The "Daily Call" From Option Alpha

Latest Episodes:

#600 - The Future Of Trading Is Tradable Option Strategy Tickers May 14, 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 why I believe the future of trading is actually tradable option strategy tickers. What do I mean by this? Oftentimes, I've talked about where I think the future of trading is going. Some of the things I've even said are starting to actually come true, things like – I believe that all brokers will eventually be zero commission and we start to see more and more brokers not only in 2018, but also recently in 2019 start to become commission free brokerages.

I think one of the other things that I definitely see the industry going towards, though I don't know exactly how it's going to work out, but I know we're going to get to some level of this in the future, is tradable option strategy tickers. Right now, we get a lot of questions around how we execute a consistent strategy and part of the problem with options trading in general is just the time commitment that's required to actually go in every single day or every single week and execute one of these option strategies, to find the option contract that you want to trade, to make the trade and to manage the position in an ongoing fashion. Now, that's part of the reason why we're developing our auto-trading technology, so that we can help curb that time aspect and start to give you more time back while also executing these strategies in the background through our platform. But where I see the industry going is probably to a level where at some point, there are going to be tradable option strategy tickers that you can just simply buy like equities and the underlying strategy is tracking a complete option strategy's P&L on an ongoing basis. And so, wherever you buy into the option strategy ticker, you basically start executing that strategy on a derivative basis or on just a kind of like net asset value basis on an ongoing chart. And so, I think eventually, we're going to start to have kind of very common tickers that people can actually buy into and that are based off of pricing from an option strategy.

The foundation of this is actually already laid to some degree by the CBOE. They do a great job of actually publishing some of these option strategy indexes, things like the BuyWrite index which is ticker symbol BXM and things like the put index which is a PutWrite index on the S&P which is ticker symbol PUT. And it's really cool that they do this because you can see what a PutWrite strategy would do compared to a BuyWrite strategy or compared to the S&P in general and you can overlay these charts. What would make it even cooler I guess is if we could go one step further and actually buy shares of this so-called option strategy index and we can't do that right now. Right now, it's just an index, it's just a number, it changes on a daily basis, but it doesn't actually give us any tradable avenue to get into these strategies or products. And so, I could easily see the next iteration or the future of trading becoming the ability to buy into an indexable option strategy to some degree. When I think about what we're doing in Option Alpha and where we're going as a company is we're trying to create a platform in which you can setup your own trading strategy and let it trade in the background, but what would be cool is if we have the ability to index that type of trading strategy, so that people could choose to buy shares of that strategy or not buy shares of that strategy or however it'd work. I don't know exactly how it would work, but basically choose to buy a contract that is based off of the price of that strategy over time and that I think would lead more investors into actually choosing to trade options on a much quicker basis and helping transition people from equity to options a little bit easier.

I think it'd be really cool to see how these different indexable option strategies could perform against one another and some point in the future, maybe people just want to trade the actual indexable option strategy ticker and hold that product and let the background of what the option strategy would do, just execute and base the pricing off of what the net asset value would be at that point. I know that this is maybe a little bit far-fetched. I have no idea how it would actually come to fruition in the legality and regulatory market that we have, but I think it's probably a foregone conclusion that this is not at least in the deck of cards in the future, that tradable ticker symbols are probably coming, things like AAPLP like the Apple put or something like that or AAPLC like a constant reoccurring Apple call for some reason. I think it's a really cool way that we could open up the universe of options trading to regular retail investors that don't have a way to trade on an ongoing basis or don't use technology to do it. I think it'd be really interesting.

Hopefully this is cool. If you like the idea or if you have feedback, you have different thoughts, let me know. I definitely want to hear what you guys think. If this is something that you've heard other people say… I didn't hear anybody say this or talk about it before, so hopefully I'm the first person to actually declare publicly that this is where I think the future of trading is going, but I could be wrong. I don't know. If you have heard people talk about it or if you have ideas or comments or ways we could potentially get this started, let us know. We'd definitely be open hearing feedback, suggestions and what you guys think. Until next time, happy trading.

