valued at, they were pretty clear on

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, were going to be piggy-backing on the show that we had yesterday, talking about the lowest cost ETFs and today, we’re going to be talking about why more than 70% of mutual fund managers don't invest their own money in the fund. This is crazy to me. But I started going on down this rabbit hole yesterday because I really in some respects, have very strong distrust and dislike of the mutual fund industry now. I think it's been slow to kind of adapt to the modern world of finance and I think in many respects, it's doing people a disservice because they have their money in there and they haven’t really had a need to change. But I think because of outflows in mutual funds, we’re going to see that change in the future and that's a good thing for investors. But I was going down this rabbit hole and I was wondering to myself – I wonder how many mutual fund managers actually invest their own money in the fund? I mean, tha

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to be telling you guys’ how you can own the best ETF portfolio for just 0.05% and that's an annualized expense fee. This is a really interesting development that we've started to see in the ETF space over the last say three to five years and that is this massive compression in the fees that these ETFs charge or these fees that a lot of equity funds end up charging. And what’s really cool about this is that this not only is a product of just the capitalist markets and companies competing against each other, but it also helps out the individual investor like me and you because if we can have a choice to invest in a broad basket of ETFs, say a global basket on most of the ETFs and we can do it for basically $.5 on the dollar, then that is extremely attractive for… or like $.5 on the dollar really, then we can do that. That's extremely attractive for investors long-term. Remember, most of what really ea

Hey everyone. This is Kirk here again from Option Alpha. Today, we’re going to be answering the question on the daily call here. “What happens when options expire out of the money?” This is actually a really simple one to answer. When options expire out of the money, nothing happens. No premium gets exchanged because the options basically are worthless and you don't have to deal with any stock. It's actually a very simple process because they just cease to exist. It’s very much like if you were to buy insurance on your car in case you get into a car accident. If at the end of the year, you don’t get into a car accident, then nothing happens. The policy expires. You don't get any money back as the option buyer. The insurance company as the option seller collects and keeps the entire premium and you just have to renew your policy and basically start over and start a new one. It’s very much the same process with options. When the options expire out of the money, the option buyer gets nothing, the option seller k

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 I think volume flow in options is overly subjective. I was on a radio show, an internet radio show just a couple of weeks ago. You may even be able to find it online or search it on YouTube. But I was on a panel, if you will with some other people and we were just talking about stocks that people had questions about and the markets and where things were going and I think it was interesting and I enjoyed being there because I found that a lot of these guys have so, so subjective views of the markets. And I don't know any of these guys personally as traders, so I have no idea if they’re actually good or not or if they’re just blowing smoke, but in many respects, the entire hour segment of this radio show with all of these different interview guest was mostly me sitting on camera in my little Google Hangout corner of the video, mostly me sitting on camera just sitting back in my

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to briefly describe the differences between a short put option and a long put option. This gets back to some of the options basics that I think are really important foundational elements that you have to understand if you want to start trading options or trading for a living. Let's talk about a long put option actually first. Long options are some of the first option strategies that you learn because they're very easy for most people to understand conceptually. With a long put option, you are doing two things. One, you are paying money to enter the position and two, in exchange for paying money to enter the position at a particular strike price, you have complete upside potential in the sense that if the stock continues to move down, you could make a lot of money on that contract. Long put options profit from a quick and rapid decline in the underlying stock price or a rise in volatility. What would

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 selling covered calls for a living. Is this a myth or really possible? This is a question that we had from one of our members and just the idea around it was – Can you sell covered calls for a living? When I think about trading for a living, I think about the income that comes in from a trading strategy. Does a trading strategy or does an investment strategy generate enough income to actually live off of? To pay bills and to put food on the table, a roof over your head, etcetera? In the case of covered calls, I don't know if necessarily that they would generate a living for you because all you're doing is buying long stock and then selling a covered call to reduce the cost basis on them. Now, do I think that it's a great strategy for long-term buy-and-hold investors? Absolutely because we've even seen in our own research, as well as outside research from CBOE and other options reg

