Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we're going to answer the question, "What's the best timeframe for stock trading?" This is actually a user submitted question. Somebody submitted this question into us, again, which is a great way if you have questions about options trading, stock trading, the market, etcetera. Get those questions into us, so we can queue them up on the daily call. But somebody said, "Can you give us an idea of what the timeframes are for indicators in particular that are best and useful? On a month-to-month as you show in many of your examples or day-to-day or do they work just as well on three or one hour or five minute charts, etcetera?" Really, the idea here is when you're looking at charting and when you're looking at in particular, technical analysis indicators, what do you use? Do we use a one hour chart, a one day, a one month, a one year? I mean, there are many different chart formats you can use. I think for most of the testing that we've done, obviously, we've done it on a daily basis, so daily charts. Not intraday charts. We're not doing one hour, one minute or tick charts, etcetera. We're doing one day charts or one day closes and wicks. For a lot of other people, if they use charting patterns, I know there are some big-time traders that like to use charting patterns using weekly charts or monthly charts.

I think the thing that I would say on many of these charting techniques and indicators is that the indicators are only as good as the timeframe that they're used on. In many cases, if you get a sell signal, but it's on say a daily chart, well, that's going to be reflective in potentially a move of a couple of days. If you get a buy signal and it's on a monthly chart, well, it could be a very big move that takes many, many months to actually play out. You have to be understanding in just looking at what chart you're looking at and how long that signal might last. On a say intraday chart, that's one minute or two minutes for every tick. If you get a buy signal, that only may last for maybe four or five minutes. I mean, it's going to be that quick. Do you have enough time to appropriately react to that? Can you get into positions that are liquid enough and then get out of it? We've really never found with technical analysis that intraday stuff really works well for us, nor do we like to trade options on an intraday basis. We're not selling option contracts and then buying them back or vice versa every single day. We're trying to be position traders. We like to trade using daily charts. A lot of our back-testing and research has been done using daily data which is a lot easier to get. It can get longer timeframes. And so, that's what we like to use. Hopefully it helps out. As always, if you guys have any questions, let me know. Until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to talk about – Should you look at individual stock IV or VIX? The simple answer to this, I believe is you should be looking at both. The VIX in and of itself, I don't think is the only thing you should be looking at because remember, the VIX is measuring implied volatility on the S&P 500, so it's basically just a way to chart or to track volatility on the S&P. Now, we could obviously track individual volatility on every stock and ETF out there. It's not that hard to do. Every individual stock and ETF could have its own VIX like ticker symbol if we had exchanges that wanted to trade these and products that were related around them. The VIX in and of itself, I don't think is the only thing you should be looking at. And case in point to use kind of some concrete examples and numbers right now, the VIX right now is trading in the low teens and the S&P 500 is rallying higher, so it's up on the day at the time I'm recording this and there's a lot of other individual stocks right now that have much higher implied volatility than the VIX and in many cases, much, much higher implied volatility than even some of the other peer groups and ETFs that we track. Things like EWW, EWZ, XOP, XLE, SMH, etcetera all have high implied volatility right now on an individual basis. If we just looked at the VIX and we didn't look at individual stock IV, we might be missing an opportunity to trade these kinds of higher IV, low hanging fruit type opportunities as an option seller. That's why I think actually both are important. I mean, look. You can use the VIX as a gauge or general broad market brushstroke of where implied volatility is, but you definitely want to dig into some of these individual stock IVs because sometimes you can find really good deals there, really good IV deals, if you will. I think again, the answer is both. I wouldn't look at just the VIX, I wouldn't look at just individual stocks, but you should be monitoring both. Hopefully that helps out. As always, if you guys have any questions, let us know. Just head on over to optionalpha.com/ask and get your question submitted and we'll get it added up to the queue here on the daily call. Until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about how we can apply Parkinson's Law to options traders. Parkinson's Law is probably something you've heard about before, whether it's in psychology class in college or high school or you just heard people talking about it. If you're a geek of success and understanding people who are successful and companies who are successful, you'd understand that Parkinson's Law is talking about generally, the idea that a task that you're trying to do or some activity that you're trying to do is going to swell in perceived importance compared to the relation of time that you allocate for its completion. For example, if you said, "Okay. I'm going to build a shed in my backyard." And you gave yourself a year to build the shed because you figured, "I need time to draw up the plans and do the base and the framing and the roofing and put the shingles on, the whole deal." It's going to seem like this huge monstrosity of a project. And so, because you gave yourself a lot of time allocated towards its completion, you naturally perceive it as a very important and complex project to work on. Now, the reality is you could probably put up a shed in two days. If you said, "You know what? I'm going to put up a shed in two days." You might have to cut back on perfect plans. You might have to reduce the time it takes to shop around for the possible shingles or materials that you're going to use. But the end result is that that time pressure forces you to complete the most essential elements and then the result is typically very, very close or same to what you would've done had you had more time. In fact, they've tested this numerously and various studies at major institutions, you see that people end up doing about the same work and they just basically consolidate all of their effort and time into just the last like 10% of what they allocated. If you allocate let's say a week to do something, you're still going to end up doing it the last day because you gave yourself a week, but you didn't do anything the first six days, you end up doing all of it anyway the last day.

