The "Daily Call" From Option Alpha

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#490 - What Is A Chart Pattern Trader? Jan 25, 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 a chart pattern trader?" A chart pattern trader or technicians sometimes as they're called are people who trade solely based off of the chart patterns that they see on a particular stock or underlying security. Things like head and shoulders and rising wedge, flags, pennants, cup and handles are some of the common terminology that you'll hear when you run across somebody who ends up being a chart pattern trader. I like to think of myself as being started as a chart pattern trader and I quickly evolved into understanding that many of the chart patterns or chart readings are very subjective in nature. Now, this isn't to say that there aren't people who do this and do this really well. Particularly, what comes to mind is guys like Peter Brandt which have actually made a career of being chart pattern traders and do very well at it. I just never actually gained enough skills in reading the right chart patterns and determining where the lines get drawn on the charts versus not, to make a good judgment call on a particular chart pattern or a particular setup. But again, the idea with many people who trade based off of the charts is that the charts basically reflect all known information or all expected information of the security. And so, what the price is doing is price is becoming king. And so, when chart patterns start to evolve and there's breakouts of breakdowns, those might potentially be tradable events.

Now, do I think that people who trade options need to understand chart patterns? I think it could help. I think seeing some of these chart patterns evolve and just knowing the general basis of some of these particular chart patterns that evolve more so than not could be helpful when you're looking at trades, but I don't think it's the end-all be-all. We know from back-testing and research that you don't need chart patterns to be successful and profitable. When we had our back-testing software built and when we started running a lot of these tests for strategies through the software, the software did not have the capability of reading chart patterns or deciphering chart patterns. It was basically making trades in a systematical and mechanical fashion. And so, for that reason, I don't think that chart pattern trading is necessarily a requirement, nor do I think it's potentially possible for many people to do because again, it's very subjective. What looks like a flag to somebody else could look like a head and shoulders to another person and a cup and handle to another person. It's very subjective in nature, but like I said, there's people out there who do it well and that's great. It's not something that I've particularly found insanely helpful moving forward. It's good to know. It's good to have an idea of it, but it's not something I base my decisions off of for trading. Hopefully this helps out in answering the question. As always, if you guys have any questions, please let me know and until next time, happy trading.

#489 - Why Trade VXXB Options? Jan 24, 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 discussing why you might want to trade VXXB options moving forward. Just as a clarification, last year, VXX announced that it would be suspending or basically coming up on its expiration of the ticker symbol and so, what's commonly referred to as the VXX options will now be trading basically under VXXB options. All they're doing is basically just issuing the new ticker symbol to keep up with regulatory and compliance requirements. It's all the same product. It's all structured exactly the same way. And with VXXB options, basically what you're trading is you're trading implied volatility on a 30-day rolling basis for the S&P500. And so, the reason that you might want to trade VXXB options in any direction is to basically gain more pure type exposure to the S&P and to the VIX.

Now, the problem as we've discussed in podcast and also on this podcast and numerous daily call episodes is that VXXB options have this roll which creates this Contango feature for the option pricing and because the options are basically rolling futures on an ongoing basis, they basically roll futures at a lower and lower price moving forward which again, creates this negative drag on the price moving forward. You just have to be careful and cautious about how you trade VXXB. Particularly if you're trading it and looking to make money off of a huge pop in volatility or a drop in volatility, you want to understand the product and understand how you could potentially trade it with options. Again, having some of these volatility products in the market is a great tool for investors. Many people don't know that they exist. Many people actually still don't trade them even though their liquidity and volume is insanely high, but they give investors another outlet to trade just broad volatility or gain exposure to broad volatility if necessary for their portfolio. I think it's a good tool to have in your toolbox. I don't think necessarily that you need to trade it every single day or every single month, but you should at least be aware of it and have an understanding of how the VXXB options work. As always, if you have any questions, let me know and until next time, happy trading.

