The "Daily Call" From Option Alpha

Latest Episodes:

#620 - Ribbon Studies Can Alert You To Market Peaks And Bottoms Jun 03, 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 ribbon studies can help alert you to market peaks and bottoms. I really actually like ribbon studies. I'm not a big fan necessarily of any one particular moving average or exponential moving average. And we've seen in our research before in the signals report that moving averages are not necessarily the best predictor of market trends or stock peaks and rallies. But I think when you actually combine multiple moving averages to create these ribbon studies which is effectively what a ribbon study is, is multiple moving averages overlaid on the same chart and it creates this rhythmic pattern of different ribbons or moving averages.

When you overlay this on a chart, one thing I like looking at in particular with ribbon studies is how expanded the ribbons can get near market peaks and bumps. When you look at a ribbon study on a chart, if you see that all the moving averages are about the same and they're really clustered together or tightly bound together, that generally means that you're in a market that's moving range bound or sideways or it doesn't really have a large outsized move to one end. But when you see ribbons start to expand or fan out as some people would call it and you start to see the disparity or the difference between say the five-day moving average and the 10 and the 20 and the 50 and the 200 or the 300 and this disparity starts to become wider and wider and the ribbon start to almost fan out and they create like a pattern on the chart where they're not necessarily bound tied together, this to me is a really good indication of markets getting overstretched in one direction or another and the reason they're getting overstretched is because now, the shorter-term moving averages are moving very quickly away from say the longer or medium-term moving averages.

Now, does this always mean that we're going have a peak in top of a market? Of course not. Does this always mean that we're going to have a bottom or a rally in the market? Of course not. But as a trader and as a contrarian trader that I naturally am, when I start to see ribbon studies start to get really exaggerated on one end or the other, it's telling me that we're starting to reach some sort of parabolic extreme, that the market is moving too fast for its own good and it's likely to snap back. We saw this in natural gas last year. We saw this in oil and gold and commodities and bonds and even the US markets in the bottom of the December kind of mini crash in 2018. I think for me, it's not, again, the only indicator that we look at, but it's very interesting to look at definitely in times of extreme moves in the market. Again, if you want to check those out, we have a nice podcast and a video on those, as well as a cool blog post. You can just search Option Alpha ribbon studies and you can see a couple of different chart examples on the website. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#619 - Buy Insurance When The Skies Are Sunny Jun 02, 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 buy insurance when the skies are sunny. I'll use this little analogy and obviously, we're relating this to options trading premium. In particular, in today's podcast, we're talking about buying option premium, put option premium when we want to protect our long stock portfolio. Now, full disclosure, I don't hold long stocks in my portfolio. We would only hold stocks if we were assigned and then we try to manage out of it. Everything that we do is options trading specific and we don't feel like holding long stock is an efficient use of capital. But having said that, a lot of people do use long stock in their portfolio and so, the question always comes up – "How do we buy insurance? How do we protect ourselves from the downside?" The little analogy that I'll use today is that of a hurricane or a storm on the horizon. Let's say you have a house or you own property in one of these hurricane or storm zones. Right now, just at the time I'm recording it, it seems like tornadoes are the big thing right now. If you own a house that's in tornado alley or could be subject to mudslides or fires or whatever, you basically want to buy insurance on that place when the skies are sunny, when there's no hurricane or tornado or fires on the horizon because what's going to happen is if you try to go back and retroactively buy insurance when a fire is three miles from your house or when a tornado is just about to touchdown or a hurricanes is 20 miles off coast, that is probably going to be really expensive insurance because there's a good chance that something is going to go wrong. Does that mean that you shouldn't buy the insurance? No, not necessarily. It means that still buying the insurance and maybe paying a really high premium might still cover you and protect your asset or your home or your property. But would it be better for you to buy that insurance when there's no storms or tornadoes or hurricanes on the horizon? Of course.

