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 the options market size and its growth. Now, there's a lot of data that’s out there, but frankly, it's a little bit fragmented when it comes to the actual size of the option market and then actually the growth from year-to-year because you have all these different exchanges and clearinghouses, so it's a little bit fragmented. But I wanted to share some stats because I think generally, when you look at the CBOE which is one of the biggest exchanges and then also the OCC which is the options clearing corp. which does vastly all of the options clearing that's out there, you get a really good understanding of kind of where the market is and where it's headed. Now, the good news is I think that the options market is continuing to grow at a really, really good clip and for me, this is good because I always think about where do I want to invest my money, where do I want to invest my time

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, I’m going to talk about how I became an options trader and just a little bit of my path and journey basically since I graduated college and what I started doing and how I took this path and becoming now a full-time options trader for over 10 years. I originally started in college as a finance major. I’ve always been a finance major in college. And when I graduated from the University of Virginia, I decided that I wanted to be an investment banker. Now, all full disclosure, looking back on it now, everybody in my class decided they wanted to be an investment banker or a hedge fund analyst or an equities trader. I mean, it was literally the only thing that you did. I mean, if you said you did anything else, it was kind of looked down upon to some degree that you are deciding to take a different path. All of my friends were getting interviews in New York and going back and forth to New York to become investment banke

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 the best place to open an online trading account. I'll start off by saying I'm never going to say that one broker or one company is the absolute best place to open up an online trading account. There's a lot of different brokers that are out there that fit many different needs in the marketplace. And so, when it comes to choosing the best place to open up your online trading account, you have to go with a broker that fits your needs and your requirements for your long-term trading activities. And so, for that reason, I think there's many possible brokers that you can choose from. Today, I want to go through what I think are some of the top brokers out there and some of the good things that they do, some of the bad things that they do, so that you can make hopefully more educated decisions. Now, we have a list of all of this, as well as all the commissions and fees that brokers cha

Hey everyone. This is Kirk here again from Option Alpha. Welcome back to the daily call. Today, we’re going to be talking about the importance of blocking and tackling, throwing and catching and shooting and passing. And you might think to yourself, “What on earth does this have to do with options trading?” But what it really comes down to if you look at most sports and the reason this is, I guess a sports related analogy is that most sports teams that are really good, win championships, have high-scoring teams, etcetera, what it ultimately comes down to is always the basics. It's being able to block and tackle in football. It’s being able to throw and catch in baseball. It’s being able to shoot and pass in basketball. It's really these very basic fundamentals and mastering those to the nth degree that leads teams to be very successful. When it comes to options trading, it’s obviously no different. Even like in the world of finance and budgeting, it's saving money and able to invest. When you are trying to be

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are going to be going through a little ultimate guide here to OTC stocks. As we’ve done just over the past week and I don’t know why I’m just dovetailing into these little areas, but it’s always stuff I want to talk about. I never thought that the weekly podcast, doing it as a longer form episode was really the right medium for this. But I get a lot of questions on futures and OTC stocks, etcetera, so I want to do a quick little podcast on what OTC stocks are, do I trade them, do I not, where can you find more about them and just kind of a little guide on that. OTC stands for over the counter stocks and basically, all you need to understand about this is that these are stocks that do trade on these dealer networks or dealer exchanges that are not traded on the regular exchanges, I would say or the bigger exchanges like the NASDAQ or the NYSE, etcetera and for whatever reason, these stock either are too low i

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. On today's episode, we want to again, go back through some of the futures market basics and I want to try to do this all in less than seven minutes. Now, the idea behind today's call as opposed to some of the other ones that we’ve just done previously is that I want talk about more of the structure of the futures market and just generally how it works. We talked about the E-minis, we talked about some commodity futures, but I want to kind of run through some of these specifics on just general futures contracts and how the futures market behaves and what it can do for you as a trader or a speculator because I think it's really important to understand. The first thing you have to understand about a futures contract is obviously, it’s just simply an agreement between two people in the future for a specific asset at a specific price. Now, this is a little bit different than implied volatility in options trading because fut

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 commodity trading through futures contracts. This is a topic which we don't often cover and we’re doing kind of a couple of little episodes here because I’m on the topic of futures trading and futures contracts. But I wanted to bring up this idea of trading with commodity contracts not necessarily because I think people should be trading commodity contracts, though you can if you want to. It’s not something that we do here at Option Alpha. But just as an understanding of why it's out there and really, what the importance of having these futures contracts are in the market. I feel like the market for futures contracts and commodity trading gets a really bad rap from people who are not in the industry or people who don't understand the industry. And so, I want people to understand why we have it and why it’s important and I hopefully want to use a really quick simple example here to