How do we apply this to the markets as options traders? I think what it comes down to is applying this from the educational side. I think what you have to do is you have to look at options trading as this thing that you start to take bites out of in understanding different categories or topic areas of options trading and then give yourself a really short timeline to try to crunch through some of the stuff. Now, I'm not saying you just watch the videos and keep your eyes down and fall asleep and just because the video played on in the background and you were asleep that that counts as going through the material. I'm saying try to learn all about earnings trades in the next four days, just as much as you can in the next four days. It doesn't matter if you get through everything or not, but try to apply some sort of time pressure to your education, so that you can finally get the most essential elements, the most essential pieces out of say earnings trades which I could probably just rifle off the top of my head. High IV, enter the trade right before the announcement, be neutral. Small position size, exit the trade right after the announcement. I mean, there are really just a couple of key elements to an earnings trade that you have to have in place. You could learn those very, very quickly. If you want to learn how to trade, I think you take bite-size chunks out of this business. Learn one topic and focus on it really, really hard for a couple of days, get the most essential elements, you'll get 95% of the way there and you can fill in the gaps later. The reality is that in this business and in many businesses, you're never going to learn everything, so let's stop being perfectionist in assuming we can only move to the next stage once we've completed everything 100% and we have a 100% understanding. It's never going to happen. You're always going to have missing gaps and things that need to be filled in. I still have that all the time. We talked about this on the weekly podcast just the other week that I still have things that I'm learning and mistakes that I'm making in my trading that I need to improve on. If you ever think you're going to be 100%, you're not, so fill in 95% of the gaps and then move onto the next thing and things will just naturally kind of dovetail into different topic areas and different understandings as you complete more courses and modules and categories, etcetera. Hopefully this helps out. As always, if you guys have any questions, let me know. Until next time, happy trading.

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we're going to be talking about why commissions are way less important when compared to this one thing. The reason I want to talk about this is because I get a lot of people who email me and always, the sob story is around commissions. Now, don't get me wrong. Commissions are a part of trading, but it's a cost to doing business. It's like emailing me and telling me that my commissions are too high on my electric bill. I get it. You can reduce the cost of your electric bill, you can reduce the cost of your commissions, but ultimately, it's a cost of doing business. Now, this even means it's a cost to doing business when it comes to free broker platforms like Robinhood. Now, I know I harp a little bit on Robinhood because I think that although it is a free broker platform and everyone likes to gravitate towards it, there is a cost to go towards the free type commission model and when it comes to speed and technology, you do pay a little bit, a little bit of a sacrifice for having free commissions. Nothing is free, absolutely free in the world. You do give up something for going towards a free model or paying a lower commission. But in the end, what I want to talk about is why commissions are way less important. Everyone is focusing on commissions, but what they should be focusing on is latency. And the reason I want to talk about latency is because when it comes to options trading, the ability to do something quickly and to do it right is way more important than any commission that you would pay and I've often said that I think commissions when paid are actually helpful to your business. It's a cost that's a good cost. It's an investment in your business because if that commission pays for amazing technology and reduces latency in your trading system, then it more than pays for itself.

