The "Daily Call" From Option Alpha

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#660 - The 1 Viewpoint Most People Hate To Accept Jul 13, 2019

Show notes

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 one viewpoint that most people hate to accept. Myself included, we all hate to actually accept this viewpoint, but it's really, really important and I think today's podcast is one that hopefully should kind of hit you right in the gut to some degree because I'm going to try to be as blunt as possible not only to you, but to myself because I think about this and I read this over and over. This is part of my kind of daily routine of reading some of these mindset things and this one always hits me. I mean, always, like literally, when I read some of this stuff, I stop and I think to myself, "Man, that's so powerful, so important." It could be so easy just to dismiss what we're talking about here and chalk up your successes and failures and everything to something else or some outside factor of circumstance, but it's really not. Here's the deal, right? In this world, the reality is the most committed person wins. Someone can fail many times, but they're not a failure until they begin to blame someone else and that's really the end result. You don't fail until you stop doing what you're doing or trying and blame someone else. At that point, you have failed. If you never get to that point, you're never going to fail and you're going to be the most committed person. But there's one viewpoint that most people really hate to accept and it's that everything you have or you don't have or you ever will have in your life, is because of the choices that you make. Now, we all hear this all the time, right? We all hear, "Oh, our choices are so important." But really, think about this for a second. Everything you have or don't have or ever will have is because of the choices you make. The quality of your life or its lack of quality is simply a function of your choice. At some point, you made a choice, good, bad or indifferent, to move in the direction that you're moving right now and that means… This is like to me, the light at the end of the tunnel, is that you can make the choice to move back.

What's cool about being a human, in all honesty, is that we have the ability to self-recognize where we're going and to make conscious decisions to change our mindset. Animals don't have this ability. They don't have the ability to say, "I do not want to be a bear today. I would like to be something else." But as humans, we have this choice. And so, we've potentially made all these choices whether we know them consciously or subconsciously to get us to this point. And what's cool is that if you think that your quality of life could be improved or you could do something better, it's simply just a matter of choice to redirect the ship. Now, I'm not saying it's going to be easy, but it's literally a decision that you have to make to do something different and you have to rewire your brain into building new habits and new routines. And so, look. This is all about taking personal responsibly for what you do, especially in trading. In trading, you're your own commander in chief, right? You're the person that's making the decisions, you're doing your own position-sizing, you know you can't predict the market, you know you can't control what Trump tweets or what Trump doesn't tweet or what the FED says or what they don't say. You know you can't control that stuff, so don't blame anybody else when some of those functions that you know could potentially harm you, end up coming back to bite you in the end, right? You have to take responsibly for what you do and it's also how you respond to other people's actions towards you. You can't control what other people say and you definitely can't control what other people do or how they react to you, but you can control your reaction to them or your inaction to them. You can choose to dismiss them and ignore them if you don't value their opinions and move on with what you're intending to do. Hopefully this helps out. Like I said, this one, like when I read my daily kind of routines in mindset and kind of quotes and things like this, this one always just makes me pause just for an extra second, just thinking, "Man, it's really everything I have, is because of the choices I make, because I choose to do this versus that or I choose to do X versus Y." And that's really powerful because that means in the future, if I want to change the ship and move in a different direction, it's just about changing my choices. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#659 - Theta Of An Option Contract Jul 12, 2019

Show notes

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 Theta of an option contract. The Theta of an option contract is a critically important concept for you to understand, especially if you're a new options trader, but even if you're an experienced options trader, hopefully you get a lot out of this. Theta is basically the Greek representation for time decay. I always think T from Theta as related to T for the time decay of the option contract. Now, as opposed to many of the other Greeks in option pricing formulas and inputs that go into it, Theta is really the one thing that is the continual constant and that's because time marches on. It never slows down, stops or speeds up. Every day passes at the same interval and the same frequency as the day before. Theta is a really good conceptual understanding of how time passes in the option contract and how the passage of time can erode the value of an option contract faster and faster. We know that option contracts that are far out in time have very little Theta decay and that's because the contract that's say six months out in time has a long time before that option contract is going to reach expiration. As we're getting closer and closer to expiration, six months seems pretty far out, so that every day that we get closer to six months expiration is not really that big of a deal. But something that's say seven days from expiration, well, every day is really getting closer. Now, we're starting to increase the speed exponentially as we get closer to expiration. Contracts with seven days as opposed to contracts with 60 days have more time decay. They start to lose their value faster and faster and faster.

