The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone, Kirk here again and welcome back to the daily call. Today, we are going to talk about this concept of core portfolio theory for options traders and really asking the question, “Is it still viable or frankly, something that’s useless?” What is core portfolio theory? You might have heard it from some other people out there and that’s basically this idea that you should have a core portfolio on at all times. That can be comprised of futures contracts. It can be comprised of synthetic options positions. It could be comprised of stock in and of itself. You could be long gold because you love gold or long bonds because you want to be long bonds. But something that is your core portfolio and then you trade around that core portfolio. I understand all of the arguments for a core portfolio. I just think it's honestly inefficient use of capital to some degree unless you're doing things mostly synthetic. My biggest rub with it is that I truly believe in most cases, that stock is really inefficient for trad