And so, the same concept applies with options trading. It's not necessarily that you should always buy put protection when implied volatility is low, that it will always protect you because what we've seen in our research (and other people can also confirm this and there's a lot of research out there on volatility risk premium in the market and even the risk premium that's present during low volatility) shows that buying options even when the skies are sunny and low volatility is in the market doesn't necessarily lead to a positive expected outcome. Now, in our opinion, this is probably your best chance at making money with an option buying strategy. It's your best chance at potentially curbing some sort of black swan event. But the problem with it is you have to be very, very good at timing and that's where most people get stuck. Do I think that buying option premium is a winning strategy? Absolutely not. We've shown that. Other people have shown that. It's definitely not a winning strategy long-term even during low implied volatility. But do I think that buying options and if you happen to time the market right or you happen to get into a situation where you can curb a downside move in the market of 20% and only lose 10% because you bought insurance? Yes, I think that's probably something that could happen. It's probably not going to happen all the time, but I think it could happen in certain instances and that could be just enough to kind of save you from a large drawdown. Again, the idea here is if you are going to buy insurance, if you are going to buy put options for your portfolio, again, the best chance you have for that insurance to pay out is when implied volatility is low, when the skies are sunny and no one's expecting a big move lower. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#618 - How To Properly Use A "Collar" Options Strategy Jun 01, 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 to properly use a collar option strategy. If you're not familiar with a collar option strategy, a collar strategy is one where you would sell a call option above the market or above the stock price or ETF price of whatever you have shares in and you would use the proceeds to then go out and purchase a put option below the market. What's cool about a collar strategy is that the proceeds you use from selling a call option are then redirected and applied to the put option that you purchased. It's like one option contract is financing the other option contract on the other end. The trade-off for doing this though, versus say a regular long put option strategy where you're just paying to buy insurance, is that when you use a collar strategy and you sell the call option above where the stock or underlying ETF that you're trading is right now, you do cap your upside potential. And so, a lot of people don't like this about a collar strategy. I personally think it's one of the better ways to use a slight hedging strategy for whatever underlying stock or ETF you happen to be holding. But when you cap your upside potential by selling a call option above the market, you then can use those funds to purchase the out of the money put option on the other side and in many cases, the best way to do this is to do it in what's called a costless fashion. A costless fashion means that it does not require you to actually pay money to execute this strategy. You could collect even just a penny of net credit between the sale and the purchase.

I want to walk through an example, so you understand kind of how it works. But let's say you have a stock trading at $100. You might sell the 110 call option and collect $50. If the stock rallies to 110, you participate in all of the gains from 100 to 110, but then after 110 which is your call option strike price, you no longer participate in any of the gains above that for the option expiration period that you selected. If you sell the 110 call option for $50, you can then use that $50 to buy let's say an 80 strike put option way below the money. And depending on the skew of the underlying contracts you're in, it won't always be the same distance from the market. Just like my example right now, we're selling a call option $10 above the market and that will effectively buy us premium that is $20 below the market. We buy this 80 strike put option for $50 as well, so now, the call option that we sold has financed the purchase completely of the put option now below the market. The trade-off in doing this, of course, is you give up your upside potential, but in doing so, you execute a strategy that does not cost money to get insurance exposure or protection below $80. In my opinion, again, I think this is a better way to go than the alternative which is what a lot of people use which is just simply to buy the 80 strike put option and outlay the $50. Now, we know intuitively from research and data, not only from Option Alpha's team of researchers, but also from other people as well and many other research reports, that when you consistently buy insurance and you outlay that capital, that capital becomes a drag on your account and it starts to actually erode the value of your account over time because insurance cost money.

When you use a costless collar like we tried to portray in this example in today's podcast, it doesn't require you to actually outlay money. Yes, you might not participate in a 12% gain one month and only participate in 10% of the gains, but that's still a lot of upside potential for you to participate in. Our opinion is it's a really good way to go. It's a really easy way to hedge a lot of downside risk for any long security that you have. In fact, if you're trading a long stock, an ETF, an index, you should almost certainly be using some sort of costless collar strategy at all times because it helps curb that rare black swan event that might happen. Now, is it going to protect from say a 10% or a 15% drop in the underlying stock price? Probably not. It's not really what it's intended to do. It's intended to really protect from the sudden crazy black swan event that happens overnight or over the course of a couple of days. That's where the costless collar starts to come in. As always, if you have any questions, let us know and until next time, happy trading.

