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2Show notes: http://optionalpha.com/show157 A couple of weeks ago I was reading the story of the three little pigs to my daughters. And for some reason, I couldn't help but think about the untold story of the three little pigs who traded options? Yes, it's true, many people don't know this but the three little pigs were actually given a large chunk of money from their mother and each decided to trade wildly different options portfolios when they set out on their own. In today's podcast, I'll walk through each of the different portfolios they used and how volatility and variance can impact long-term performance and why it's important that we know the story of the three little pigs that traded options.
Show notes: http://optionalpha.com/show156 Many of our members understand the best times to trade options (i.e. higher IV setups when option premiums are expensive), but should we avoid trading during other market situations? Today's podcast walks through the four general market situations I avoid aggressively trading in and explain why each type requires that you either sit on the sidelines or dramatically scale back your position size.
Show notes: http://optionalpha.com/show155 Everyone loves a good options trading checklist right? Well, here are the 7 questions you should ask yourself before you put on an options trade. Answer each one over the next week and you'll build a strong habit that will keep your positions and portfolio in check before you put your hard earned money at risk.
Show notes: http://optionalpha.com/show154 We get a lot of emails each day - I'm talking hundreds of emails. Naturally, seeing so many questions and comments come through the system, we found that these 17 top questions keep coming up again and again. So, in an effort to help you, and our team reduce the support inquiries, I'm recording answers to each of these questions in today's show.
Show notes: http://optionalpha.com/show153 Assignment for some traders can be scary and cause them to freeze up or throw in the towel. On today's podcast, we'll walk-thru another case study in which we got assigned on our iron butterfly position in TLT not once, but twice. Inside I'll move slowly as we look back at each stage in the trade from the original order entry, adjustments, assignment, and ultimately the covered calls we sold after being assigned stock. This podcast is worth listening to twice!
Show notes: http://optionalpha.com/show152 You're looking at a great setup for a neutral trade, but which neutral strategy do you use? Short straddle or short iron butterfly? It's a question we get all the time and today's podcast focuses exclusively on the trade-offs of using one strategy over the other. And while both strategies are built using the same core short straddle position, the choice of adding protection or not using long OTM options can sometimes lead to analysis paralysis. So, let's clear this hurdle together.
Show notes: http://optionalpha.com/show151 All over the internet, you'll hear stories of why short straddles and short strangles should be avoided at all costs. Stories of how trading "undefined" risk positions can blow up your account when the market moves against you quickly. And while position sizing still needs to be managed appropriately, the fact remains that properly adjusting short straddles and rolling for duration and premium can help turn so-called losers into profitable positions. In today's show, we'll focus on our most recent case study in EWZ in which we turned this losing set of straddles into a $540 winner with a little patience and some mechanical adjusting.
Show notes: http://optionalpha.com/show150 As much as I love options trading and following the financial markets, I enjoy the challenge and process of building wealth. I think about wealth building as a 3-step process in broad terms, possibly in the shape of a pyramid even. And since it's our 150th show, I figured I would take a slightly new angle in today's podcast and discuss what I believe are the most valuable insights I can offer from my own experiences and research on how to manage your money and generate wealth. Plus, we'll use this 3-step or 3-part approach to help frame the conversation as best we can.
Show notes: http://optionalpha.com/show149 For some reason, many traders fear being assigned option contracts as part of an option strategy. Maybe it's the large capital requirement to hold the shares or just the "unknown" around how to manage the position. But, like most things in life, when you slow down and take the time to walk through the position and the mechanics it becomes much easier. On today's show, I want to once again provide another case study on how we managed a recent assignment on our GLD iron butterfly position. If was fun for me to go back through my own comments and remarks during this 4-month trade and I have no doubt that you'll also find it extremely helpful. We'll take you through each and every step from the initial trade entry, adjusting and inversion, being assigned shares, selling covered calls, etc. No details will be left out and we'll walk through the P&L calculations together step by step. Let's begin, shall we?
