The "Daily Call" From Option Alpha

Latest Episodes:

#260 - The Single Biggest Impact On Your Wealth Is Budgeting Jun 09, 2018

Show notes

Hey everyone, Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about what I believe to be the single biggest impact on your wealth and that is budgeting. Budgeting is one of those scary words I think for a lot of people. Some people don't feel like they need to budget. They feel like they're constrained by their budget, like if they have a budget, they can't do the things they want to do or can't take the trips they want to do. But the reality is that if you're focused on building wealth not only for your family, but multigenerational wealth, wealth that last for decades and decades and through your grandkids and their grandkids, then I do believe that the single biggest impact is your ability to properly budget. Now, budgeting doesn't mean that you have to cut out all the things that you want to do. If you want to do something, just factor it into the budget. But it means keeping expenses low. It means always reassessing how you're spending your money each month and it means looking at things and trying to figure out if you can save $100 here or $100 there. It's something that me and my wife do just once a month. I mean, you don't have to do it more than that. But I think that we've been able to, over the past couple of years, really keep a keen eye on where we want to spend our money, how we want to use our money and doing that through just a monthly budgeting needing that we do, me and her. Just once a month for about an hour so is really, really important.

Benjamin Franklin said, "If you watch your pennies, the pounds will take care of themselves." And I don't know and I still have to look this up, but I think that he was one of the first millionaires. Even way back then, he had a little bit of clout and knew what he was talking about. But it's so true, like I can't get over it enough and I see people all the time, especially in the area that I live in just blow their money on just random stuff. And if you don't track any of it, then the money has no accountability to anybody. You just get money into your account and you spend it as you see fit and then you're left over with whatever you're left over with at the end of the month. And it's funny because it seems like money in accounts want to spend themselves and you'll find a reason to spend the money. That's what people do and that's probably why I think a lot of people are in financial hardship most of the time or living generally paycheck to paycheck because they're not figuring out a way to budget, keep their cost in control and save money and save for the future, etcetera. I would highly encourage you… One of the things that I've done definitely in my life and I will continue to do is be really, really strict about sticking to a budget. Again, it doesn't mean that you can't do things you want to do. You just factor them into the budget. If you have a beach vacation coming up or you want to take a trip, then start saving for it now. Save $50 or $100 now every month, so you can save up until that date and then actually, you have the capital to do that, you have the finances to do that. I think people who budget for sure end up generating more wealth long-term. I have no question about that. I haven't seen any definitive research on it. I know intuitively and instinctively that's what the case is.

I would love to hear your guys' thoughts on what tools you guys use for budgeting. I've pretty much tried a lot of them out there. I'm a big fan of Mint. I like using mint.com. It seems to be the easiest. Also, Personal Capital is a good one. There's also YNAB which is You Need To Budget, ynab.com as well. I've used all of them. Like I said, I generally like to use Mint. It just seems to work for me and I've used it for a really long time, so I can track all of our budgeting stuff over time. But again, you can use Excel if you want to. Most banking apps have it. But do something. Do something today to help clear out your budget and see where you can save a little bit of money. See what things you can cut, what things you can cut back on, maybe changes to service that you can do like telephone and internet, TV, etcetera, all that stuff that you can maybe cut back on or if you're not using, reduce. Hopefully this helps out. As always, if you guys have any questions, let me know. Until next time, happy trading.