#617 - Your Income Is The Average Of The 5 People You Spend The Most Time With May 31, 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 your income is the average of the five people you spend the most time with. Truth be told, I did not believe this when I first heard it. In fact, you probably heard this before in the past and I've heard this quote or a quote variation of this thrown around numerous times and I always thought it was cool and it was a novelty thing and – "Oh yeah. That's an interesting quote." But I really didn't understand the power of what this is actually portraying. And now, looking back on the last couple of years, not only for trading, but also in Option Alpha as a business and what my wife does in real estate, this could not be further from the truth. In fact, I now spend a lot of my time thinking about who I want to associate with in the future and that's not a bad thing. You should cut ties with people who are not at the level that you want to be at. And that's not to say you can' be friends and nice and cordial with people. You just don't want to spend your time with people who are going to drag you down to their average level.

And I learned this lesson not in a hard way, but I learned it really, really quickly about three years ago when I started in this new mastermind group that I've been a part of and it's literally the only group I'm a part of. It's the only association that I'm with right now and I couldn't be happier, honestly. It's a very expensive mastermind group to be in, but I know why they do that. They prescreen people before they come in, so you can't just pay and get in. You got to be prescreened to get in. You have to have a relationship with somebody or a couple of people in the group. You have to be at a certain income or net worth or business level to get into the group. And I thought that was crazy initially, but it actually is very smart now because what they're doing by creating this group of likeminded people is they're trying to move up the average of all of the members in the group. If they were to accept everybody who was let's say a newbie investor or a newbie business owner, then it would end up dragging down the group and the group could not elevate on its own.

And so, I learned this because what I was a part of before this, even going back five, six years now, I was a part of other little groups and little associations. You probably have them in your town, little meet-ups and I went to all these things and I always want to be connected and learn from other people and figure out what other people are doing. But what I found is that all of those little associations and groups, while great to start, didn't really get me where I wanted to go and it was because I was associating with, in many respects, people who are just getting started too. And so, that wasn't appropriate for me then moving on in the future. I needed to disassociate myself with groups and people who have chosen to either stay at the status quo or have chosen to quit or stop. I can't be associated with those types of individuals anymore. And again, this is not a knock on people personally. I like a lot of people from the last 10 years that I've met. I like them personally. I still message them on Facebook and they're great people, but when it comes to business and investing and building wealth, they're not the people that I want to associate with. I want to associate with a different group of people who have my same ideals, who are going to help support me and I'm going to help support them.

And so, today, if nothing else you get out of this podcast, is it's okay, like I give you permission if you need my permission or you need somebody to say it's okay to disassociate yourself and cut ties to some degree with people who are dragging you down. And you know who they are. You know who the people are that are in your life or you're even thinking to yourself right now – "I really shouldn't be spending this much time with this person because all they do is complain and all they do is whine and all they do is talk about the things that are wrong in life." And so, it's okay to cut ties with them and frankly just stop communicating with them and be more busy, have more things come up that you can't go and meet them every single weekend to sit around and lounge and talk about how miserable life is. And start finding people who are like you or start finding people who you want to emulate that have had success because I'm telling you, what's crazy about even the group that I'm in right now is that nobody complains. I mean, it's insane. It's a very high end, very expensive mastermind to be in and everyone supports each other 1,000,000%. Nobody complains.

And the disparity in income even at this level is ridiculous. I mean, there's people in this group who are just crushing it on every level. It doesn't matter what it is, commercial real estate, investing, business, I mean, you name it. And still, even in this group, everyone is so, so supportive because they've all been there. They've been through the beginning stages and now, they want to elevate their life. And so, someone who's making $100 million a year, he wants to learn from the person making $2 million a year and you don't find that that often when you start to associate with people who just don't have the same mindset. Hopefully this helps out. Like I said, if you have any questions, comments or feedback, let me know and until next time, happy trading.

#616 - Out-Of-The-Money Call Options Are A Terrible Investment May 30, 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 out of the money call options are a terrible investment. I know I'm going to get a lot of pushback on this podcast potentially, but the reality is and the research 100% proves and backs that out of the money call options are a really bad investment and a terrible stock substitute. Now, while a lot of people will use out of the money call options as a means to generate a "quick buck" trading in the market, the reality is that a consistent stream of buying out of the money call options ultimately is going to lead to negative expected returns. Now, this should come as no surprise, honestly. Because of the implied volatility premium and because of the premium that's embedded in buying options out of the money and on the further ends of the spectrum, we should naturally assume that the stock is going to make a less than expected move and therefore, cause these out of the money call options to be worth less than many people are paying for them.