Let me give you guys an example hopefully to kind of prove this point because I just see too many people just like focusing on it way too much and missing the big picture. Let's say that we're trying to invest in real estate. There are two types of people who invest in real estate and by the way, my wife and I, we invest in real estate. There's people who love to do the work themselves because they want to save money and then there's people who don't want to do the work themselves because they realize that if you don't do your own work that you could actually do exponentially more units and more properties, thereby increasing your total profit, cash flow, whatever you want to do. There are people who will buy a house and they'll do all the work themselves. They'll even list it themselves. "For sale by owner." They won't use an agent because they want to save, save, save, save, save all of these commissions and fees that are in there and that works for sure because you can do that and then you can save all that money and you can feel really good about what you're doing. What I have learned though not only in the real estate business, but in the options trading business is that when you do this and you try to cut, cut, cut, cut, cut from every angle, you basically end up cutting yourself out of business. And so, we used to do a lot of work on our properties back when we're younger and we didn't have any money. We had no choice basically to do it. But now that we actually have investments that make money and we do 15 plus properties, we're doing two flips right now, when we do this, we don't touch the properties at all. Like when we're flipping a house, we do not pick up a hammer, a paintbrush, nothing because what I realize is that my highest and best use is finding and allocating capital not actually doing the work. Although I might end up spending a little bit more money to hire a contractor and hire an agent to do it, I can end up doing a lot more properties, thereby increasing our portfolio much faster than if I was to do the work by myself.

Now, to use this analogy now on the options trading side, what everyone thinks I mean when I say latency is they think I mean that you have to throw, like who can throw mud against the wall quickest. When I talk about latency and speed, it's every broker platform can enter trades really fast. Like you want to get a trade in, it can be entered really fast. But it's not about how quickly you can throw just like random mud against the wall. It's how accurate you can be in choosing the right strategy, the right setup and making the best decision. And so, if you have let's say a broker platform where you don't have the ability necessarily to enter a trade that quickly or they don't even have a mobile application where you can enter a trade or they don't have a desktop application that you can enter a trade, that increases latency. That reduces the amount of speed in which the time it takes for you to make a decision and get a trade executed starts to become wider. And during that time period, spreads increase, the market moves and let's say the market moves just $.5. On a $.5 option contract, that's $5. That more than makes up the difference in commissions that you would ever pay at most with these brokers. Whether you're at Robinhood or Tastyworks or you're at Thinkorswim, you're going to be paying zero to a dollar per contract. A $.5 move in the market is $5. Literally, if you can't get in the trade at the right price, at the right time with the right option strategy, then saving the dollar in commission to go to a cheaper broker or doing whatever you need to do to save commissions still doesn't negate the fact that you missed an opportunity to get into or out of a position when you could've.

And I think the ultimate example of this is what we're trying to do with the auto-trading technology because even still today, every single broker out there has no ability to automatically enter and exit and adjust your trades for you on-the-fly. Everything has to be done with our fingers. We have to click. We can do GTC closing orders which is great, but you can't find the opportunities in all markets at all times and you can't be everywhere at the same time. And so, because we're releasing auto-trading technology that reduces this latency, it doesn't matter honestly in the end. I don't think it'll matter if you have regular commissions, high commissions, low commissions, no commissions. Commissions are a non-factor when you can increase the speed in which you do things and reduce the latency. The time it takes for the software or the bot on our end to find a great strategy even if you're at the grocery store or changing a diaper and immediately execute that strategy and save you the cost of doing the strategy later on when the premium is lower or totally missed the opportunity because you were doing something else and didn't have time to watch it, that in and of itself is way more important than any commissions that we could possibly pay. On our end, we always think about commissions as a cost of doing business, an investment basically in technology that reduces latency and that is way more important than what you guys should be focusing on right now. Everyone is too focused on commissions. Again, not to say you can't get them reduced. For sure, get them reduced. But once you get them reduced and you're comfortable with the platform, focus on other things because there are way bigger things that move the needle more so than commissions. As always, hopefully this helps out. If you guys have any questions, let me know and until next time, happy trading.