#259 - Bear Market Definition And Why It's Flawed Jun 08, 2018

Show notes

Hey everyone. This is Kirk here again at optionalpha.com where we show you how to make smarter trades and welcome back to the daily call. Today, we are going to be talking about the bear market definition and why I think that it's a little bit flawed. First, let's get it out of the way. Most people use bear market definitions as a drop in 20% of the underlying value of a security or a bond ETF, currency, whatever you want to use in there. A 20% drop from the 52-week high, so basically, a healthy pullback, if you will from the recent highs. And why I think that this is a little bit flawed is that in many cases, it could either lead to people being overly-panicked when they hear that something is in a bear market or it can lead to people not realizing that something is actually still in the midst of falling because they think once it reaches that magic 20% drop threshold that it actually might be a good opportunity to buy. We've seen in many cases, particularly in the bond market and the currency markets in this gold and silver markets that stocks and ETFs and all of these equities can actually be in multi-year bear markets where they just continuously drop, 20% one year, then another 10%, then maybe another 15% and they just seem to continuously drop over multi-year periods. What I think people again, get sucked into is that they hear the term, bear market and then they initially sell. Sometimes, stocks can be in a very short bear market where they have a really strong, maybe too aggressive of a pullback that's not really something that's a cause for concern, the fundamentals didn't change, the total trend did not change, but then it leads investors to basically dumping or panicking and not really looking at their strategic strategy for investing.

And the other reason that again, I think it's a little bit flawed that people just… Or not flawed, that people just rely on it too much and we hear it too much is that the true definition of a bear market is that again, it leads people into believing that things are over and well and done once it reaches a 20% pullback, like 20% is the magic number and once it hits that number, then everything is rosy and it's a better buying opportunity. We know from many examples, again, in oil and currency and precious metals that that's just not the case, that stocks and equities can have a huge multi-year decline and that doesn't necessarily mean once it hits 20% of the recent pullback that that's a good buying opportunity. In either case, as options traders, I really don't care about it. People ask me all the time, "What if there's another bear market? What if there's another bull market? How does that impact it?" There's bear and bull markets it seems like all the time in different securities and ETFs and underlyings and it just happens naturally. And so, as options traders, because our duration is so short compared to other investors, meaning we're trading just a month or two months out, we have the ability to quickly adjust to any market environment that happens and if you're keeping your portfolio generally balanced, it shouldn't matter if we're in a bear or a bull market long-term for you. As always, hopefully this helps out. If you guys have any other questions, let me know. Until next time, happy trading.

#258 - How To Setup A Short Straddle Jun 07, 2018

Show notes

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are going to be talking about how to setup a short straddle option strategy. A short straddle option strategy is probably one of the core and most aggressive option selling strategies that you can do and it's basically setup by selling at the money calls and at the money puts at the same strike price. For example, if a stock is trading at $100, you would go ahead and sell the 100 strike put option and the 100 strike call option. It's always setup using the at the money strikes or near at the money strikes, whatever strike prices you can get that are closest to where the stock is trading, so that you can try to build the strategy as neutral as possible. The idea with a short straddle is that even though you're selling options where one contract is conceivably going to be in the money at all times, you are taking in the most amount of option premium by selling those at the money contracts, therefore, moving your breakeven points further out from the at the money strikes. For example, using a $100 stock that's trading right now, if we were to sell the 100 strike straddle, we might collect on one side, say the call side option, $2 in premium. On the put side, we might also collect $2 in premium. We've collected now a total of $4 in premium which means that our breakeven points on our short straddle are actually $96, so $4 below where the stock is trading and $104, so $4 above where the stock is trading as well.

Again, you can see that when you trade a short straddle, the premium that you collect takes into account the fact that you need to move those breakeven points much further out which gives you a wider profit range. Setting up short straddles is generally a trade that we like to use in a couple of different market scenarios. We like to use these when we are in an earnings event. When a stock is coming up on earnings, we'll setup a short straddle if we have high implied volatility for that setup and we'll also set them up either as a regular short straddle with undefined risk or synthetically as a very wide iron butterfly trade where we would buy options further out than our short strikes and create a risk defined position. We usually set these up for our monthly position trades where we're trading one to two months out. Now, in many cases, we run all of our strategies through our trade optimization software to tell us exactly when and how to use these and when to take profits on these. We would typically suggest in many cases that you take profits at about a 25% profit target for short straddles though we have found through our trade optimization software and back-testing software that in many cases and many market environments, actually waiting just a little bit longer to take profits at say 50% or 75% of a profit target actually ends up creating higher returns overall. As always, you can check out our demo of our software at optionalpha.com/toolbox to get a little bit more details on that. As always, if you guys have any questions, let me know. Until next time, happy trading.