#599 - What I'm Doing About My Failed Habits May 13, 2019

Show notes

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, I'm going to be talking about what I'm doing about my failed habits. I recently went through and I think I've talked about this on the weekly podcast, as well as maybe a daily podcast previously, but I recently went through a little bit of a slump in my habits because we were traveling and things were happening and we had school and swimming and soccer and so, everything with our kids and family got messed up for a week and it really threw me through a loop as far as habits go. And so, I'm usually really good about waking up on time and getting into a good rhythm every week and getting things done that I need to and for whatever reason, I was thrown into kind of like a little bit of a whirlwind and my habits went out the door. And so, now, I got to come back around and I have to refocus everything I'm doing again and kind of rebuild these habits. As I've talked about previously on the podcast, it only takes I think three days to lose a habit, so unless you're doing it for a really long time, even just three days of not doing that consistent habit can cause you to lose that habit totally. Getting up early, if you miss it for three days, you have to rebuild that habit and reconnect those links and strings inside of your brain to get up early again.

And so, here's the things that I'm doing just so you guys know and again, I'm just being open and honest about what kind of is happening in my life. Obviously, I'm not perfect because I failed in my habits and I have to get back on kind of the habit train here, but the first thing is I'm reviewing all of the habits. There's obviously a reason why maybe it failed that week and I didn't have the right systems or the right schedule in place and I think that's a good starting point because then, I can cut things that ultimately are not as important. There's things that I've cut out of my habit routine, especially my morning routine for waking up and checking emails and social media and checking it with the team. There's things that I don't need to do necessarily every single day. I can kind of cut those and get right to kind of the focus or the big rocks.

The second thing is I'm starting small. Again, when you try to rebuild habits, you don't have to do all of them at one time. Start small and do one thing and then let that be the momentum that you need, the spark that you need to kick off other strings of habits. And typically, what happens is when you lose a series or a sequence of habits, all you need to do is start the queue of the original habit loop and that will then cause your brain to go into this regular domino effect of basically doing the next task after the next task after the next task. Usually, for example, if you have a habit in the morning of taking a shower, then brushing your teeth and then getting dressed, all you need to do is just get back into the shower and then that will automatically cause you to brush your teeth and get dressed later on in that kind of same loop that you've already created before.

Number three, public commitment. I don't care if you do this to me. You can do this to me if you want to in the show notes or on social media and say, "I commit to doing this new habit for X amount of days." or whatever or you commit to a family member, a spouse, a friend. I'm doing it right now to you guys, so 150,000 plus people, making a public commitment of refocusing on the habits that are really important.

Number four is mega-batching. This is actually something I used to do a couple of months ago and for whatever reason, I just stopped doing it because we've been so focused on different things with the team and the website and the new platform and just my attention has been drawn to so many different things that I stopped doing mega-batching. And so, for me, mega-batching is really cool because what I do is I sit down and I do a ridiculous number of things that are related to one another. For example, in the daily podcast, I've already kind of scripted out things that I want to talk about for about the next three and a half months and I did that on one afternoon. And what's cool about that is when you mega-batch say topics that you could potentially talk about for the next couple of months, you get into a rhythm and a routine of covering and thinking about those same issues and other questions come up and you don't have all this context switching that really kind of plagues our productivity. What a lot of people do is they end up going into the day and they try to do 15 different things, but the context switching between all those different activities causes them to lose a lot of momentum and probably a lot of creativity. For me, it's all about mega-batching, especially with things that I can mega-batch, so like podcast topics, research, when I send out boungiornos to all of our new members and send out like welcome messages. I can do that now in mega-batching which is really, really fun.