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 options market size and its growth. Now, there's a lot of data that's out there, but frankly, it's a little bit fragmented when it comes to the actual size of the option market and then actually the growth from year-to-year because you have all these different exchanges and clearinghouses, so it's a little bit fragmented. But I wanted to share some stats because I think generally, when you look at the CBOE which is one of the biggest exchanges and then also the OCC which is the options clearing corp. which does vastly all of the options clearing that's out there, you get a really good understanding of kind of where the market is and where it's headed. Now, the good news is I think that the options market is continuing to grow at a really, really good clip and for me, this is good because I always think about where do I want to invest my money, where do I want to invest my time. A long time ago, I knew when I'm starting this process that I wanted to be in a market that was ever-expanding, that have the opportunity to expand not only in the people that are trading it and the liquidity, but also in the products that are traded and the contract sizes that are traded and it's interesting to me and it's encouraging to me to hear how much the options market has grown even in the last like say 10 or 12 years because that allows us wiggle room to be able to increase the number of people that we can help trading and as traders, it allows us to have a certain level of confidence that when we grow and when our account starts to grow and we have to trade more contracts and we're forced to do more things in the future that we have liquidity backing, we have a base of a very deep, very wide market that's out there that can absorb a lot more people trading and a lot more people making money trading from options.

To start off which is kind of the raw statistics and I think using the OCC's numbers is probably about as best as you can get because they do have data on all the different exchanges that clear through them, including BATS and BOX and CBOE and GMX and AJX, etcetera. All of these are kind of rolled into the OCC stats. But last year in 2017 which was the last kind of like fiscal year for the options market, the OCC cleared more than 4.3 billion option contracts and that's a 4% increase from 2016. And so, while 4% doesn't seem like it's a huge steppingstone, you have to realize that in the last 10 years, the options market was growing at about like a 10% to 12% clip for a long time. I mean, it's really been growing quickly. And so, naturally, as you start to reach certain levels of higher and higher saturation in the market, you start to dovetail on that growth. 4% at 4.3 billion contracts is nothing to shy away from and in fact, most of that growth has been in some of the weeklies and VIX and volatility type options. What's interesting to me is that if you look and dig into let's say just futures and VIX options, the growth from say 2018 to 2017 is astronomical. The average number of VIX contracts that were traded in 2008 was 102,000 contracts. The average number of VIX contracts traded in 2017 was 636,000 contracts. I mean, really, a 6x improvement over the last 10 years in growth of these underlying contracts. Again, you can then spread that out over a bunch of different ETFs and stocks which are all increasing in liquidity, increasing in the number of contracts that are being traded which really just leaves us to a huge opportunity as traders to realize that this is a growing and ever increasing market for us to be in. In fact, many years in the future, maybe 10 years in the future from now, that will be well over a million contracts traded average each day. I mean, that's crazy to even believe that the options market can be that big, but I think it can.

Now, when you look at actually like growth charts of the options market, I think the only thing I notice that's a blip in the growth of options trading was the 2008-2009 period. Now, just before that, kind of that leading run-up to 2008-2009, that's really when I think the retail market was starting to explode for options trading. And so, I think we naturally saw in 2008-2009 with the market kind of moving down, people started to get back into what was familiar. They started to go back to stocks. They started to shy away from options. Maybe they got burned on some stuff and they just started to basically let go. I don't think that that's going to happen again. I think when the next downturn happens, people are going to actually start gravitating even more towards options trading. I think actually right now, the growth in options that's been maybe slowing down at the growth percentage pace than it has been historically in the past is because a lot of people are getting sucked into this idea that just blindly passive investing index funds are going to be the wave of the future. But as I've mentioned many times before, the problem with passive index investing is that it's only as good as the next dummy that was passively index investing right before you. People are just saying, "Look. I just got to blindly cover my eyes and buy the index." Well, at what point do you stop blindly covering your eyes and buying the index? There's got to be some value that says, "Hey, look. It's too high for us to stop buying." I think when that happens and we get the next downturn, I think actually, the options market is going to continuously grow. I think it's going to really even pick up its pace which is why I'm so excited about staying involved in it, staying engaged and hopefully why you should be too. This is a market that is growing exponentially year after year after year as far as activity and different tickers and number of contracts. I mean, it's just really growing at a very, very good clip and so, I would definitely be paying attention to this and if you're not already involved in options trading, you need to be because this is a business. It's something that's very stable and very sustainable for the future. Hopefully it helps out. As always, if you guys have any questions, let me know. Until next time, happy trading.