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to be talking about the easy guide to understanding E-mini S&P 500 futures contracts and basically just trying to walk you through a little bit of understanding of how these contracts work, how they’re structured and what you need to know about them if you're going to start using them for trading purposes, not only on the futures side, but also on the option side. Again, it’s going to be a very basic introduction to these E-mini futures just so you have a little bit of understanding of the history behind them, why they're available and kind of the specifics of the contract. Again, the reason that these eventually came out and I think they came out in like late 90s or something like that. I’m not sure exactly the exact time, but around the late 90s or so. The contract size of the regular S&P 500 contract just got to be a little bit too big, so what we ended up seeing is we ended up seeing the

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are going to be talking about intraday trading and answering the question, “Can it work for options traders too?” I think a lot of people are drawn to the idea of trading intraday, so day trading, if you will, entering a position, having this huge profit show up in 15 minutes or 20 minutes and then exiting the position. And in fact, as I've been watching a lot of communities and Facebook groups out there, particularly in the Robinhood space because people are getting in for no commissions, I’m seeing people posting all of their gains and profits and losers and winners on intraday trading and then everyone else is supporting them and saying “Keep at it. Intraday trading works.” and people are starting with a $200 account and risking $100 per trade. I think the reality is that of course, it probably works for some people. I’m not going to say that it absolutely emphatically does not work. That’d be ignorant of

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we are going to be talking about why being busy is a form of laziness. This I think is one of the most interesting things that I think about all the time. I mean, I literally geek out on this stuff all the time, on productivity and psychological hacks and just like how the mind works and how we as humans and investors, how we operate and how we think about things. And this one to me, I’ll tell you a quick little story as to where this really kind of started. We always hear this, I think in many cases, but to me, I saw this firsthand and it really made an impression on me back when I was working for Deutsche Bank and I was in the M&A space, so I was in mergers acquisitions. And our director, like our global head of M&A worked on our floor, so we were in the building on Wall Street and he would come in later in the morning for sure, so he would not be there the same time that we were there. But he would come

Hey everyone. This is Kirk here again at Option Alpha. Welcome back to the daily call. Today, we are answering another question from our community and that is “Should you hedge domestic currency risk by trading Forex?” A couple of episodes ago, we gave you a brief description of the Forex markets which you can go back to and listen, but now, the question from somebody is “Okay. If I have a lot of my assets denominated in Australian dollars or Canadian dollars or Euro, then should I hedge my domestic currency risk by trading Forex? Should I protect it in some cases?” And so, I think the natural answer to this or the easy answer to this would be yes, like people would assume yes. “Oh my gosh! Absolutely! You have to hedge your domestic currency risk.” I think it can be hedged easily by just trading ETFs or trading currency pairs in other markets. We often trade a lot of the Forex currency type ETFs like FXE, FXY, etcetera, so that’s an easy answer. But the easy answer being yes is not actually what we see in a

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we are going to be talking about how to invest in oil. Now, we’re definitely not talking about buying oil rigs or investing in offshore drilling platforms, but we’re talking about how you can invest in oil if you want to gain some exposure in your portfolio, whether that's directly with some ETFs and tickers or you want to gain some exposure with futures contracts, etcetera. Some of the ways that you can obviously invest in oil is you can invest directly in some of the major corporations that deal in oil, Exxon Mobil, ticker symbol XOP, Chevron, CVX, some of the other ones. There are big names out there you can just search. That's a very direct way to go about it. You can also invest in a lot of baskets of ETFs around the oil market. Some of the popular ones and ones that we actually trade options around as well are XOP which is the spider oil and gas exploration ETF. You have USO which is the United State oil fin

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to be talking about how to setup an iron butterfly, so walking through some of the basic mechanics around how you can setup an iron butterfly strategy. Before I even talk about just a very simple example, as always, when we’re setting up iron butterflies, we are mainly using our trade optimization and back-testing software to determine how far out to buy the wings of these iron butterflies based on whatever market situation or IV environment we find ourselves in. Oftentimes, if we are trading say 30 days out versus 60 days out and implied volatility is 50 IV rank versus 70 IV rank, that may have an impact on how wide and how we setup our iron butterflies. It’s always I guess advised to go back through and make sure that you’re using the trade optimizer for what it was built for, the purpose it was built for and that is to optimize positions for market scenarios. As far as a general setup goes, obvio

Hey everyone. This is Kirk here again at Option Alpha. Welcome back to the daily call. Today, we’re going to be answering the question, “What are the best trade tools that you can use for options trading or for stock trading in general?” I think the best tools that you can use are first, a broker. A broker accomplishes most of the goals or checks most of the boxes when it comes to actually trading. You pair yourself up with the right broker that has great technology, great speed, great customer service, great commissions, etcetera, I think that accomplishes a lot of it. From there, you definitely want some charting software. If you're looking to start trading, you want to figure out how you can get charting software. If you don't get it through your broker, if you can't get good charting software through your broker, you want to use a third-party service provider. Something like tradingview.com is a good alternative. I know a lot of people who are now trading on Robinhood because of the free commissions, but