#488 - How To Determine IV Rank? Jan 23, 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 to determine IV rank?" IV rank is a favor metric of options traders, in particular, option sellers and over the last couple of years, it's gained a lot of popularity and you can actually see IV rank in many different platforms. We have an IV rank calculated using our own software here at Option Alpha, but inside of Thinkorswim and Tastyworks and some other brokers as well, you have the ability to determine IV rank or IV percentile. Now, on today's show, we're going to be talking about IV rank because it's the very quick and dirty way to look at and compare different securities on a normalized implied volatility basis. And so, what I mean by this is that when we typically see implied volatility, what we are looking at when we see implied volatility is the raw or real implied volatility of the security, but that implied volatility is not normalized when we try to compare one security to another. For example, if we have a tech social media company like Facebook and we are trying to compare implied volatility in Facebook to say something like a large financial like Goldman Sachs, we might see on the outside that that raw or real implied volatility could be wildly different. Facebook might have implied volatility of 45% and Goldman Sachs might have implied volatility of say 10%. And so, if you just look at this metric on the outside, you're not getting the full picture because Facebook is a social media tech company which potentially should have more implied volatility and will fluctuate more in the future, but we don't know if that 45% that Facebook is showing right now is actually relatively high or relatively low. It could be a relatively low reading for Facebook and maybe their real volatility is typically much higher than it is right now at 45%. And same thing, we don't even know if that's potentially a high reading. Maybe 45% implied volatility in Facebook is actually fairly high and it should be much lower historically or it has been much lower historically. This is where we introduce something like IV rank and what IV rank does basically is it normalizes or neutralizes the impact of these individual implied volatilities and makes everything compatible on the same scale. And so, it takes the high implied volatility or a seemingly high implied volatility of Facebook and the implied volatility of say something like Goldman Sachs, compresses them down into the same basically zero to 100 scaling mechanism so that we can accurately look at each individual security and say, "Okay. Facebook or Goldman Sachs (or whatever you're looking at) has relatively high implied volatility based on its historical trading range."

And so, the way that we use IV rank is to use a very simple formula to calculate this. And so, all you need to do basically is take the current level of implied volatility, subtract the 52-week low and then divide that number by the difference between the 52-week low and the 52-week high. You're basically taking the current implied volatility reading, subtract it out from the low and dividing it by the full range over the last 52 weeks. Now, some people might use implied volatility not on a yearly basis and could use implied volatility on a weekly basis. I've seen people use it on a monthly or a quarterly, semiannually. I think the most standard default is to really use it for about a year. We go back in time about a year to get the true range of the security as far as implied volatility goes over the last year and then use that as the basis for determining where the security is trading now. Again, what this does (and I'll use an example here) is it takes this entire massive range that a company could be trading in and it basically tries to normalize it down to the range or rank that the current level it's in right now. Let's say that we have a company that's low implied volatility reading over last year was 20% and the high implied volatility reading over the last year was 70%. Well, right now, let's say that the company is trading at 45% implied volatility. Well, that would represent about the 50 rank between a low of 20% and a high of 70%. And so, this is again, a very easy way to just say, "Okay, look. If the range is this and this, then the current reading is around the 50th rank. If we were to take 20% as our low, make that basically like our zero barrier and take that reading of 70% as our high-end or 100 barrier, then the current reading of 45% is around the 50th rank." And so, when you do this over multiple securities, then you get a much better idea of which securities or which ticker symbols you might end up making trades on actually have implied volatility that's above or below their average range over the last year. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#487 - What Is A Price To Sales Ratio? Jan 22, 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 a price to sales ratio?" Very much like we did yesterday on the podcast where we talked about price to earnings ratios or PE ratios, today, we're going to talk a little bit more about price to sales ratios. The price to sales ratio is basically what it sounds like. You basically take the share price of the company and you divide that out by the sales per share to get an accurate representation of how much money each unit of the company, each share price of the company is generating in revenue. And the reason why investors want to take a look at this as again, one metric of many to determine if they want to make an investment in a security or a private company or an equity deal is because we want to know how much top line revenue the company is generating and if their earnings are coming more from revenue growth or coming more from cost-cutting and optimization metrics. Oftentimes, we see companies that have really good price to earnings ratios or really good earnings report, but maybe when you start digging into it a little bit more, in particular, looking at price to sales ratios, what you find is that the company actually lost revenue, but they cut expenses faster. We see companies that have great earnings reports and they beat expectations on earnings, but those earnings were actually a factor of the company cutting cost faster, not necessarily gaining market share or increasing top line revenue. Again, it's just another metric that you can use to weigh your decisions when choosing your investments.