#257 - What Is Broker Dealer & Do We Still Need Them? Jun 06, 2018

Show notes

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we're answering the question, "What is a broker dealer and more importantly, do we still need them?" To quickly answer this question, broker dealers are a very important part of any financial system. In our financial system which is extremely complex, very large and in many cases, very efficient, broker dealers do serve a very important purpose. Now, to now backtrack a little bit and say what is a broker dealer, well, we have to break it down into two things. Well, first, there's a broker. And so, a broker is just anybody who basically facilitates or helps you buy or sell securities. For example, right now, the best example maybe of this in its rawest format is maybe say Robinhood. Robinhood is a brand new brokerage and all they do is they help facilitate the actual transaction. They are basically if you want to call them, a middleman, they're a security facilitator where if you want to go buy a stock, you would do it through Robinhood and they basically connect you to the market.

Now, a dealer on the other hand is actually a company who actually invest their own money and has their own interest in buying and selling underlying securities. Some of the biggest investment banks in the world, Deutsche Bank, Goldman Sachs, JP Morgan Chase, all of these ones, they have a brokerage arm where they will actually help clients and help people buy or sell securities, but then they also have trading floors or investing floors, dealer floors which they are actually trading and actually physically maintaining positions for the bank itself, for the actual investment bank itself. And so, they're what many people would call a broker dealer and many of the largest firms and investment banks and many of the largest brokerages that you hear about now have both, so they end up being both. The question becomes, "Do we still need them?" Obviously, I think we do. I think we can go down a huge rabbit hole of the conflict of interest that comes about because banks have a brokerage arm and a dealer arm if you want to call it that or are investing firm's money, but also offering of advice to clients.

I think that on the outside though, it's generally okay as long as there's a division between these two, so what a firm does with its own money and what it needs to do to hedge its own risk or where things are the better investments for firm money. That's firm money. They can do what they want with their money in my opinion. If somebody comes in and they walk in the door and they say, "Hey, look, I'm going to buy Apple stock. I want to buy Apple stock no matter what you say, no matter what you do." then they can facilitate that transaction and serve the client just as well by doing that as they are doing if they say, "You know what? We're not going to buy Apple stock with our own firm money. But if this guy wants to walk in off the street and he wants to buy Apple stock and we've told him that we don't think it's a good decision or maybe advice him something else is better, he still wants to buy it, then they have to buy." They can make that decision and let the guy buy the stock, help him buy shares of Apple.

I think when there's that division and you understand that a firm can invest its own money for its own purposes and hedging purposes and strategic business purposes… It doesn't always necessarily have to agree with the actual client that's walking in and obviously, we know that everyone here even listening on this podcast is in totally different places in their life financially, location wise, age wise. We're all totally at different levels and so, what might be good for you may not be good for ma and vice versa. I think they still serve a valuable purpose in the market even more so and we could get into this on another podcast, but just on acting as a means for people and companies to get liquidity and access to capital through public markets, investment banks and broker dealers take on a lot of risk in sponsoring a lot of these companies and putting together some of these deals. And so, without that, companies don't have the ability to grow and increase their capital and debt and leverage themselves to be able to expand and build new companies and new plans and territories. I think they serve a really important purpose in the market. Of course, we always have to watch and monitor them. That's obviously the job or the regulators and the government. But for us as traders, I think it's important to understand at least this quick little distinction. Hopefully this helps out. If you guys have any questions, as always, let me know. Until next time, happy trading.