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How do you make money selling options?” I think this is one of the biggest questions that many new investors ask. In particular, many new options traders ask how exactly do we make money on a consistent basis, generating income for our portfolio by selling options. There’s a couple of bullet points I want to go through here that I think touch on a lot of the big rocks that we talk about in our strategy, so the really important things that you have to master. In many regards, if you master these couple of big rocks, these really important key concepts, everything else should generally fall into place or it should be a lot easier to generate money selling options. Now, as we go through these, I want you to continue to remember or reference the concept of both the casino business as a casino owner and the insurance company business as again, an insurance company owner because th

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What time of day do options expire?” This is an important question because as you're getting closer to options expiration, even trading options during the last day of expiration, it's really important to know what time of day they expire. Now, there is a difference between the time of day that they expire and the time of day that you can exercise or assign the contract and the time of day that they stop trading. There's a lot of different days and times that are kind of rolled up into one. The first thing you have to understand is that for most option contracts, they actually stop trading at 4:00 o'clock Eastern Standard Time. And so, that's when you can place your last potential possible trades in the market to close your position or remove the position from your account or get rid of the option position completely. That’s the last kind of trading time during the day. But wh

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 Buffettology is missing one key investing concept. Buffettology is just framework around how Warren Buffett invests and there's actually a couple of good books on this that are out there. You can just search Buffettology and pick one up at Amazon or wherever you buy your books. But I think that the books and just this whole framework around investing is really interesting and a lot of good stuff that comes out of it naturally and Warren Buffett is probably one of the best investors of all time, if not, arguably the best investor or all time and I think he got a lot of things going for him. Obviously, he started at the right time. He was big on compounding. He was big on intrinsic value. A lot of that stuff worked in Buffett’s favor. One of the things that we talk about at nausea here is why Warren Buffett is actually a big time option seller. Now, he does this not only through

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 liquidity considerations for closing option trades. Again, another question that was sent in from one of our members and he basically said, “If I decide to close out a position and there's no liquidity, does that mean that I'm stuck with the options or does it simply mean that I can sell back or buy back for a lesser or worse price?” This is a great question because what we talk about often with options trading is that liquidity should be one of the things that you look at on a consistent basis, that you can use our watch list and toolbox software, in which case, we screen and kind of filter out tickers for liquidity already for you. We try to close that gap and remove that barrier immediately. But if you are going to trade say a random stock or a random ETF, you should be looking at the liquidity. We've done shows on this that you can search in the podcast app or on our website a

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be trying to answer the question, “Should we stop estimating earnings for stocks?” Really, where this came out of is – Recently, we’ve gone through another earnings season here in the US markets and a lot of companies have had huge gyrations or volatility swings in their stock. In particular, we’ve seen companies like Netflix and Facebook that got absolutely crushed after their earnings and it was all based on expectations and growth. But Facebook alone was down more than 20% the day after it announced earnings. Now, just to again, put it into a little bit of context, they literally went through a bear market decline in one single day. Investors in Facebook lost 20% of their equity and they one minute full swoop between the time that the market opens and started trading and it’s huge, huge gyrations. And so, the question that some users had brought up to me was, “Should we stop doing all this esti

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're running out of time because the next opportunity is so close. This is one that I think took a little while for me to really understand what this means, but I actually had somebody, a coach of some sort or like a mentor of some sort tell me this a while back and they said, “You never know really when that next opportunity is and when that next opportunity might come.” And so, you just have to keep pushing forward and keep pushing forward because it literally could be around the next bend. It could be the next door that you open up. And it’s tough because sometimes, like even in let’s say like business or in relationships or even in finances with trading, you just feel like you're just pounding the wall and nothing's happening, but it's just that that next hit, that next opportunity to knock down the wall or break through is one more step away and you never know how close