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, I'm going to talk about how I became an options trader and just a little bit of my path and journey basically since I graduated college and what I started doing and how I took this path and becoming now a full-time options trader for over 10 years. I originally started in college as a finance major. I've always been a finance major in college. And when I graduated from the University of Virginia, I decided that I wanted to be an investment banker. Now, all full disclosure, looking back on it now, everybody in my class decided they wanted to be an investment banker or a hedge fund analyst or an equities trader. I mean, it was literally the only thing that you did. I mean, if you said you did anything else, it was kind of looked down upon to some degree that you are deciding to take a different path. All of my friends were getting interviews in New York and going back and forth to New York to become investment bankers or work on Wall Street. Naturally, I thought, "Well, yeah. This is what I want to do." I love numbers, I love math, I love the markets. I've always had a love for understanding business and finance and so, I thought to myself, "Well, yeah, of course. This is what everybody wants to do, is work on Wall Street and become an investment banker." I eventually got a job, an internship and job at Deutsche Bank and worked at Deutsche Bank for a while which was right on 60 Wall Street. In fact, I still think that the company is still there, although I think their stock has been tanking over the last couple of years. But it was a great place and I really enjoyed my time there. I think the people there were great. I learned a ton and I was in the mergers and acquisitions group which is one of the probably better groups that you can be in because you see a lot of stuff. It's on the private side of the Chinese wall, so you have very much private information, companies that are coming together that the market doesn't know about, people are talking secretly, they're trying to merge with each other or buy each other out and it's just a really fascinating time to be part of this and this was all well before the markets kind of collapsed. Things were going crazy. There was leverage buyouts all over the place, but again, very, very fascinating.

What I absolutely hated about that job, however, was the hours and time commitment and trajectory of my life at that point. I originally saw one of my managing directors come in one weekend, obviously coming in on the weekend which is not something I thought should be really kind of the norm for some guy who was leading this group. But he came in on the weekend and worked pretty much all day. We were in there on the weekend all the time. I mean, it was kind of a social norm to come in at 6:00 and don't leave until midnight, basically. And he called his kids and tucked them into bed on the phone and I remember asking him, saying, "How many nights do you see your kids?" And he said, "Maybe two nights a week, I see my kids." And he spent most of his time actually in the city. He would rent a hotel. The company would pay for him to stay in a hotel a couple of blocks away, so that when he left the city and went to New Jersey for a day or two, that's when he would see this kids and I thought to myself like, "That is absolutely the worst possible thing in the world. I couldn't even imagine even at that point that'd be my life trajectory, working so hard every single day and that's the type of success level that I reach." All else being said, I learned a lot being at Deutsche Bank, got an opportunity to do a rotation on the derivatives trading desk. Now, what I loved about Deutsche Bank unlike maybe some of the other banks out there is that they actually, I think to some degree like wanted you to kind of move around and find your own fit. And so, when I had a chance to move over and do a rotation on trading desk, that's where I really learned a little bit and kind of got my feet really wet in understanding how the markets worked and how an institutional bank like Deutsche Bank saw the equity markets, saw the derivatives market and saw options trading in general from the institutional side. And even though I was there for a short amount of time and kind of rotating around to different groups, I really, really got sucked into that. I mean, that's really what I consider to be my official start. I mean, I learned about options trading and calculated Black Scholes models by hand in college, but from an understanding and just like watching and witnessing how they thought about markets and expected value and pricing and position sizing, how they thought about all of that stuff was really, really interesting to me.

Following that, I left New York and moved back to DC. At that time, I was dating my wife. Well, now wife and mother of three kids, but fiancé, girlfriend at the time. I had an opportunity to work as a REIT analyst for a capital markets bank, regional bank outside of DC. Again, really good opportunity, I want to try something different. I wanted to be on the other side of the Chinese wall, if you will, so I wanted to be on the public side. In mergers and acquisitions, I was on the private side, so I couldn't say anything to anybody. On the other side, I was a REIT analyst, so I could ask questions, I could dive deeper, I could try to understand how these REITs were operating, how their business model was structured, how they thought about capital and how they thought about allocating resources. It was really, really interesting and still why I really like real estate and REITs even to this day. I just understand and love that business as well. But even during that time period, I realized that this is still not something I want to do. It always seemed like I was just chasing this proverbial tail or it's just always just updating models and improving systems and trying to figure out what the growth rates were and even though we have no idea where companies are going to be in the future and we don't know how fast technology is evolving. I mean, it was just this constant like cat and dog chasing each other around. The company would say one thing. How does that change our model? The industry published a new growth expectation. How does that change our model? I mean, it was just this constant bereavement that I just really, really hated and seemed like it served really no value to the outside world, nor to myself really. I left that business and decided to them start trading at home at that point and thankfully, my wife was able to help facilitate this. She was a teacher and so, she was able to support us as we started trading at home.