To use an example here and what we want to see with a price to sales ratio is a low price to sales ratio and a low price to sales ratio would basically mean that investors are paying less for each unit of sale that the company generates. Again, low price to sales ratio is generally better than a higher price to sales ratio. Let's look at the first example. Let's say that the stock that we're looking at is trading at $10 per share and the sales for the company on a per share basis are $8 per share. Basically, what we do is we take the $10 and we divide that by the $8 in sales per share and we get a price to sales ratio of 1.25. Now, again, this could be potentially low for that industry or it could be potentially high for that industry. It's just one metric that we're going to use. Now, if we look at another company and let's say another company is trading at around $15 per share but is generating more sales per share than the first company we looked at, it's generating $10 per share in revenue, then we take the $15 divided by the $10 that it generates and we see that the price to sales ratio is 1.5. On the top line revenue basis, yes, the second company is generating more money per share, but the stock price is so much higher that you are actually paying a little bit of a premium to invest in that company, company B which is trading for $15 per share over company A which was trading for $10 per share. Again, this is just one metric that you can use, but it's a great way to kind of level the playing field and see which companies are actually generating meaningful top line revenue and are potentially growing their revenue over time before making an investment. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#486 - Simple Explanation Of Price To Earnings Ratio [PE Ratio] Jan 21, 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 walk through a simple explanation of price to earnings ratio or what's commonly referred to as a PE ratio. Price to earnings ratio is basically exactly what it sounds like. You take the share price of the company and you divide the share price of the company by the earnings that the company is generating over the course of in most cases, say a year, so adjusted earnings for the last year. And when you get that, you get a ratio that ends up being a number and that number helps you determine whether a company is highly valued based on their share price earnings or maybe a low value compared to their share price and earnings. For example, if a company right now is trading at say $20 and they earned $5 per share per year, then the PE ratio for that company would be $4 and for some people, that might be a really low PE ratio. It might again, signal to the market that that company is undervalued because they're generating $5 per share per year and yet, the stock price is only trading at $20. Now, compare this to another company that also generates $5 per share for earnings, but is trading around $50 a share, so when you take $50 divided by the $5 per share in earnings, you get a PE ratio of 10. Now, we can see that PE ratio is a good initial kind of filter for potentially investing in stocks or getting into securities or potentially any investment. It really doesn't really have to be stocks or securities, but a good initial filter to level the playing field and make less noise between stock prices and what the company actually earns because I think a lot of people look at stock prices and they value companies based on the stock price, but the stock price is only one determining factor and it's really highly contingent upon the outstanding float and how many shares are issued, etcetera.

When you use something like PE ratio, you are able to then compress the noise and look at just simply how much money the company is generating compared to the value of the stock. Now, this does mean that sometimes, PE ratios can be non-adjusted or non-cyclically adjusted. In another episode in the future, we'll talk about using what's called a CAPE ratio or a PE10 ratio which adjust for long-term earnings of the company and also inflation. But right now, this initial simple PE ratio is a good again, benchmark and metric to use when looking at different companies. Now, the last question is – Can a stock have negative PE ratios? And the answer is yes. We actually saw this a lot last year in 2018 and pretty much every year, we've seen some companies come onto market that have negative PE ratios which means that basically, the company is not yet earning money and which is why their ratio is negative, but they still have a share price, so companies like Tesla or Facebook or Twitter or Snapchat. Any of these companies that come on the market that don't yet earn money or are net profitable still are going to be trading at really high stock prices, but that doesn't mean necessarily that the company is good or bad. It could be that they're high-growth and maybe they're coming into potential profit zones or about to make money on a net profit basis, but they just haven't yet. Don't necessarily shy away from companies that have negative PE, but again, using a PE ratio and in particular, a CAPE or a PE10 ratio in the future might be a good again, screening metric for anything that you have to do long-term in the market. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#485 - Only Light Can Drive Out Darkness Jan 20, 2019