The way that I was always explained this concept and I think probably the best example of this was many, many years ago, has explained Theta as drops in a bucket. An option contract is basically this bucket of water that you fill up and the bucket of water has been poured into this bucket and then someone drills a tiny little hole in the bottom of the bucket and that's Theta decay, that's time. Now, when the bucket is full of water, that tiny little hole that's dripping water every single day at a similar and constant pace doesn't seem like a lot because you have a lot of water in the bucket. This is representing option contracts with a lot of time value left in them, option contracts that are really far out in expiration, three months, six months, a year, two years out in expiration. At that point, the small drop of water that's coming out of the bottom of the bucket doesn't seem like a lot. It's not a high percentage of the total value of that bucket of water. But as you get closer and closer to running out of water, as expiration nears and the value of the contract starts to drop because we're getting closer to expiration, well, now, every single day, that drop of water that's coming out of it or those drips of water start to represent a higher and higher amount or percentage of the total water that's left in the bucket. We start to lose value. And that's really what time decay is. Time decay is this increasing curve that starts to accelerate as we get closer to expiration. It's a slow drip of water that starts to remove value from the contract for further out contracts. But as you get closer to expiration, the drops of water still maintain their pace. They just end up becoming a larger and larger portion of what's left in the contract.

This is really important to understand as an options trader because as an option buyer, Theta decay is working against you. It is eroding the value of your contract so much so that you really need the stock to make a move and make a move quickly before Theta decay rips all the value out of it. As an option seller, Theta works to our advantage, but sometimes, it feels like we're not really making any progress because as an option seller, we sold this option contract and we're looking for all the water to be sucked out of this bucket, but in some cases, it might happen just a couple of drips at a time. And so, this is really good because as an option seller in particular, we can conceptually think about this as the bucket of water with drips and just understand that Theta decay will occur. It will happen, but it's probably going to take some time. You probably have to be patient to let all the water kind of get sucked out of that small little hole at the bottom of the bucket and that may take 30 days, it may take 60 days of patience to let that maturity happen, but it's really, really worth it. Hopefully this helps out. Hopefully it was a good concept. If you did like it or if you didn't like it, let us know. Just give us your feedback online or on social media. Post a review for the podcast. We'd always love that. That's how we spread the word here at Option Alpha and until next time, happy trading.

#658 - Babysitting $100 Dollar Bills Jul 11, 2019

Show notes

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, I want to talk about babysitting $100 bills. I want to explain this because I want to use just a very simple, realistic scenario of what happened. Me and my wife have three kids and whenever we go on a date night or if we have some function going on where our kids can't attend, we obviously get a babysitter for our kids, okay? We don't leave them at home and just put out food and water and hope they're okay like dogs and cats, right? We get a babysitter. But as a parent of three kids, we're going to get a babysitter who is used to and has experience with multiple kids, right? I mean, that would only seem fair and it would only seem realistic and probably the smart thing to do, that we don't get maybe a new babysitter that's never watched a kid before, let alone a five-year-old, a three-year-old and an infant. We want a babysitter who's watched one kid, two kids, maybe three kids and had experience watching infants, in particular, that knows how to deal with certain scenarios when they come up and potentially, CPR training, all the stuff that's really important as a parent, right? But when we actually apply this concept to investing our own money, it's amazing to me that a lot of people break rules and assume that they have all of this experience to be managing more money, like more money is going to magically solve all of their problems, like if a babysitter walked in and if she wasn't good as a babysitter or he, it doesn't have to be a girl, but if that babysitter wasn't good managing one kid, having five kids is going to make it a lot easier. That's not how it works. It doesn't work when you watch kids and it definitely doesn't work when you watch investment money and portfolios.