Now, the usual argument when I talk about why these are a terrible investment is people will bring up stocks like Tesla or Netflix or Facebook or any of these other highflying tech stocks. And so, we did the research on a lot of these and what we found is that when you go back and look at some of these highflying tech stocks and it doesn't have to be tech, it could be other things as well, but stocks that have had a really parabolic move, there are some instances where out of the money call options do make money. But the problem with that strategy is that you could have gone in many cases, 36, 24, 48 months before you hit it big on one particular month. It acts more like a lottery ticket than anything else.

And so, when we look at the research, basically, what we see is that many of these strategies went 36 months of losing trades in some cases before they had one single month that they hit it big. And so, although yes, it could be profitable to do that, the question is – "How many months can you go of consistently losing $100, $200, $300 on these out of the money call options in hope that you time it right for the next big move?" And that's really difficult. That seems almost impossible. It's like trying to time the lottery. And so, this is why to me, it's a terrible systematic investment. It should not be part of anybody's portfolio. If you want to go long the stock, go long the stock or buy deep in the money call options that replicate long stock. But trying to buy lottery ticket out of the money call options is a losing strategy long-term. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#615 - How Long Should You Spend Analyzing Stock Charts? May 29, 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 answer the question – "How long should you spend analyzing stock charts?" I think there's actually two parts to this question. There's the first part which is – "How long do you spend analyzing a stock chart before you make a particular trade?" And in that case, I don't think you spend too much time. Ultimately, stock charts are there as an engagement tool and I like and use stock charts as an engagement tool because they give us an idea of where the stock has been in the future and what the current market situation is, how fast is the stock moving or not relative to the past. But stock charts are still just purely an engagement tool, a tool that gives us perspective on what has happened on the underlying security. In my opinion, I think you can still make trades without using a stock chart. We've gone over this before in the weekly podcast many, many years ago where we said eventually, there's going to come a point where stock charts potentially become obsolete for many traders because you don't need a stock chart to make a decision. Stock charts are great for engagement, they're great for looking at a couple different technicals, depending on which ones you use and ultimately, as an options trader, you don't need to use the stock chart. Everything that you need is in the options pricing table, using the probabilities and the Deltas and the underlying stock.

Now, that being said, I think the other part of this question is – "How long should you spend analyzing stock charts in your career?" And I think the analysis of charts and markets I think is really important for again, perspective and just understanding how fast things might move in the future. I think a lot of people nowadays, especially in the last couple of years, have not been through the 2007s and the 2008s of this world or the oil crashes or the gold crashes or any of the other major market events that have happened since the last recession. And so, they haven't really experienced very fast moving markets. They haven't experienced insane volume and volatility. And so, by going back and looking historically, day by day, how things are moving and how quickly things could change, I think again, it gives you a level of perspective that is going to be beneficial to you in the future. Markets do not repeat themselves, but they do rhyme as people say and we do see the same types of moves over and over again in many different sectors and industries and different underlying commodities, Forex, utilities. I mean, we see it over and over again, very similar moves, but it takes a long time to get used to watching and looking at charts and seeing what's normal or what's abnormal and getting comfortable with all those different nuances. In my opinion, I think it's a lifelong journey to watch and study the financial markets. That's personally why I love it, is because it's constantly changing, it's constantly evolving. It's really a never-ending process which is really cool in my opinion. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#614 - What's The Difference Between A Limit And Market Order? May 28, 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 answer the question – "What's the difference between a limit and a market order?" The difference between these two orders is very important, especially if you are just getting started trading. Even if you've been trading for a while now, you might see these two different order types on your broker dialogue screen before you place the order in the market that you're trading. And so, the difference is really, what the name sounds like. A limit order sets a specific limited price to whatever contract or shares you're trading and this is the price that you will not go above or below (depending on what side of the trade you're on) for any reason. The broker will not execute it if the price of the contracts are higher or lower than your limit price. For example, if I'm going to buy an option contract, I might set a limit price of $152. And so, that means that if the option contract is trading for anything higher than $152, the order will not execute. It could trade for $152 and execute. It could even trade for $151 and execute.