Show notes

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to reflect on a saying from Martin Luther King Jr. which is – "Only light can drive out darkness." And I've recently come across this over the last couple of months and it keeps coming back up and to me, it's a really interesting topic to discuss because I think about it a lot actually and as we are approaching Martin Luther King Jr. day here in the United States, it's a really important one and I figured give it some time in this podcast. But the concept here is basically that when you get into skirmishes or struggles or competition with people, what ends up being the default for most people is to attack the other person and to look at the other person and to demean and undermine and cut them down so much so that you become the higher person or the last man standing basically. But the reality is that more darkness, more negativity, more hate, more harmful speech actually does not drive out darkness. You can't have a dark room and then introduce more darkness to the room and then have the room become better. It's just going to become darker and darker and it's' this spiral that we get ourselves into. And so, what he said is he said only light can drive out darkness and I really love this because it's so true and it's so simple that you can remember it especially in this era of online community and online reviews and people posting videos and having the ability to chat and comment on things anonymously. What I found over the last 10 years is that there are absolutely trolls out there and there are people who want to see you fail and they want to see you be unsuccessful because all it's going to do is make them feel better about themselves for a brief period of time as they try to undercut and undermine you moving forward.

But the reality is that if you find yourself in a situation where you're dealing with people like this as I definitely have over the last 10 years being open and transparent and out in the community here in the options market, what I found is that you can't fight these people with darkness. You can't play their game. They want to suck you down. They want to drag you into these holes and we see this everywhere. We see this on Reddit. We see this on YouTube. We see this on Facebook and Twitter. It's just this nonstop berate of just negativity and it doesn't really help or improve the industry, it doesn't move anybody forward, so for the most part, I don't choose to participate in it. And when I say actually for the most part, I don't participate in it. I've made a rational decision many years ago that Option Alpha would be the exception to all of this rather than play these games. And so, for that reason, we see things all the time out there about me and Option Alpha and you might see things about you or people might make comments about what you're doing or how you're trading or how you're raising your family. I mean, there's a number of things. But I encourage you not to get sucked down the hole of darkness, to not use more darkness, more negativity, more combative tones and languages to basically feed these beasts, these trolls that will end up dying a very slow and meaningless life on the internet. But I encourage you to just keep doing what you're doing and to keep using honest, transparent practices, speaking your opinion, posting what you're going to post out there, having your word, your reflection reflected in everything that you do and I promise you that light will eventually drive out darkness. It may take some time and it may feel like these people are attacking you, but that's okay because there's many more people who need to hear your story, that need to hear your comments, that need to hear what you're doing rather than you getting sucked down this hole of darkness. Hopefully this helps out as we reflect on again, MLK day here in the United States and as always, if you guys have any questions, let me know and until next time, happy trading.

#484 - When Adjusting Too Early Backfires [XBI Example] Jan 19, 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 when adjusting too early backfires. In particular, we'll go over our XBI example. Look. I'm always a fan of being transparent and kind of talking through all of the positions and philosophies and things that we consider to be important here at Option Alpha and one thing that always is something that's difficult to do with a lot of precision I would say is adjustments. Adjustments are a tricky thing. You adjust too early and you potentially find yourself in a situation where the position backfires like what we had in XBI, but you adjust too late and the same market scenario that you thought you should adjust and you didn't because you maybe got burned before, you end up with a position that lost more money than if you were to adjust it and reduce the risk. Again, it is a fine line. There's no perfect formula for adjusting. Each style of position requires a little bit more massaging and creativity than the next, but our whole philosophy on adjusting generally is to start making adjustments slowly as we get closer to expiration. I don't think that we like and I don't think that any of our trading you would see online and in all of our public trades that we post on YouTube would show that we're overly-adjusty, meaning we don't adjust a position the moment it goes against us. We tend to wait closer to the last couple of weeks of expiration and then start slowly adjusting positions as needed. In this case, we did that with XBI. It was one of our first adjustments just the other month where we entered a position in XBI as a neutral iron butterfly. The position went against us as the market was heading lower the last couple of months and as a result, we started to get into the last couple of weeks of expiration. We went inverted on the position and started to reduce risk. Now, this was one of the first positions that we adjusted of the whole portfolio and again, the whole idea was – Okay. Well, let's start adjusting the positions that are most uniquely challenged that are really stressing us on one end of the spectrum or the other. And lo and behold as I guess luck would have it, the position turned completely back around and XBI went not only lower, but went shooting past the upper end of our range. The adjustment that we did worked for about two days and then the position went completely the other direction.