#256 - How To Invest In Precious Metals Using Diversified ETFs Jun 05, 2018

Show notes

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we're answering the question, "How to invest in precious metals using diversified ETFs?" Look. Precious metals I think are an important part of the markets in general and they still are becoming a more important part of the global economy even as industrial nations start to continue to grow and new industrial nations start to grow things like silver and steel and precious metals. It all becomes really, really important. Do I think it's a major part of every market? Of course not. But is it tradable for us as options traders and investors? 100%. The question becomes, "How do you invest in these things if you want to do it from a nonphysical side? You do not want to physically own silver or physically own gold or any of these other metals or precious commodities. How do you do it from the ETF side?" But there's a lot of ETFs out there and so, I think the starting point for me would be if you want to trade them from a long-term perspective, I mean, the doors are wide open to whatever you want to trade. There's lots of Vanguard Funds and Spider Shares and iShares that you can check out that are all ETFs that have different trajectories and different holding patterns, whether they hold physical or not, whether they just track the precious metals and the bullion or not. I'd say read into those if you want to on the long-term side. There are a lot of different choices out there.

When it comes to actually trading from an option side, I think the first threshold to cross for me is crossing over the liquidity threshold and making sure that there's enough liquidity in the market. And so, for us, some of the major ones that we trade are things like GLD, GDX, SLV, etcetera and they end up usually having lots and lots of liquidity both on the underlying stock and in the options contract, so they become decent trading vehicles for us and we've made some pretty good money trading GLD and silver in the past before that we like having them in our basket of potential ticker symbols every single month. Now, if you wanted to trade things like GDX which are gold miners or PICK which is Pick, again, another mining and metals producers, those are going to be trades that you make not necessarily on tracking the physical underlying precious metal like silver or gold, but actually on the companies that are in that industry that are mining and actually producing the metals and actually going and extracting it from the earth. Those are what you're investing in there. There's a difference. Everyone seems to think GDX and GLD is the same thing and one is more expensive and the other one is cheaper, but it's not the case. One tracks the actual physical gold bullion and the other one is basically the metals and miners of gold, so the actual companies that extract gold from again, the earth.

It's really interesting to read a little bit more into this which I encourage you to do if you do have some time. But again, you can trade a lot of these precious metals and really diversify out your portfolio pretty quickly by trading some of these ticker symbols. Again, just look up online some of these ticker symbols if you're interested in doing it. Like I said, the ones that we mainly trade which are also part of our watch list and toolbox software (so it's already built in there) are ticker symbols like SLV, GLD and GDX. Hopefully this helps out. As always, if you have any questions, let us know. Until next time, happy trading.

#255 - Can Black Swan Events Occur In ETFs? Jun 04, 2018

Show notes

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we're going to answer a question from one of our members which is basically, "Can black swan events occur in ETFs?" I think this is actually a really great question because a lot of the benefits of trading an ETF style contract, especially with options, is that you remove in many cases, the unsystematic risk that's in the market. When you're trading an ETF, it's basically a collection of underlying securities or a tracking mechanism for other sectors or areas. And so, conceivably, not one particular company getting knocked out, in a given day is going to have a huge impact on that ETF. If you even think about just the broad-based indexes like the NASDAQ and the Qs, IWM, SPY, DIA, etcetera, it's basically just an ETF that tracks the collection of underlying securities. If one stock in that particular collection, say the S&P 500 has an absolutely terrible day, it will impact the index, but not like that one stock by itself, in a vacuum by itself. I get the idea of doing that for ETFs and I like that that prospect of trading ETFs for that reason as well, so you don't have the risk of an ETF necessarily going bankrupt overnight because it's a collection of securities that it's tracking or in its portfolio.

But the question now is, "Can these ETFs still have black swan type of events, events where it has a huge move up or a huge move down, basically, this big gapping move that happens almost instantly overnight?" The un-doubtable answer to this is yes, it can happen and I'll prove to you with two examples that you can look up when you get home or when you get to your office and you can type these in on a chart. The two examples I want to go through are EWZ and RSX. EWZ is the first one that we'll go through. This had a huge black swan event back in May of 2017. A little over a year ago, it had a huge black swan event where the entire Brazil market and therefore, the Brazil ETF basically collapsed on some… I think it was like government fraud or something like that, basically, charges or allegations at the high levels of the government. Overnight, the ETF basically opened up the next day down almost 20% on the day. I think it was a little bit over 20% and implied volatility spiked up huge. Now, it since recovered from that collapse, but that is a black swan type of event that can happen in an ETF. Now, the same thing also happened to the Russian ETF which is ticker symbol, RSX. Again, the Russian ETF basically had a huge gap down, about a 15% gap down literally overnight in April of 2018. I don't remember exactly what the news headline was that caused it, but it doesn't really matter. It had a huge gap down, basically a big black swan event that occurred and again, this happened in a major ETF.