What I'm trying to tell you today is don't focus on what you potentially need to have to make it work. You need to learn how to make it work right now and build from here. A great example of this and we talked about this on other podcast, but it's so, so true, is the Apollo 13 mission. If you've never watched the movie, you've never learned about it, go research it. What they basically did is when they ran into the situation with the oxygen tanks, they basically said, "Look. We need to build a filter with what we have. We can't send stuff up to the spaceship. We can't shoot it from earth up there and send them the right tools." They basically dumped everything out on the table and said, "Let's build a filter. Let's figure out how we can build a filter to filter…" I think it was like carbon monoxide to oxygen. And so, that's what you need to do as an options trader. Look. You don't have $1 million, right? You may not even have $100,000 or $10,000. That's fine because what you have to do first is you have to learn how to babysit your first $100 bills. And if you can learn how to properly protect those, then the universe will give you enough money to learn how to babysit the next set of $100 and then thousands and then hundreds of thousands and then hopefully, millions. But you'll never have a fortune if you don't first control what you have right now. If you can't manage one kid, having three kids is not going to solve the problem, right? And so, in that same way, if you can't first learn how to manage and babysit $100 bills, maybe a $1,000 account, $3,000, $5,000 account, adding more money is not going to be the solution. In fact, it's just going to compound the problem and it's going to make it even crazier. Hopefully this little analogy and this little story helped out. If it did, let us know. Share this online on social media. We're everywhere in Option Alpha and until next time, happy trading.

#657 - Cash Gives You Investing Optionality Jul 10, 2019

Show notes

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 cash gives you investing optionality. This is a really important concept and something that we've been harping on for probably over 10 years now. We've been talking about how important it is just to have cash in the bank and have a cushion of cash ready for trading or investing or really anything, kind of like this emergency day fund if you want to call it the emergency day fund in budgeting. But the whole idea behind cash is the optionality that comes with cash. And with cash, you can do so much so quickly. And I think a lot of people try to kind of break some very simple rules with cash. They try to use things that are cash like or they try to put them into things that they assume they can quickly unwind and unravel, but the reality is nothing comes close to just having literally hard cash in the bank ready to go at any moment. And because of that, you have a lot more flexibility in what you can do. You don't have to rush decisions. You don't have to make rash decisions. You can really spend that extra day or those extra two days double-checking and triple-checking things before you do something. But in the world of trading, specifically for options traders, when people get into trouble is when they one, over-allocate on individual positions, but two, over-allocate on the whole account. And when you over-allocate on the whole account and say you've invested almost everything or nearly everything into the market at one time, it gives you no flexibility, no leeway to kind of bend and move with the wind, right? Some of the biggest trees in the world, the tallest trees in the world have a lot of flexibility to bend with the wind. They can move and sway, sometimes a lot of swaying at the top end of the tree that we wouldn't just notice on the ground by the base or close to the roots. But it's that bending and swaying that has allowed them to kind of continue to grow and continue to thrive in that environment because they bend, but they don't break.

And so, in trading, when you get into a situation where the market's going against you or something happens that's odd and random and stocks are moving very fast, cash is that cushion that allows you to kind of bend and move with the market without having to snap. If you don't have enough cash in the bank or if your position sizes are too large, then what happens is other people start making decisions for you. Your broker might make a decision because you have a margin call now and they might liquidate a position that's totally fine. I've seen times before and I remember specifically a couple of years ago, we were actually on a family vacation and I came back and checked the position and nothing had happened to the position. The stock absolutely moved nowhere and yet, implied volatility in the broad market went up, so the margin requirement on the individual position almost tripled I think. And at that moment, if I was in a position where I didn't have enough cash as a cushion, the broker could've easily liquidated that position. But the underlying stock didn't move anywhere. In fact, it didn't move at all. It was basically trading the same price it traded the morning and the afternoon. But because the overall markets saw more volatility and more perceived risk, the brokerage and margin requirements on everything started to expand and because of that, I had enough cash to allow that flexibility to kind of expand and push against my cash balance, but not really push us to the brink that we needed to force close that position. That's a great example of where a broker might just come in and close something that really didn't need to be closed in the first place. You get into a situation where someone else is directing your decisions versus you taking the time to analyze it and make sure you're making the right decisions and making the right trades in your portfolio.

Again, cash is this wonderful, wonderful optionality that we don't get any place else and it's really hard in today's environment because for many people who are trading, they haven't been through a market meltdown or a crash. Many people haven't even been through a 10% or 15% correction in all honesty. And so, you don't know what type of pricing is out there that you could get on some of these options when implied volatility triples or quadruples overnight. And that's the kind of stuff that I really look forward to because at some point in the future, we're going to have a lot more volatility in the market and that's going to lead to a lot better option pricing and that's where I want to scale into positions. But right now and any time that you're listening to this where implied volatility is low, the edge is still there, it's just that the optionality of what we can do is very limited. There's not a lot of choice out there. We want to keep a lot of cash. We want to keep a lot of cushion there, so that we can withstand a blow from some black swan event that comes down the line and not have it knock us out. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#656 - People Love To Be Victims of Circumstances Jul 09, 2019

Show notes

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 people love to be victims of circumstances. And this is totally true and you probably know this or you've maybe seen somebody that's like this. We've all even felt like we're victims of circumstance in some cases. But people love to be victims of circumstance because of all the benefits that it entails. They never have to be personally responsible for anything that happens to them. They never take responsibility because it's always someone else's fault.