Show notes: http://optionalpha.com/show148 No system is perfect. No trader is perfect. You will have losing trades. But it's how you react to those losing trades, or even false positive trades, that defines how long you'll survive in this business. Today's show focuses on what I'm calling the 5x2 "Victim Matrix" in which there are 2 paths you can take follow each and every trading event. Each path has 5 stages or steps. Which path should you choose? Well, it's all inside our latest podcast episode.
Show notes: http://optionalpha.com/show147 Did you ever wonder what an options market maker is thinking or how they see the markets and regular traders like us? After all, these guys are the ones that are making markets in different securities each week. So, I invited one on the podcast to ask him questions and learn more about the “other side” of the business we rarely see. On today show, I have the opportunity to interview former CBOE options market maker and volatility trader David Lincoln. During our time together we discussed everything from how he went from making $100,000 in a day to losing $300,000 in one session to the lessons retail traders like us can learn from the his decades of trading experience. We also dove deep into volatility trading and pricing structures for VXX and UVXY and the strategies you can use to profit following a rise in market volatility. This is an episode you won’t want to miss!
Show notes: http://optionalpha.com/show146 If you trade options and are struggling to find consistency or profitability it's likely because you are breaking, knowingly or unknowingly, some important rules. Rules that are designed to keep you safe, protect your portfolio, and cater to the math and probabilities that drive any options selling system. On this episode, I'll walk thru the 11 common options strategy mistakes you might be making right now. Plus, we'll talk about the core principle or rule associated with each of the mistakes, which will help you quickly correct your trading system and ultimately find success sooner.
Show notes: http://optionalpha.com/show145 Is less more? Often we hear this phrase thrown about with the assumption that when investing you should do less, sit on your hands or trade further out, in order to generate higher profits and better returns. But is this really the case and does the math and data prove this to be the point? We wanted to put this assumption to the test with a couple backtested short straddles in IWM and EFA. No filters, no profit targets, no stop-loss orders; pure option selling strategies. Our goal was to see if trading options 60 days out was more effective or profitable than trading options more actively 30 days out from expiration.
Show notes: http://optionalpha.com/show144 On today's podcast, we bring in a very special interview guest, Larry Connors, and discuss his new book Buy the Fear, Sell the Greed. Larry is an established author in the trading and equities space and I thoroughly enjoyed our conversation about market dynamics, trading psychology, VXX pricing structures, and the future of the industry with regards to automation. As you listen to this podcast interview, notice the very similar structure and thought process that both Larry and I share about creating mechanical data-driven event signals that can be replicated in any market environment. This I believe is why traders who use a more systematic approach end up performing better than those who are driven by their emotions and psychology of the environment.
Show notes: http://optionalpha.com/show143 Choosing which ticker symbols and option strategies to use when entering new option trades can sometimes seem overwhelming. In fact, many of our pro and elite members continually ask about the rationale behind why we choose one ticker symbol over another or use one strategy over another when building our portfolio. Today's podcast will help you understand the four-step process we use for evaluating how we choose ticker symbols and strategies when creating our options trading portfolio for each expiration. This framework should help guide you into understanding why IV rank is at the heart of our selection process but also why portfolio diversification becomes the true mechanics that govern which tickers ultimately get selected.
Show notes: http://optionalpha.com/show142 Many new options traders worry about what might happen to their portfolio during a short put option assignment scenario. They wonder how they can recover or if they have enough capital to hold onto the stock position. just a few weeks ago we were assigned on one of our short put options in EWZ and were forced to buy stock well above where the stock price was trading at the time. In today's podcast, I want to walk through the entire trade, including the short put option assignment and help you understand how being assigned options impacts your account and how you can still trade around these events by using a couple key strategies.