Now, full disclosure, at the time that I'm recording this podcast, we're still in the position. We rolled it to the next month for a credit and we're still in this inverted position, so we'll see what happens, but this is a great example of sometimes a position backfiring and moving against you. And so, as usual, we get a lot of emails from people saying, "Why did we adjust it too early? And if we didn't adjust it, it would've gone the other direction. It could've been profitable." Yes, 100%. This is a great example of one that could've done it, but hindsight, it's always 20/20. We adjusted one or two positions as the market was going down. I would've done the exact same thing given the exact same scenario in the future. I will do the exact same thing moving forward because I do believe that although it backfired in this instance, generally, the portfolio ended up holding up really well in the month of January and we ended up making some pretty good money in January. Even though this position so far has lost money, it's still open and working for the next expiration, but this is one of those examples where I think you slowly start to adjust because you want to leave room for the market to come back around and for some cyclicality to play itself out. And so, this is one that hindsight 20/20, it would've been easier not to adjust and we would've made more money, but we didn't know that at the time and I think at the time, we have to be cautious of reducing risk and minimizing the stress on the portfolio, minimizing the potential for drawdowns and so, that's what we tried to do. As always, hopefully this helps out kind of talking through these. If you have any questions, let me know and until next time, happy trading.

#483 - What's The Point Of Leaving OTM Options On To Expire Worthless? Jan 18, 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 a question which is – "What's the point of leaving out of the money options on to expire worthless?" If you've been following any of the trades that we typically like to do, we do a lot of spread type trading, whether it's iron condors, credit spreads, iron butterflies, etcetera and sometimes when we get into these positions, we will exit the positions by just simply buying back the inside strikes. For example, if we're doing an iron condor, we'll buy back the short call and the short put and we'll leave the outside out of the money options on to expire worthless. Now, why do we do this? Well, in many cases, when we do this, we're doing this when those out of the money options are not worth any value anyway. They were added as protection, they were added for a very cheap premium and they still are probably worth almost no premium at all, so it might take a little bit more time to fill if we were trying to fill all of the legs together. And if we did fill all the legs together, maybe we get a dollar's worth of value out of these out of the money options. It's just not worth a lot of premium to spend time and energy and waste an opportunity to close the inside kind of real risk of the position for a potential profit, so we'll leave these out of the money options on to expire worthless. Now, again, the point of this is that one, it's harder to fill these out of the money options as you get closer to expiration, so why would we sacrifice the rest of the position just to fill a dollar's worth of value in an out of the money option?

But the other reason that we leave them on is because I think they act as little long lottery tickets and black swan event kind of hedges. If we have a bunch of out of the money options, we close the inside strikes and then randomly, the market goes bananas, we at least have a little bit of protection on either end from these out of the money options. Now, is that always going to happen? Are we always going to have that? Highly unlikely. In fact, I think it's only really happened twice before in the last 10 years. EWZ and then I think the other one that we had was Netflix and Netflix had a huge move after we closed an earnings trade and we ended up making money on the out of the money options. But again, it's not the standard rule. It's probably the exception two. But again, it's not hurting you to leave these out of the money options on to expire worthless as part of the positions. They act as little black swan event kind of hedge protection. They don't have any value anyway, so probably in many cases, it might cost you more in commissions than the actual options have in value, so that's why we leave them on. We're not trying to play the market long. We're not expecting these huge moves in either direction. We just are trying to be very systematic and logical in how we go about closing positions for the most premium possible. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#482 - Can You Use A Stop-Loss As Your Position Sizing Metric? Jan 17, 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 – Can you use a stop-loss as your position-sizing metric? When a lot of people ask… And I get this question a lot is, "Kirk. If I'm getting into a trade and maybe I want to trade some particular index or product, can I just use a stop-loss order as a means to protect the position size of the portfolio?" And so, an example of this would be is if they got into a short premium trade or a credit spread trade that say had $10,000 worth of risk when you get into the position, but they might setup an automatic stop-loss to get them out of the position if the position loses $1,000 or some 2X premium or some doubling of Delta. Whatever the trigger is, they're setting up a stop-loss that is before the "real risk" of the position. And on the outside, on the surface, this seems like a good idea. I get into this position and if it goes against me, my stop-loss is there to protect me. But the problem is that when you have extremely volatile markets, you have gaps and you have black swan events and gaps can go in either direction, they don't always have to go down and black swans can have a black swan event where stocks has a huge move higher. We just saw this at the end of last year with natural gas where natural gas just went absolutely bananas and moved higher and had a black swan kind of bullish event. And because of those types of scenarios, what you end up seeing is that these stop-losses become worthless and meaningless. And so, if you're using a stop-loss as a means to position-size your portfolio, you're really asking for some bad stuff to happen to you at some point or another.