And then the fifth thing is setting deadlines, so setting deadlines for myself as to kind of getting back on track and getting back into a rhythm and having a deadline of a couple of weeks out for consistency. And again, the reason we do this is because we want to get into a very consistent habit. Remember, your brain doesn't recognize what's a good habit or what's a bad habit. All it wants to do is reduce the energy usage and the friction that's caused in your daily activities. You have to force yourself to get over the hurdle to the point at which your brain recognizes a habit as being something easy and routine and consistent and not something new that the brain is going to try to fight back against. Every time that we try to introduce a new habit or a new queue, our brains are naturally going to fight it not because they think it's wrong. It's just that the brain is trying to do things as simple and as easy as possible. For us and for me in particular, setting deadlines of a couple of weeks out that says I'm going to wake up early in the morning, seven days a week for the next three weeks, like that's a great habit to start building and it's a very consistent one, so that it gets my body and my brain into the rhythm of not only going to bed early, but then also waking up early to get my goals achieved. Hopefully this helps out. I know this was a little bit longer of a regular daily podcast than usual, but if it's helping out, please let us know. Send us feedback messages, social media, everywhere at Option Alpha and until next time, happy trading.

#597 - Profiting From Extreme Investor Sentiment May 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 profiting from extreme investor sentiment. There actually is a pretty decent body of research out there from a lot of different institutions that show or prove that extreme levels of investor sentiment tend to be contrarian indicators for the market. For example, if we see an investor sentiment survey that shows that most people who are invested in the market are extremely bullish about the next six months or a year or two years or whatever the timeframe is, that tends to be a little bit more of an extreme contrarian indicator once they reach these higher levels, that might actually predict that the market is reaching a peak or that the market has already started its peaking or topping out process. The same thing can be true in reverse. When investors are highly pessimistic and bearish, that tends generally to be correlated with bottoms of markets. Now, this is not always the case, obviously. These investor sentiment readings are not perfect. You can't always have a perfect high with the top of the market and investor sentiment at the same time, nor can you have a perfect low in investor sentiment and the bottom of a market at the same time. They do not always overlap 100%.

But the key for me is just understanding where we are in that cycle. If you're looking at the broad-based markets and you're trading the markets or Beta weighting your portfolio to a broad-based market like the S&P, it's probably a good idea to understand where we are in the investor sentiment cycle. Are we neutral and investors are half bullish, half bearish or are we at potentially one extreme or the other? Now, it doesn't mean necessarily that we dramatically shift our positions and be uber-bearish or uber-bullish, but it does mean that we have a little bit more of an awareness to understand that maybe we could start to see a reversal and go the opposite direction. And so, we have to be willing to quickly adjust our positions and portfolio if that reversal starts to materialize. That's how I would use it. I don't think necessarily that you can 100% profit from investor sentiment. I think it's probably still really hard to predict where markets go just based on what people think, but I think it's a good contrarian indicator that has been proven to be more right than wrong and you can use it for tilting purposes in your trading. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#598 - What Is EBITDA? May 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 answer the question – "What is EBITDA?" which is earnings before interest, taxes, depreciation and amortization. We actually just told you what EBITDA is, but really, what is EBITDA? How do we use it? How do we calculate it? Why do we even care what EBITDA is?

Now, this takes me all the way back to my original finance and schooldays back at UVA and even when I went to work in New York and worked in BB&T capital markets as a REIT analyst. We used EBITDA all the time in our industry jargon and finance. And so, what EBITDA does, it basically just takes what a company's cash flow is and tries to break it down to the most basic, nondescript, non-structure or tax consequence level. And so, what I mean is when you look at a company and a company has earnings of say $100 million, that net earnings that they show of $100 million is already including things like the taxes that they had previously paid or any debt structure that they have on the company or how they amortize and depreciate all of their physical or corporate assets, but that might be different had they restructured or if that company was say moved to a different corporation or was owned by a different parent company. And so, what EBITDA does is EBITDA tries to add back in these things that are really specific to the structure that they chose as a corporation, the debt levels that they have or how they depreciate and amortize equipment based on their tax status or where they're even located in the world for tax purposes. EBITDA tries to add back in these things that are corporate structure or accounting type elements and by adding those back in, we have hopefully a much better understanding of what the company actually generates before the effects of accounting and corporate structure and we can now appropriately compare that to say another company and how much they make before the effects of corporate structure and taxes, etcetera.