And look. We've all done this before, myself included. "Oh, it's person's fault." or "It's the government's fault." or "It's because Trump tweeted." And this actually came because somebody cancelled and they said, "I can't do this anymore because the Trump tweet really killed my position." And when I dug down a little bit deeper, we found out that their position was just too large. It was a massive position. I think it was like 18% or 20% of their account. They just broke a lot of simple rules and they just really didn't want to feel like they had responsibility for it. Whether it's subconscious or conscious level, people like to be victims because they can push their blame to someone else. But remember, no one else is your problem. You have to take responsibility for everything that you do because ultimately, you're in control. You're in the driver seat, no one else. Can other things impact you? For sure. But your reaction to those things is what makes all the difference.

Again, it's just a reminder today in case you didn't think about it. Make sure that you take control and make sure that you realize you are responsible for everything, whether it's good, bad, whatever happens. This is all stuff that happens to you and your impact and your control over what happens afterwards and your reaction is far more important than any other thing that might happen around you. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#655 - Simple AAPL Put Option Example Jul 08, 2019

Show notes

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to use a very simple Apple put option example just to help you kind of walk through how you can understand how to sell put options in a particular stock. I like to use Apple because it's a really popular ticker for everyone. Everyone knows Apple, they're familiar with it and it gets a lot of attention. We're just going to do this at the time that I'm actually recording this. And so, right now, ironically enough, Apple is trading pretty much at $200. It was just downgraded today, so it's trading a little bit lower on the day, about 2.5% or so, but it's trading right around $200 a share. When we look at a put option, obviously, what we're trying to do is sell a put option, hope that the stock does not go below our strike price or our blended breakeven price and look to collect all that premium or as much of that premium as possible before expiration. Now, at the time I'm recording this, it looks like August expiration is about 40 days out from now, so we've got a decent amount of time. It's not an insane amount of time, but we're just beyond 30 days, so we've got a pretty good amount of time for Apple to close within our expected range.

Now, you have a couple different choices and this is where you really have to decide ultimately what works best for you and what works best in this market environment that we're in right now. The first one that we'll look at… And we'll just look at two examples, so you can kind of compare and contrast the differences between them. But this is the beauty of options, is you do have really options (no pun intended) on how you can go about this and you can pinpoint your probability of success or how much premium you want to take in, how much risk you want to take on the position. It's all up to you. The first thing that we can do is we can look at something that's fairly close to where the stock is trading, but also gives us potentially a high probability of success. The 15 Delta put options right now are the 180 strike put options. Again, the stock is trading at about $200. If we were to sell the 180 strike puts, that would give us around a 15 Delta which means it probably has around a 15% probability of being in the money at expiration. If you think about it in the inverse, you probably got about an 85% chance of winning on this trade. Now, right now, the 15 Delta 180 strike put options are trading for $177, so if we want to sell those options, we would collect $177 and then we would carry a bunch of margin to cover that position. But again, we have a high probability of success, we have to put up a lot of money and capital just in case it does go sideways because we're likely to lose more than $177 if the stock starts going down. In that case though, if we sell the 180 put options and we have a credit of $177, that would actually make our blended breakeven price around $178.32 or $.23 or so. We'd have a breakeven price that's a little bit lower than where the stock is trading now.

Now, as opposed to doing the 180 strike put options, we could sell something a little bit further out. If you told me, "Kirk, I'm just not that risky. 180 might be close. The stock just got downgraded today. It's moving down on the day. I don't know if it'll go down to 180 by the time we get to expiration." Okay, fine. We can go a little bit further out and we can sell something around say like a five Delta. A five Delta would be super far out of the money at least for Apple is concerned or for any other stock is concerned and you're selling something that has a really high probability of success, but in exchange, you get a lot less premium. In this case, if we were to sell the five Delta put options which have a roughly 5% chance of being in the money, so a 95% chance that they would expire worthless or close to worthless at expiration, selling those put options would be selling options down at 165. Now, you're selling options that are much further away from where the stock is trading now, about $35 lower than where the stock is trading. That means that Apple could go through a massive move down lower and your option could still be worthless at expiration and you could collect all that premium. Now, because you have a much higher probability of success, you have to give up a lot of your premium. In this case, the 165 options are only trading for $.60, so when we use that against our breakeven point, we're only looking at kind of a blended breakeven point of 164.40.