Show notes: http://optionalpha.com/show141 In the futures trading world, there are two words that sound cool to say but also might be very confusing for new traders; contango and backwardation. Yet, both of these future pricing concepts are very easy to understand once you know the relationship between three key items. In today's podcast, I want to slowly walk through the concept of contango and backwardation while offering a couple different examples to show you how it works in real life and how we might be able to use the awareness of futures pricing as part of an options strategy in our portfolio.
Show notes: http://optionalpha.com/show140 Have you ever gotten the feeling that some of your trades just end up exploding in your face and turn into "massive" losing positions? They just never seem to go the way you thought it would and always demand or steal your attention right? Well, there's likely a couple reasons why this happens and it gets back down to some of the most basic principles of options trading. In today's podcast, I'll walk through the psychology behind many of these "bad trades" and help offer a strategy to help manage them.
Show notes: http://optionalpha.com/show139 We all fear losing money, it's a natural human emotion. Myself included, I fear losing money just as much as the next person. But today I want to try to walk through a rational and logic sequence of questions that I believe, if follow the series, will help you uncover the only true risk in the market to your portfolio - and more importantly how to avoid blowing up your trading account in the process. I'd even dare to say that if you follow my 4 question logic sequence in the beginning of this show, you cannot help but come to the same conclusion about trading options including why the "staying alive" framework all but ensures you'll find success in any market.
Show notes: http://optionalpha.com/show138 I'm going to go out on a limb and publicly declare that this podcast will be one of our top 3 to 5 shows we ever recorded. Aggressive and overly confident, maybe - but I have absolutely no doubt this podcast episode will be a game-changer for hundreds of thousands of options traders. The expected probability paradox for options traders, as I have coined this problem, is one of the most understood aspects of option selling and premium strategies. The root of this problem starts with the misunderstanding of initial strike price probabilities, perfect pricing of option spreads, and the impact of implied volatility on when rates and drawdowns. On today's show, we are going to dive deep into the three main areas of the expected probability paradox to help you understand why option selling, even in its purest form, even if you cannot find perfect pricing, still outperforms the market. We'll also talk about why laddering in some additional active management strategies such as profit-taking and making adjustments or rolling trades helps stabilize portfolios and increase returns. Put simply, skip this show at your own risk.
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Hi Kirk, Have you decided to stop recording the podcasts? There is nothing after October 2020. Could you let us know please?
Hi Kirk, Can you please mention what was the time period that you backtested those strategies over? You mention those 500-670% returns but the period of time you testes is not mentioned in the podcast. Many thanks in advance. Best, Ola
speaking of the scarcity mindset, be sure to look into Andrew Yang and his book “The War on Normal People”. Great ep Kirk
Great episode!
loved this episode! always learn something with these. thank you Kirk!
in my opinion the Option Alpha podcast is the best of breed. you owe it to yourself to take advantage of this free quality education
Before listening to this podcast I understood buying and selling options. Just the basics. I'm up to episode 68 or so right now and I understand so much more. Some episodes I listen to repeatedly for days to make sure I'm absorbing the bulk of the message. I take notes as well when I can. I would highly recommend this podcast to anybody interested in options. I look forward to the rest of the podcasts and hopefully joining the site soon as well. Thank you Kirk for all you do.
Thanks for everything you do, Kirk. This podcast is great just like the rest of your content.
Great Podcast Kirk. I started from episode 1 and am on Episode 35. Very methodical in your approach and I have found every episode insightful. Keep up the good work.
Kirk I have been listening to you for about a month and recently became a member of your service. Your teaching and explanations have helped me demystify options and gave permitted me to correct some errors I was making. Thanks so much. Great service folks!
I'm so glad I found your podcast! I listen to them all the time and take notes. I am also a student of your online courses. You give sound advice in this episode by telling us to teach someone who isn't involved with options. I find this method of learning very helpful! Thanks for all you do! Keep up the good work!
Hi Kirk, this is a great Podcast that I have begun listening too, information and explanation is invaluable. thanks Jas