For me, EBITDA is not necessarily the only thing you should look at, obviously, if you're looking to analyze a company. Where EBITDA comes into play is when you're looking for relative valuation and comparison purposes between say two or three different companies. One company has a lot of debt. The other company doesn't have a lot of debt. Does that necessarily mean that one is more profitable than the other? Well, what if we bought one company and removed the debt completely? Does that now make us more profitable, less profitable? And these questions are more simply answered by looking at EBITDA which again, factors in and adds back to the earnings, things like interests, the tax consequences, depreciation amortization. Again, just moving a company from one location for tax purposes to another location in the world could dramatically change the profitability of the company. Now, that is again, something that's corporate structure, tax consequence stuff that is not necessarily accounted for if you always look at net earnings or net profit of a company. If you want to compare two different companies regardless of their structure, regardless of their tax consequences, you really want to look at something like EBITDA. Now, there's other metrics out there that you can use, so I'm not saying it's the only one, but it is the most broadly used one, especially in corporate finance and investment banking. EBITDA multiples are some of the most widely used industry jargon, so if you want to get into that space, you probably should understand what it is.

I would relate this (just to use a simple analogy) to cap rates in real estate. In cap rates for commercial real estate, it looks at just the general gross or net income, depending on how you're looking at it for cap rates, the income of the property divided by the actual cost of the property, so how much is the property taking in usually on a net basis after all of the required things like taxes and utilities or anything like that. That is a good way to look at real estate because it has no consideration for leverage. It doesn't matter if you buy this property and you add leverage to it or you buy that property and you don't add leverage to it. It's telling you basically what your starting line return is before you add the effects of depreciation or leverage to the property and that's really cool because that can help, again, create this apples to apples comparison across many different real estate assets on a very quick and dirty view. Hopefully this helps out. Again, if you have any questions, let me know and until next time, happy trading.

#596 - Can You Learn How To Read Stocks? May 11, 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 – "Can you learn how to read stocks?" I think this is a really interesting question. I think ultimately, you can learn how to read stocks, but that doesn't necessarily mean that you'll have really great predictive power. When I think about learning how to read stocks and read charts, I think about generally looking at different stocks or markets and figuring out what types of common ebbs and flows or common moves that a particular stock might have over time. I've often said that stocks are like people in that they have their own personality. They have their own ways of reacting to news or different environments that you could probably get a good idea of over time. Now, again, does this mean that you would have crazy, crazy predictive power over where a potential stock is going to go in the future? Probably not. I think it's probably really hard to do. Are there really good stock chartist and technical chartists out there who learn how to read stock movements and can use technical analysis and chart patterns and candlesticks to understand how markets move? For sure. There's no doubt that people are out there that do this really well. I think they are the exception though. I don't think they're the rule.

For me, when I look at stock charts, I think it's a good visual aid to help in your learning and your education because you can see how markets move and basically see if today's move is a large magnitude move or a small magnitude, if it gets us back into some sort of range. But I think when it comes to reading charts, it's good just to look at a lot of charts generally just to understand the ebbs and flows, the peaks and valleys that charts often might go through from time to time. And what I like to do is just kind of glance back historically, especially if we're in the middle of a large move in a stock and see if this is actually something that's abnormal or if this is something fairly normal for a security to go through. You look at a stock like even Facebook or Amazon or Tesla or Netflix, they all have their own chart history and some are a lot more volatile than others. For example, Tesla, at least right now when I'm looking at it, goes through many, many weeks of rapid acceleration and rapid selloffs, whereas Facebook is probably a little bit more stable. Just in the last couple of weeks, we've seen Tesla go from 380 to 320 to 360 in a matter of a month and that's a massive move, whereas in that same time period, Facebook has gone from 170 to 160. Now, that's still a big move for Facebook, but compared to Tesla which is just a lot more volatile than Facebook at least right now, you might have a better understanding of potentially how Tesla trades if you understood that it was a lot more volatile. And so, therefore, if you have a day where the stock is up 5%, you could easily see that the stock could be down 5% the next day because that's just how volatile Tesla is right now.