As you can see here, this is the tradeoff in trading different strike prices and different out of the money contracts. You trade something a little bit closer, you collect a lot more money, but you also have a much higher probability that the stock goes in the money, so your P&L is going to fluctuate a lot more. You trade something a little bit further out and you have a higher probability of success, but you do give up on the premium. Now, we've done a couple podcast on this and kind of analyzed this on the weekly podcast, trying to figure out is there an optimal range and we think there's for many environments, probably a good range that you could look at. Again, check out the weekly podcast where we did talk about risk and reward and pricing of different spreads out of the money to help out. Hopefully this helps. As always, if you have any questions, let me know and until next time, happy trading.

#654 - How Economic Vertigo Impacts Options Traders Jul 07, 2019

Show notes

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 how economic vertigo impacts options traders. What is economic vertigo? It's just this idea that we get unbalanced or we get lopsided if we start going too deep down the rabbit hole of trying to understand the impact of every single economic or fundamental indicator out there. A lot of times, what you'll see is somebody who wants to understand every little intricacy that's going on and what they end up doing is they start feeding into this self-fulfilling cycle of trying to read the news and understand this indicator versus that report and this FED official said this and Trump tweeted this thing. And what they end up having is vertigo because they're so unbalanced with so much information coming in and whirling around them that it knocks them off track and a little bit of the analysis paralysis can creep in.

My thought process on this and the visual I use (maybe it helps out with you or not) is that what you want to be is you want to be basically the center of everything swirling around you and you want to be steady and calm and you want to watch things happen and pay attention, (not that you should be totally oblivious) but you don't want to get yourself sucked up in the vortex of everything that's going on. You need to have a general awareness of what's happening in the market, the fact that the FED is going to announce on this date or the fact that there are some trade issues with China or Mexico or whatever the case is. But that doesn't mean that you need to go down the rabbit hole of understanding and reading every single thing that you come across or get your hands on because ultimately, it will knock you off track, it will create some economic vertigo where you get unbalanced and dizzy with so much happening. You want to be calm, cool, collect, the center of this vortex spinning around you which is the entire world in trading, so that you can track and focus on your system and your process. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#653 - Top 3 Qualities of People Who Lose Trading Options Jul 06, 2019

Show notes

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to go through what I think are the top three qualities of people who lose trading options. Now, I'm not saying this is everybody who loses trading options, but I think generally after doing this now 10 plus years, I see people who do some of the same reoccurring things over and over again and they develop their own little pattern and habit that starts to evolve. If I were to kind of break it down into the top three things that would characterize somebody who I would think would be somebody who's not going to make it in options trading, it would probably be one of these three things. First, they complain about their circumstances and wait for something to change. Undoubtedly, when I see somebody who start complaining about why the president is tweeting or why the FED is doing this or why Russia and China are doing what they're doing or anybody else, undoubtedly, I know somebody is just not taking control of their own circumstances and they're waiting for something to change. They're using everyone else as a scapegoat for why they can't be successful.

Number two, they look gimmicks or shortcuts to success. You would not believe the number of emails that I get on a monthly basis of people who ask if I can make 50% a month in trading or "How can I do it?" or "I know it's probably really hard to do, but how could I do just even one trade that makes 200%?" And the reality is that they have such a short window and shortsightedness with regards to probabilities and expectancy that they're just trying to gamble and they're using options trading as a means of trying to gamble and shortcut their way to success. I'm telling you. It would actually kind of probably for many people, actually astonish you how many people email me and say things like, "How can I make 10% a month?" or "How can I make 25% in a month even if it's just for a month, Kirk? Just tell me really quickly like what you would do if you knew you had to make 25% in a month or you knew you had to make 50% on a trade." And it's really sad because I know that ultimately, those people are going to fail. And I try to steer them in the right direction, but they probably just never reply back or go someplace else.

