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

Hey everyone, Kirk here again and on today’s daily call, I want to talk about why “buy the dip” is terrible investing advice. This is something I’ve mentioned before on a Facebook Live we did a couple of months ago, but it's worth repeating here because we continue to see people fall into this terrible, terrible investing advice trap and that is this “buy the dip” mentality. Where does this come from? This comes from this idea that when the markets go down that that is always the best opportunity to buy up more securities. In fact, recently, just a couple of weeks ago, we heard this with Facebook when they announced earnings that it was a “buy the dip” type of opportunity or if Tesla goes down, it’s a “buy the dip” type of opportunity. But here's the problem with “buy the dip” when you trade options and when you’re truly neutral. Let's assume that your portfolio right now and the stock is trading let’s say around $100. Let’s say your option position around that security is totally neutral. You’ve got position