I think understanding or just having a little bit of awareness, kind of like keeping your head above water or as I used to say, like keeping your eyes downfield, gives you a little bit of a leg up potentially in just understanding if the move you're in currently is something abnormal or something fairly normal for the stock to exhibit. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#595 - Basics Of Direct Access Day Trading May 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 the basics of direct access day trading. Now, I don't necessarily want to talk about day trading because we don't believe in day trading here at Option Alpha, but many people are probably searching for concepts around direct access trading or direct access day trading, trying to get an idea of what direct access trading is. In its most basic terms, direct access trading gives you the ability to skip any potential middleman and directly place orders with whatever exchange you want to place orders with. Many broker platforms now give you the ability to do this where you can actually place orders the exact same day or a different day or use contingent orders with any exchange that you want or choose to just use the best possible exchange or the best price at that given time. And this is really cool because what it does is it skips over any potential middleman that potentially might be there to collect orders and then route orders for you. You want the ability to cut out the middleman and deal directly with the exchanges, find a buyer or seller for whatever product or contract you're trading and hopefully get faster fills at better prices.

Now, what I like about this and in particular, what our broker does with Thinkorswim is they give you the ability to choose what exchange you want your orders to go through. Right now, I just pulled up a simple option contract in TLT. It doesn't matter the put option or call or expiration date, but what matters is that I have the ability to route this order through either the best exchange which just looks at all the exchanges and tries to fill at different prices at all the exchanges, hopefully getting the best price or I can choose manually to directly route my orders through the CBOE or the Philadelphia Exchange or AMX or ICE or BOX or NYSE, NASDAQ, BATS, C2, etcetera. If wanted to, for some crazy reason and I had said to myself, "Look. I'm only going to fill orders on the CBOE." then I would place the order and say, "Look. Just fill this on the exchange." And that's cool that you can do that. In my opinion, I don't think it serves as good of a purpose necessarily if you're trading liquid products because for that one moment in time or for that 10 minutes in time maybe that your order is working, you may not get the best fill. The best fill may come from some other exchange where you have the ability to fill the contract faster. We've actually had orders multiple times where the orders get split. And say we're trying to fill four contracts. Two might fill on the CBOE and two might fill on BATS or something else or the AMX or NYSC. I mean, it's crazy that these orders can get split.

My opinion is that direct access trading is not really such a big deal anymore because most brokers do it. It probably was more of a big deal five or 10 years ago. 10 years ago when I started, it was really big for Thinkorswim to have this because other brokers didn't, but now, it's probably not that big of a deal because most of the other brokers are starting to run orders through multiple exchanges and trying to get the best fills, so I don't know. It doesn't make sense anymore to necessarily have this as a filtering requirement, but you should ask in case you don't know if your broker house allows this. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#594 - If The Dream Is A Tree, Resistance Is The Shadow May 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 – "If the dream is a tree, resistance is the shadow." And I actually love this quote. This is a fairly recent quote that I came over and thought it would be applicable for the podcast because I think it actually applies to many different aspects and I think it was originally attributed to Steven Pressfield. Maybe it doesn't, maybe it's not. But he said, "If the dream is a tree, resistance is the shadow. Both appear and grow at the same time."

And I got to be honest. I can't tell you, like I feel like this actually is so, so true and so fitting and it's just a good analogy for it because in so many ways, even with Option Alpha trading, just like anything in life, when you have this dream to step outside of any social norm or any relative norm compared to the masses, then the further and further you step outside of that normal herd, you just find more and more resistance to pull you back in. And I feel like in some cases, this comes from external factors, people telling you that you can't do it. You hear people saying you're crazy or you're stupid or that's never going to work or nobody does that and those are external factors pulling you back in and in my opinion, that's mainly people and things and places and society potentially as a whole that tries to reel people back in that are trying to escape the cage. In fact, if you ever read or understand what happens to crabs, I think when crabs get into a pot or into a cage, if one crab tries to crawl out, the others will claw it back in and pull it down and drag it back to where the mass of other crabs are. And so, we have this external pressure of everyone else telling us we can't do it, there's no way we can do it, we're stupid, we're crazy, we're ignorant, we're not being safe, nobody does that and that's tough. I mean, I think in trading, I think that's really hard because you tell somebody that you trade options and immediately, they have this image in their mind of somebody who's a gunslinger and doesn't know what they're doing and it's totally risky. You start a website like you start Option Alpha and you have people who are saying you're crazy, you're scamming, you're in it for the money, you don't know what you're doing, this is crazy, who are you to tell people what to do and all these factors, no matter where you go in your life, of people just trying to push you back into the social norm. But then you also have the internal. Now, the internal starts to dig in and you have this growing resistance within yourself too where you become successful at one thing and then you think to yourself – "Well, who am I to have this type of success or who am I to do this?" And so, now, your own internal resistance grows. Your shadow grows along with your success or with your dream.