Hey everyone. This is Kirk here again from Option Alpha. Welcome back to the daily call. Today, we’re going to be talking about how to adjust short straddle option strategies. Short straddles are probably one of our favorite strategies here whether we do them regular, I guess or naked short straddles or we do them synthetically with iron butterflies because sometimes we will sell a short straddle and then buy protective wings because they’re really cheap during low implied volatility and basically create an iron butterfly. But a lot of people have confusion on how you should adjust these strategies or I guess there's a lot of confusion on how you should go about adjusting new strategies. Now, the first thing you have to understand is that with these strategies, whether you do them as a regular straddle or as an iron butterfly, is that because you’re selling at the money strikes, your first style of adjustment is going to be to go inverted. We’re not talking about rolling contracts to the next month. We’re tal

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to be talking about why I believe and I will try to subscribe myself to not spending your life avoiding failures. I’ll tell you a quick little story which I think will help because it really helped me and I kind of (I don’t know, for whatever reason) thought that it was impactful on my life which is why I wanted to bring it to your attention. But I was at mastermind event a couple of months ago, the only mastermind that I go to with a bunch of people and we had a chance to meet and speak and sit down and talk with Sara Blakely who is the founder and the woman who runs SPANX, multi-billion-dollar company and she’s a billionaire by her own right, very interesting story. And what she said in her story which I think stuck out more than anything was that at their dinner table when they were their kids, her father would go around the table and ask each of them what they failed at that day and if you didn'

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to try to walk through a very simple guide to understanding the foreign exchange or Forex markets. The purpose of doing this is just to give you guys a little bit of an overview of what the Forex markets are and generally, why they’re around and how you could potentially use them if you wanted to trade or hedge in the foreign exchange markets. Again, the Forex market or FX market as it's commonly referred to is really just a huge over-the-counter or decentralized market for currencies all over the world. And so, the point of having a foreign exchange market and having all of these large institutional banks and international banks and financial brokers and interbank markets is basically to set a bunch of foreign exchange rates. And so, the idea is that the market is not necessarily setting a price of any particular denomination of currency, but it's setting it by pairs, so what is $1 if you were to pa

Hey everyone. This is Kirk here again from optionalpha.com and welcome back to the daily call. Today, we’re going to be talking about why you have to stop discounting the importance of variance in your portfolio. The reality is that when a lot of people get started in trading, what they often do is they often over-allocate. This is nothing new. This is something we’ve talked about at nausea before. And the trouble with over-allocating is that when things go right, it gives you a false sense of false positive that you're doing the right things. You allocate let’s say 50% of your account to a trade and the trade goes really, really well and for that reason, you think, “Okay, great. Now, I have to allocate 50% or whatever the threshold is to all of the trades that I do moving forward.” The truth is that when you do this and you get those false sense of positives, you eventually run into a string of losers. Murphy's law implies that when something bad could happen, it probably will go happen and many of you guys

Hey everyone. This is Kirk here again at optionalpha.com where we show you how to make smarter trades and welcome back to the daily call. Today, we are going to be talking about the cheapest options trading brokers. And when we say the cheapest, we are naturally talking about the option trading brokers that have the cheapest commission rates. Now, before we get into what I think are the top three as far as cheapness goes and commissions go, I just want to make one disclaimer and that is that in most cases, you get exactly what you pay for when it comes to an options trading broker. Although it might seem a little bit tempting to go with the absolute cheapest broker and in many cases, that might fit your needs very well, you have to understand that the reality is in this business, commissions are a cost of doing business and if you go with a broker that charges commissions, you will likely find yourself in a trading platform and in an environment that might end up making more money because of the broker chargi

Hey everyone. This is Kirk here again and welcome back to the daily call from Option Alpha. Today, we’re going to answer the question, “How do you make money buying non-dividend paying stocks?” This is a question I think a lot of people have. In fact, this recently came up at a family barbecue because somebody asked in our extended family. He said, “You know, I was talking to somebody…” They were talking to their financial advisor, whoever and they just didn’t really understand why people would buy non-dividend paying stocks and I think this is actually a very old mentality, meaning that people in the old days, I guess maybe 30 or 40 years ago, the big thing was you had to buy stocks that paid a dividend because you wanted that income, you wanted that cash flow. Nowadays, not all stocks pay dividends. We know this intuitively. I think some people are starting to learn this which is actually kind of interesting that this is not something that everybody knows and everybody understands the market. But there's co