Now, we all know Murphy's Law. If something bad is bound to happen, it's potentially bound to happen to you. You're bound to trade through a bad scenario. I would highly suggest you don't use a stop-loss as your position-sizing metric because immediately overnight, what you thought was going to be capped at a $1,000 loss could turn into a $5,000 or $10,000 loss in a black swan or gapping type of event and those stop-losses give you no overnight protection for that. You basically have to be at the will of the market the next day with a market order and the bid ask spreads are wide and you're going to get terrible fills. It's all the things that we should not be doing as traders. To answer the question again, "Can you use a stop-loss as your position-sizing metric?" I highly suggest against it. I think you should use the true risk in the position for a spread. If you're doing a naked position, you should use the initial margin that's required to hold the position as a means to validate position-sizing and from there, definitely, we suggest as a broad statement not to use stop-losses in general because they do create more losing trades. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

#481 - Beta-Weighting After Adjusting Or Hedging Jan 16, 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 Beta weighting after adjusting or hedging positions. This question comes in from one of our members as always and he said, "It works great assuming that you're never going to sell the inside legs of a position, potentially roll, ladder or adjust. No platform is mature enough to Beta weight after any modifications." For example, if you roll several positions that you have been laddered or adjusting into over the next month, it will skew your next month's Beta weight. Basically, how do we account for this? How do we look at and monitor Beta weighting after making adjustments? Well, I think the easiest way to do this is basically to either un-toggle or uncheck the positions that caused your portfolio to be screwed up for Beta weighting purposes. Now, the idea here is that many platforms like Thinkorswim, when you make an adjustment and you now have existing positions that are on that are post adjustment, it will show those positions as if they were a standalone. Now, in many cases, if we've rolled down a call side strike or rolled up a put side strike, this won't include the credit from rolling up or rolling down those calls. It looks like the position is actually in worse shape than it actually might be including all credits and again, this is what affects the Beta weighting of your portfolio.

What I like to do in these instances if these positions are affecting the look of the portfolio, is just quickly go into my analyze tab and toggle them on and off to see what kind of impact it has on the rest of the positions. And so, when I toggle these things off, then I have a better idea of what's left, I can deal with the individual position by itself separately, I can look at that independently, still make judgment calls on how much that individual position is going to affect the overall portfolio or not, but again, that's something that I do every week on the weekly strategy call with elite members. We go over all these positions, we toggle positions on and off, we see how they affect and how they either skew or rebalance the portfolio and again, I think it just comes with a little bit of practice and patience to go through these positions one by one. Now, hopefully you don't have too many adjustments, but you can also put them in different groups or categories. You can especially do this in Thinkorswim where you can drop a bunch of these adjusted positions into a category or a group and then when you're analyzing your portfolio, you can actually analyze non-adjusted kind of core positions and then you can separately go through and look at all the adjusted positions.

Again, it's a little bit different. There is no perfect solution for sure. You have to be a little bit creative and you have to be a little bit patient about understanding these positions and how they impact things. Still overall, your portfolio should be pretty balanced even with these adjusted positions. If they're not perfect in there, I don't think any of these things are going to skew it way out of line that you couldn't get a good handle on where your balance sits at the current moment. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

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