And I think this is really funny because I think it happens. I think at every stage, you start to have just these thoughts because it's new, it's different, it's uncomfortable. You don't really know what's happening because you're not used to it. And so, it's easy to fall back to what our norms are. It's easy to fall back in line basically because being in line and being like everyone else or doing the same thing like everyone else is socially acceptable. You're never going to get called out if you have a job, have a mortgage, drive a regular car, live in a regular house. I mean, you're never going to get called out for that. But God forbid, you do something different, you start to transition out of your job, maybe don't drive a normal car or a regular car or maybe you have a different house or you choose not to have a house and just live through Airbnbs, I have no idea, but that is not the social norm. And so, naturally, people try to pull those people back into the fold if you will and I think it's tough. I mean, look. The reason I'm doing this one here is because I go through it too. I feel like there's external factors that try to push me down and suppress me and I think there's internal factors where I say to myself on some days like – "Who am I to do this? What are we doing? How are we really helping people? Maybe people have these thoughts about us. Maybe we should stop and not do anything anymore." I think it's tough, but ultimately, this quote I think gave me a lot of inspiration because I realized that the further and further I grow, not only just personally, but with Option Alpha or with trading, as a husband, as a father, ultimately, I'm going to face more resistance and that's okay. That's how it should potentially be. That should be expected I guess, that I'm going to get more and more resistance, more pushback from people because they don't know, they don't understand and I'm more than willing to I think push through those levels and keep moving forward. Hopefully this helps out. Like I said, if this was helpful, please let us know. Add it in the comments or share it on social media, on Twitter, Facebook, YouTube, etcetera, Instagram. We'd love to help spread the word about what we're trying to do here at Option Alpha and until next time, happy trading.

#593 - Can Option Assignment Help Turn A Trade Around? May 08, 2019

Show notes

Hey everyone. This is Kirk here again from Option Alpha and today, we're going to be answering a question I just got the other day from a member which is – "Can option assignment help turn around a trade?" And I thought this was an interesting question, not one typically that we usually get, but it's an interesting topic because the thought process here is A, if I have a trade that's going against me or that's not working out, can I somehow use the process of assigning the contract or being assigned the contract as a means to an end to then help turn the position around? And the only thing I could think of that might help turn a position around is just simply more time, but time does not require you to be assigned or to go through the assignment process. You could just as easily roll option contracts, even contracts that are challenged or in the money. You can roll those contracts to the next month, keep your capital allocation low because you don't have to purchase or short sell the stock and you can use that contract and extend the trade duration.

In all honesty, other than extending time which is basically all you get when you get through an assignment or you get delivered shares or you're short shares, now you have to deal with them, but you can theoretically hold them for forever. That's the only thing you get. I don't think that that is enough to say that option assignment can help turn a position around. The underlying option contract is based on where the stock is at the time and during the expiration cycle, so switching from the option contract to the underlying stock and just moving from one relative thing to the other relative thing is not going to turn your position around. If anything, you're going to lose any time value potentially left in the contract and you're going to have a massive capital exposure to now hold the outstanding shares of stock versus potentially a fifth or a fourth of the capital invested to hold the option contract and cover it with margin or to just hold it in cash. I really don't think that option assignment or going through the exercise process, in either case, is anything that can help turn a position around, so you probably shouldn't lean on it as a failsafe.