A limit order is just simply saying – "This is the highest possible price I'm willing to buy." or in reverse, "If I'm selling an option contract, it's the lowest possible price I'm willing to accept to sell." If I'm selling an option contract and I place a limit order to sell a contract for $152, then it will not sell the contract for $151. It could sell for $152 or $153. It will sell potentially right around the limit price, but could sell a little bit better, but it will absolutely not fill at a lower price or worse price. Now, I usually only trade limit orders and this is because I want to know exactly what I'm getting into and exactly what the price is. I often will change my limit orders during the day or if needed, to fill contracts. If I see that the price that I'm shooting for is not filling and it's $.3 or $.5 away from my targeted price, well, then I'll manually change my limit order and redo my order dialogue screen to a new price, but I am in control of the prices that I get for the contracts I'm trading.

This is in comparison to a market order. A market order is filling at the next available price in the market. And a lot of people like to use market orders because they're frankly, impatient and they just want to get the order in and they don't want to mess around with it and I do not agree with this because in many cases, you're going to find that you're filling these trades at vastly different prices than what they're trading at right now. And this doesn't necessarily have to be on the furthest end of the bid ask spread. In some cases, I've seen people fill orders that are just totally out in the field because when you place a market order, you're accepting the next marketed price and that does not mean the last price that the contracts were traded. That means the next price someone else is willing to pay. To use our example again, if I'm trying to place an order for $152 and instead, I get frustrated and I just want to place a market order, I could fill anywhere between (I don't know) $145, $165. It could fill way better, it could fill way worse, but you're going to get filled immediately.

To me, as an options trader and as a position trader, there's really no scenario that I would think of that we need to use a market order. I think market orders are there for people who want to get into things fast and they are willing to accept large amount of risk in exchange for what they perceive as immediate fills. Many times with filling limit orders, you can get filled very quickly as well if you adjust your own pricing and you can still be in control and fill pretty quickly if you have a little bit more patience. In my opinion, again, use limit orders. Do not use market orders. You'll be better off long-term for it. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#613 - Does Volume Play An Important Role In Future Stock Direction? May 27, 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 answer the question – "Does volume play an important role in future stock direction?" I think of course, volume plays an important role. I don't think it's the ultimate indicator for future stock direction, but in many cases, when you are looking at a stock chart and in particular, when you see a large movement in the underlying shares, whether that's a large move up on the day or a large move down on the day, what many people want to see is a large spike in volume as a confirmation that that move is supported by a lot of market participants.

When we see a stock rally and it's rallying on light volume, we may think to ourselves – "Well, the stock rally is not really being supported by all this influx of new additional buyers coming in." And so, if the stock lunges to a new high or a higher high and that is then supported by a huge spike in volume, we could then think to ourselves that it's impossible that the move is now supported by all of this new buying activity. Same thing happens in reverse. When we see stocks start to break down, it's usually a better sign than not for those large break down days and selloffs to be supported by large volume as a confirmation that the move is justified and won't reverse any time soon.

Again, thin volume, thin liquidity means that really, anything can happen and when you have more volume spikes and larger volume spikes on those important days where the stock is really moving a large percentage, then again, it could be more of a confirmation signal than anything else. Hopefully this helps out. As always, if you guys have any questions, let us know and until next time, happy trading.

#612 - Diversification Is NOT About Increasing The Quantity Of Tickers May 26, 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 diversification is not about increasing the quantity of tickers. I think a lot of people get diversification wrong and the regular thought process on diversification that you hear for most investors is – "Well, diversification just means spreading your investment across different ticker symbols." But it's not just about increasing the quantity of tickers that you're trading because ultimately, what you could do is spread your basket across a bunch of different tickers that end up being in the same sector or industry or just highly correlated to one another.

The other thing about diversification is that it's not necessarily diversifying, so that when you win on one, you lose on the other. That type of diversification is not effective or beneficial to a portfolio. What you want is you want diversification across uncorrelated asset classes. You want ticker symbols in your portfolio that you're trading that are not correlated or highly uncorrelated to one another. And this doesn't necessarily mean that when you lose on one position, you'll win on the other. It means that you should generally win on both positions or that both positions should we go through a major cycle in one sector or industry, not have a detrimental impact on the rest of the portfolio. Many times, the regular traditional thought process is you should invest your money between say 15 to 20 years. Stock and bond prices have actually been highly correlated to one another which means that if you were to just spread your trades out across stocks and bonds, you would actually still be investing mostly in a stock-like portfolio that has a lot of the same downside risk as the traditional equity markets do.