Now, the thing that you'll notice in these particular cases (and this is just worthy to notice across all different ETFs that you trade) is that if there's news or information that affects an entire industry or sector or country, then those ETFs are going to be hit the worst. In these two examples, there was news specific to Brazil that infected the entire Brazil ETF. There was news specific to Russia that affected the entire Russian ETF. If you have news that's specific to semiconductors, that's going to affect things like SMH which is an ETF that tracks semiconductors. It's industry-specific that you're going to have it. For this reason, that is why I tell people all the time that even though implied volatility can be high across the board in so many different ETFs, we still want to have a good mix of ETFs in our portfolio and keep our position size small. In fact, one of the ones that we've traded over the last two years, kind of religiously every single month is TLT which is bonds. Bonds have not generally had super high implied volatility, but because adding bonds to our portfolio gives us some diversification in our underlyings, we're not just trading emerging markets, we're not just trading oil and gold and silver ETFs, we're trying to get a good mix in our portfolio, so that if something were to happen to one of those other sectors and/or to bonds or something else, we always have a good mix that's generating income for us.

Hopefully this helps out because I think the question today is really important and something that you should just again, refresh on and remember. Look. We can see black swan events in ETFs and we don't know when they're going to happen, so even though it's an ETF and you think it's going to be a little bit more stable, it can become unstable very quickly and so, therefore, make sure you add some diversification to your portfolio and make sure you always keep your position sizes super small. Until next time, happy trading.

#255 - Can Black Swan Events Occur In ETFs? Jun 04, 2018

Show notes

#254 - Swing Trading For Options Traders Jun 03, 2018

Show notes

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are going to be talking about swing trading for options traders. Oftentimes, I will get emails from people around the topic of swing trading or using day trading type techniques in options trading and the thought process is always, "Well, Kirk, we can't really use options trading because we're trying to swing trade the stock or we're trying to day trade the stock." But I actually think that this marriage of swing trading or position trading around the market in options trading actually works really well and I'll explain why. Whenever you do a regular swing type trade or let's call it a day type trade where you're trying to actually trade the underlying position, so you're swing trading Apple or day trading Apple, you are trading the actual physical stock of Apple. The problem with that is that you have to be right immediately in your directional assumption. If you buy Apple stock for say $500 a share, then if it goes higher than $500 a share, you make money, but if it goes lower than $500 a share, you lose money. You have to be pinpoint accuracy on your directional assumption. There's really no wiggle room in there. You either are right or wrong and there's one line in the sand.

I think when you start using options trading in conjunction with swing trading if you want to go that route, then it gives you the ability to now trade a directional assumption. Let's say you still wanted to go long Apple, but instead of buying the stock, instead trying to swing trade the stock itself, you use options trading. It now gives you the ability to have a margin of error or a cushion, so that if you're wrong in your assumption or maybe if you're wrong by a $1 in your assumption early on and then the stock does continue to move higher, you still have the ability to make money. Let's say now that if Apple was trading at say $500, theoretically just to make everything round numbers and easy and you thought that Apple was going to go higher, well, don't buy the stock at $500. Go ahead and sell let's say a put credit spread below the market at say $490 on the put side. That's your short strike. That becomes a line in the sand and if you're wrong and Apple doesn't move higher, at least you have the ability to make money as long as Apple stays above $490. In this case, you could be wrong and the stock moves sideways, you still make money. You could be wrong and the stock goes down, but as long as it doesn't go below $490, you still have the ability to make money.