Alright, so number three is they avoid hard work, they're close-minded, go at it alone and give up easy. I know that was a couple of them, but I kind of wrapped them up in the third, but it's just really this idea of people who just really kind of shut down and give up. Options trading is not going to be something that is easy to do, but it is very simple. It's very simple in regard to how the numbers work, how the models work, how the research has been proven from us and everybody else. That's all simple stuff, but it's not easy to do. It's hard to do in the sense that it's hard to go in every day and make trades. It's hard to understand lingo if you're not new to it. It's hard to understand a brokerage platform that you've never seen before and looks like a jetfighter cockpit, right? That stuff is a little bit difficult, but if you're close-minded and you don't reach out for support, then ultimately, you're doomed to fail. Reach out for help. Look for people to help. You can look to us if you want us to help you. You can look to other people online or other people that are talking about trading. Look for support. Help other people out along the way as you go. Answer questions that you can answer and help somebody else out somewhere else online or in a forum or a mother or a brother or a sister, a father, a coworker who's starting to trade, but don't give up. Really keep after it because it is a lifelong pursuit that hopefully is a worthy one for you to be on because it helps you gain control of what you're doing in your portfolio. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#652 - The #1 Diversification Mistake You Are Making Jul 05, 2019

Show notes

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 number one diversification mistake you're making right now, and that mistake is not acknowledging correlations. The huge mistake that a lot of people make with classical diversification is that they mistake quantity for quality, and what I mean by this is that a lot of people, when they get into diversifying their trading and trading more products, they just naturally trade more symbols and they go for the game of quantity, so the idea that if I trade five products versus one product, that makes me diversified. I have five tickers versus one ticker, now I'm diversified. But that's not the story. The end result is that you could be trading five symbols that are either in the same industry sector or area of the market or just happen to be if they're not in the same industry or sector, happen to be highly correlated to one another.

The classic example of this is if you trade Home Depot and Lowe's, yes, you have diversity in the sense that you have more trades and more products in your account, but you're basically trading two of the exact same thing. It could be seen as one giant position just split among two individual players. What you need to be focusing on and acknowledging is the correlation between different investing products and different areas. We did a lot of research on this. We published this on the website for our members, this idea that correlations do change over time, so they're not perfect, but there are certain areas and sectors that are highly uncorrelated to one another, and so, by adding positions in those areas first, you get a lot more diversification bang for your buck in a sense. Adding things like FXI and GLD and TLT and XOP and XLU and XRT, that gives you a lot more diversity in your portfolio quickly versus trading a lot of the same ticker symbols in a highly related or highly correlated industry. Hopefully this helps out. As always, if you have any questions, let us know and until next time, happy trading.

#651 - "Burn The Ships" Or Quit Now Jul 04, 2019

Show notes

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 should burn the ships or quit now. Many of you guys have heard the old Cortez (I believe it was) quote where he talked about burning the ships and never going back, this idea that when he landed in the Americas, he gave his men the order to burn the ships and basically, that forced them to do the things they needed to do to be successful in the Americas or wherever they landed and ultimately gave them a reason for sticking with it because they knew that the ships were gone and there was no way to go back. Well, the same thing has to be said about options trading. I've seen way too many people over the last couple of months tiptoe and kind of dance their way into this market and into this business, but it's not how it works. You either have to commit to going full steam ahead and committing to options trading as a viable systematic approach to investing or you just have to quit. And there's no shame in doing that. That's fine if you want to quit and you want to go on and move on and do your own thing. That's completely up to you.

This is one of the reasons why all the training and education in Option Alpha is completely free, because I want people to come in and to decide for themselves if they choose to use options trading strategies or not. And if you don't, if you don't have the time, you don't have the patience, you don't have the emotional intelligence to do it, you just don't want to do it or think something else is better, fine, go do something else. But you can't tiptoe into this business. You have to burn the ships if you are going to get into this business for options trading. You have to commit to doing it on a long-term basis. You have to commit to playing the expected outcome and the expectancy of any system that you're trading and you have to have that definable edge that's going to reveal itself over time. Otherwise, you're just gambling with your money. You're just coming in, trying to make a quick buck whether you subconsciously or consciously know this to be true and that's never going to work because Murphy's Law is in place here. What will go bad is going to go bad and it's going to happen to you when you start really tiptoeing in this business. Hopefully that helps out. As always, if you have any questions, let us know and until next time, happy trading.

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