Hopefully this helps out, a very good question. As always, if you guys have any of these questions that pop into your head and you want to ask them here on the podcast, please head on over to optionalpha.com/ask. Leave me a message. I love getting messages. We'll reply back to you and we'll add them to the upcoming shows until next time, happy trading.

#592 - Time Comes To Those Who Make It Not Those Who Find It May 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 why time comes to those who make it, not those who find it. Now, I think this is really important because ultimately, the last couple of weeks, I think I mentioned this on a Facebook Live recently, but I went through a little bit of funk in my schedule and we were traveling and we had so much going on with the kids and school, soccer, swimming, they're overlapping, swimming and soccer and I just couldn't seem to find time to get some of the content writing and some of the podcast done that I wanted to do. And ultimately, what I ended up realizing was that I was trying to find time in my day, like fit something in that was important, but ultimately, what I needed to do was I needed to make time for it. I needed to block out time in my day to make that a priority.

And so, this is a reminder for you and for me because I'm talking to myself as I do this, but we have to make time for the things that are important. And I don't know why in this case, I slipped and had a really good schedule and then somebody else was taking over the steering wheel and it ended up being my kid's soccer practice and swim lessons and traveling and family and this and that and I let the steering wheel slip on my time and my habits and ultimately, I paid the price for it. I got a week and a half or two weeks behind on things that I wanted to do. And so, now, what I need to do is again, regroup and make time, block out time in my day to make commitments to the things that are really, really important and ultimately, I have to say no to a lot of things that are really, distractions and get me away from my core path and mission and where I'm going with not only Option Alpha, but with my family and with my relationship with my wife and everything.

This is a good reminder of us today hopefully just to figure out those things that are really, really important and then carve out time. Make time for them in your calendar, on your planner, in your phone, so that they become the priority. In fact, make time for them at the beginning of the day when you have a lot of energy and your brain has a lot of capacity to get through a subject or to work on a project or to learn options trading. Make that the first thing you do during the day, so that you don't have to find time for it later on because we all know we're all searching for time. It's just nonexistent. It seems like time flies these days, especially if you have so many obligations and work and family and school and friends and relationships. There's just no time left in the day unless you make time for the things that are important. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#591 - Everything Is Leveraged May 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 be talking about why everything is leveraged. This actually comes up from a discussion I was having with somebody the other day and they basically said, "Look, Kirk. I don't want to invest in anything that has to do with margin." And I was talking about how when you trade with options, sometimes depending on the account that you have, you have to put up margin. Not that you have to borrow a margin, but you have to put up margin to cover potential losses on positions and that's how brokers allow you to then trade a leveraged product like options, is you have to put up margin. And they basically said, "Look. I don't want to ever, ever, ever trade anything with leverage. I don't believe in it. I don't want to do it. I just want to invest in regular stocks and the stock market industries." And I told them and I said, "Look. Everything is leveraged." Even your regular traditional investment in any stock mostly or any index for sure has leveraged components into it because even stocks have leverage. Companies borrow with their capital and then invest potentially or hopefully in plant, people, equipment, other product lines, etcetera or they borrow money and pay back and repurchase their stock. And so, if you think that you're investing in just equity or just an index because it's a stock or it says equity, that it doesn't have leverage, then you are grossly underestimating how many things have leverage.

And so, this is really again, I would say like a public service announcement almost. Everything that you see out there in the investing world probably has some sort of leverage tied into it. The end result here is that leverage is never bad if it's used in moderation. It's the same thing that goes in personal finance. It's not bad to borrow money to get into an investment, but you shouldn't borrow all of the money needed to get into an investment, right? You should have a little skin in the game. You should use leverage in moderation. And so, when it comes to options trading, because options trading is a leveraged product, you are trading a leveraged trading instrument that's a derivative of the underlying security, you should be using it in moderation. And it doesn't mean that it's bad, it doesn't mean that you're a bad person and it doesn't mean that it breaks into your belief system, but regardless, everything has leverage, so the choice is now – What do you want to trade that gives you the highest possible probability of success with the least amount of risk and the most control? And ultimately, I think that's options trading. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

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