I think this marriage, this pairing of options trading when people actually really think about it, it gives them such a margin of error and a cushion to be wrong and still generate expected income from a portfolio and still have the thrill, I guess of swing trading and day trading or using technicals and chart patterns. I'm not one of those people who use it all the time. It's something I look at for sure. I look at the technicals from our research, I glance at chart patterns, but I by no means, make major decisions based off of them. If you're that type of person that you love using chart patterns and Fibonaccis and technical analysis, great, just now use options trading in conjunction with what you're already doing to create positions that have a little bit higher expected win rates than just flat out trying to trade the stock. I think when people actually start gravitating towards this style and methodology of trading, it's actually a lot more comfortable, you become a lot more confident and you still figure out a way to trade based on whatever indicators or analysis you use, but also layer in some risk protection on the backside. Hopefully this helps out, just food for thought today. As always, if you guys have any questions, let me know. Until next time, happy trading.

#253 - Free Options Trading eBook: The Ultimate Options Strategy Guide Jun 02, 2018

Show notes

Hey everyone. This is Kirk here again from optionalpha.com and welcome back to the daily call. Today, we are going to be talking about how you can get a free copy of our options trading eBook called, The Ultimate Options Strategy Guide. This thing has actually been downloaded more than 65,000 times in the last couple of years and it's something that we wrote actually a while back and then we recently redid completely about two years ago and expanded it out. I think our first copy of this eBook and basically, this manual was about 40 pages or so and we recently redid the book about two years ago and expanded it out to 90 pages. The goal of which being to offer a lot more information on the why and the how and why you trade options versus stocks, why implied volatility is our edge, all of that stuff and I really went into a lot of detail in some different sections. Now, I know that some people actually charge a lot of money for books on options trading and they charge money for resources and guides. This is something that I wanted to be as your go-to starting place for getting used to the markets and getting familiar with options trading in general. We offer it available for free to everyone. You can just download it at optionalpha.com/ebook. That's just one word, eBook, optionalpha.com/ebook if you want to get a copy of it.

On today's podcast, we'll go through a couple of these sections here because even though it's been out for a couple of years now and we've revised it and continued to expand it out to 90 plus pages now, people still are not downloading this thing and I think it's a really huge resource if you're just getting started or even if you've been trading for a little bit, but just haven't quite figured out how the market works or how options trading work. I wanted to hit some of the highlights from the book today really quickly and just present it to you and hopefully get you interested enough to check it out and take a look at it. The first major section that we have is why did we trade options versus stocks and that still becomes a point of contention for a lot of people. They still don't understand, they cannot clearly articulate why options are better than stocks or how we can use options trading to basically replicate a stock portfolio if we wanted to. And then after that, we start going through basically our 3-step process in general for finding the best option strategy and it is always a 3-step process. Even though we use a lot of software and technology now with our toolbox software to basically find the best strategies for us, the whole process is a 3-step process. It's finding the directional assumptions, so where do you think the market is going and ultimately, it doesn't matter as long as you're overall neutral. Step two is just finding implied volatility, so that's again, an easy process. It's pretty much given where a stock's implied volatility ranking is. And then three is targeting the best strategy for you, so it's then taking those two factors and saying, "Okay. If I'm trading in an IRA account versus a margin account, do I need to be making different option strategy selections in my account and my portfolio versus if I'm trading a huge account in a portfolio margin account, for example?"

And then from there, we start digging into literally the most of this, like the meat of this entire guide, our basically one or two page little quick guides for every single option strategies, so call debit spreads, call calendar spreads, put diagonals, short straddles, short strangles, put credit spreads, broken wing butterflies, iron condors, iron butterflies, naked calls, naked puts, debit spreads, calendars, ratios, diagonals. Again, it's all in there. All of these little quick guides that we have basically go through the initial setup of that position, so how you build out an iron condor and then it has a little one-page cheat sheet that says, "Okay. This is the trade setup. This is around the optimal timeline to do it. Here's how volatility impacts the position. Here's how time decay impacts the position. Here's a general profit target of when you should take the trade off. Here's how you calculate breakeven points." I mean, it really tries to go through step-by-step and give you as much information in one single place as possible. Now, we know we can optimize around this and we know that this is just the starting point, but if you're again, new to options trading or if you've been in the business for a while and you don't understand exactly how you haven't made money yet because you've been trying different things and nothing seems to work, this might be a nice little go-to resource for you. Again, I wanted to push that out to you guys today because it is a free resource that we give out to everyone and it's always available for you guys at optionalpha.com/ebook. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.