When we apply this then to options trading, we should again, be mindful of the correlations between different industries and products and markets. If I was to trade gold and silver, yes, I have two different ticker symbols in my portfolio, but they're highly correlated to one another. If I was to trade USO and OIH and XOP, yes, I have three different ticker symbols, but again, highly correlated to one another in our portfolio. Instead, what we should be doing is we should be looking to trade things, again, that are highly uncorrelated to one another, things like FXI, TLT, SPY and GLD. That kind of mini basket of potential tickers doesn't necessarily have as much correlation between each other, so what you should see is over time, you should see a lot more stability in your portfolio, a lot less volatility and hopefully a lot lower drawdowns. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#611 - The Inner & Outer Game Of Trading May 25, 2019

Show notes

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we're going to be talking about the inner and outer game of trading. I think this is a really important topic and I think it's important because in this day and age, we are so bombarded with different messages and different streams of video and Facebook messages and friend likes and Instagram that it seems like we're not moving at a fast enough pace. And so, what that causes us to do in many respects is it causes us to make decisions that create a lot of context switching between different strategies and investments and ideas. They invest in one thing and they don't see a lot of success right way, so they immediately pull and do something else and it's like we're just throwing all of these lines in the water and as soon as we throw the line in the water and we're trying to fish for a great investment or a great strategy, the second that the line hits the water, if we don't catch a bite, then we yank it out and we try something different and we're just not giving ourselves enough time to let the numbers and the systems work themselves out and I think it's mainly driven by kind of the outside world to some degree, having these outside forces and such high expectations on everything that we do.

Now, that being said, I think as a personal retail trader like me and you, there's two things that we have to contend with. There's the outer game of trading which to me is just the actual mechanics of placing trades, executing positions, analyzing our portfolio, figuring out adjustments and rolls. That is maybe 10% of it. The inner game to me is 90%. That's the mechanics and the behavioral biases. It's the patience that's required to do the same type of trading strategy day in and day out even when there's all these new stories flying all over the place. 90% of your success, in my opinion, comes from mastering that inner trading game, having enough discipline to not do something on a really crazy day or on the other hand, having enough discipline to actually execute just that additional laddered entry when there's a lot of new stories flying around and there's a lot of people saying it's not a good time to trade or you should wait until things calm down. That can be really tough. And so, having enough discipline and patience to go through a lot of those different market cycles is not easy and it takes time. It takes a lot of effort and a lot of self-reflection to make sure that you know what your big why is and where you're going and the direction that you ultimately want to move towards.

When we look at options trading, the reason that I continue to run Option Alpha personally (this is very bias for me) is because it allows me to detach myself from my actual trades, so that I don't overanalyze them. I've mentioned this so many times before that Option Alpha and running this business, helping other people trade makes me a better trader because I have to continuously reinforce the concepts that I teach and that I believe in, not only in the trades that I make, but also in my own mind because I continuously have to practice the patience that I require of so many different people. And so, that keeps my eyes I guess off of actually analyzing or overanalyzing so many different trades.

My suggestion today for you (if I could give you some advice) would be to take the outer game of trading and try to compress that down to 30 minutes per day. The actual order entries, the mechanics, choosing tickers, executing strategies, I don't think it requires more than 30 minutes per day and that time crunch really will help you focus in on the most important aspects and then during the rest of the time, try to practice as much patience and discipline as possible. Use some sort of outlet (whatever that outlet ends up being for you) as the means to keep you away from overanalyzing your portfolio. You can paint, you can write, you can build, you can work your regular job, play with your kids. Do something else that takes you away from the market and helps you build a level of patience and discipline that we know is required to see long-term success. Hopefully this helps out. As always, if you guys have any questions, let us know. Head on over to optionalpha.com/ask. You can leave a voicemail there. I love getting voicemails of questions. That is the basis for what we do with these podcast and the content that we choose to release every single day. As always, if you guys need anything, let me know and until next time, happy trading.

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