#252 - What If 20 Seconds Was Worth $218,759? Jun 01, 2018

Show notes

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, I want to answer the question, "What if 20 seconds was worth $218,759?" Now, where on earth did I come up with that number? Well, I was recently running a back-test with a guy during a coaching session and literally, one tweak that we made between one strategy and the other strategy, very small tweak to just the strike prices created a difference over 10 years for that back-test of $218,759. I am still dumbfounded, honestly by why people don't use more back-testing in their options trading when they start actually trading and putting their hard earned money at risk.

Now, I honestly don't care if you use ours or try to use other people's out there. There are other services that do back-testing as well. We think we provide an insane value because it's just a one-time investment with lifetime access. I think there are a lot of other services out there that don't have as much data as we do and also charge a monthly fee for it. But in any case, wouldn't you want to use something that is proven to work over many, many trades, many market scenarios, different environments versus trying to just hope and pray and guess that whatever trade you're getting into now works in the end? That's what I see people doing all the time, is they get into a position and they get into it because they just feel like that's the best one for them and they don't know why or there's no real rationale behind it, there's no mathematical models or expectancy models behind the trade that they're getting into and you end up wasting a lot of time by trying to pick and choose all of these different strategies to see what works.

And so, the goal that I had in building this out was selfishly for myself because I wanted to be able to back-test strategies before I got into them and I didn't see anything out there that I thought worked really well, so I want to build it myself and build it in-house at Option Alpha because I wanted to know "Hey, before I put another $2,000 or $3,000 towards this trade, does this actually work out if I were to do this over and over and over again?" Because what we all don't have is we all don't have more time. Every single day, we're just wasting away at the time that we have left to invest and to trade. Time is the most important thing that we have right now. The longer time span you have to trade and invest, the better off you're going to be, but if you're short on time or you're getting short on time, you better be trading the right strategies because I'd hate to look back… And I'm saying this for myself. I would hate to look back say 10 years from now and say, "Man, I wish I would've done things a little bit different."

Let me give you guys an example. I think that what we learned in our profit matrix research (again, I'm sharing this because I want to provide value to you) is that you see a direct correlation between trades that you hold generally longer towards expiration and higher returns. Now, this doesn't mean that you hold every trade to expiration, but what it does mean is that if you're willing to hold trades a little bit longer, in some cases, beyond the 50% profit target, if you hold to say 60% or 75% profit, you will generally see higher returns on the long run, meaning that you'll generally see more money in your account, higher cagiers and you might have to go through a couple of more ups and downs in the process to get there, but it generally ends up creating more revenue and more profit for your trading account. Now, that's really insightful stuff that we did not know before. We thought that "Hey, if you take trades off early, your best trade is to close it really early." But now, we're starting to see that if you hold trades just a little bit longer, especially if they're neutral and right in the middle of your range anyway, they're not really challenging you, why not hold them a little bit longer to expiration? Again, you don't have to hold all the way to expiration, but why not hold them a little bit longer? That difference could generate hundreds of thousands of dollars for me over the next 10 to 20 years and that's the type of difference that I wanted to figure out.

And so, again, I just don't understand. I know I'm pushing this hard, but I think it's so important because if literally one tweak to how you're doing something could change literally the trajectory of your portfolio for 10 years, isn't it worth it just to look at it for at least like 10 seconds or 20 seconds to run an analysis? I think you guys work way too hard for your money. I know I do. I work really hard for the money that I make and I'm not willing to give it up on some whim, on some theory of something that's not tested. That's my push today. I think it's worth it in any case to do your research on an investment. I don't care if it's options trading, real estate, stocks, indexes. Figure out if that strategy actually works before you put your hard-earned money into it. I think you'll be well-served in the future. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.

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