But you know, when I went home and started trading and as many of you guys know, it was not like a very easy journey. I mean, in fact, the first week, I lost a couple of thousand dollars and I remember my wife saying like, "If that's going to be how it's going to be, you better start polishing up that resume." But I started doing basically what everyone else was doing at that time and very, very quickly learned how not to do things and that's okay and I kind of moved past those. I tried day trading. That didn't work. I tried Forex trading. That definitely didn't work. I tried futures trading. That didn't work. I tried swing trading and using chart patterns and drawing lines all over the place. I looked like I was a 13-year-old kid drawing colors on charts. I mean, it was crazy. And I quickly learned and kind refocused my attention back onto options trading. I kind of sat down after a couple of weeks and said, "Look. None of this crap is working. What works?" And then that's where I really started to dig in and what I believe to be the very start of a very long journey that I'm still on now in understanding exactly how the options market works. At that time, when I started digging down, I said, "Okay. What are the numbers? What can I really hang my hat on as far as the math behind trading? What can I use as far as a system that can produce predictable results or some sort of model or template that I can use?" And that really started my journey into understanding the options market in all facets. And what we started doing even a couple of years ago with our Signals and profit matrix research, to our back-testing software, to our upcoming auto-trading software has all been in an attempt to basically from that day forward, understand more and solidify more how the options market works. It's been for me a very, very long journey, but a very fulfilling journey because it's a labor of love. I truly love trying to figure out the markets, trying to improve even incrementally how we're doing things and understanding the psychology all around it.

I would say that my start in becoming an options trader got started many, many years ago, over 10 years ago now, but the process and journey has been a constant improvement. I mean, it really has. I consider myself to be not yet fully there and I don't think I will ever be there to like consider myself to be a great trader. I think there's always room for improvement and I'm always looking for the next iteration, the next edge, the next thing I can change or tweak or adapt to make myself a little bit better. Hopefully that helps out. I'd love to hear your guys' story if you do have a story of how you got started in trading options. I know it's probably always a little bit different, but seriously, I really want to hear this, so please shoot me an email, post on Facebook, on Twitter, LinkedIn, YouTube, wherever you follow us online. I'd love to know your story of how you came to the markets, how they found you, how you found the markets, kind of that serendipitous love story between you and options trading and please share it with us. As always, hopefully you guys enjoyed this and until next time, happy trading.

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 best place to open an online trading account. I'll start off by saying I'm never going to say that one broker or one company is the absolute best place to open up an online trading account. There's a lot of different brokers that are out there that fit many different needs in the marketplace. And so, when it comes to choosing the best place to open up your online trading account, you have to go with a broker that fits your needs and your requirements for your long-term trading activities. And so, for that reason, I think there's many possible brokers that you can choose from. Today, I want to go through what I think are some of the top brokers out there and some of the good things that they do, some of the bad things that they do, so that you can make hopefully more educated decisions. Now, we have a list of all of this, as well as all the commissions and fees that brokers charge on our website. You can just go to optionalpha.com/trading-platforms. There's a broker tab that you can search on our website and we have all of this listed and we're constantly updating it.

But with regard to, I think some of the top brokers right off the bat for options trading, I think the top couple of brokers are Thinkorswim, Tastyworks and I would say Robinhood and Interactive Brokers are probably in that list for me. Let's start off with Thinkorswim. It's the broker that I use and that I choose to use and it integrates directly with our auto-trading platform which is why we are still with them. I think by far, they are the leading dog, if you will, in this race of technology. They absolutely have some of the best technology out there. Their commissions when you start can be high, but you can easily negotiate their commissions low. We pay under a dollar per contract at Thinkorswim. A lot of people who are also in our community, they pay under a dollar per contract, so don't be afraid to ask for a little bit of a reduction in your commissions or work towards that. But using the Thinkorswim platform in combined with the Option Alpha auto-trading platform is one of the, I think premier integrations and technology pieces that are out there right now. I would definitely say that that would be the first place to start.

The next place would be obviously Tastyworks. These are the founders of Thinkorswim, the original creators that spun off and created their own newer broker platform geared all towards options traders. Now, what I love about their platform and I hope that we can integrate with their platform in the future for auto-trading… They don't yet have a public API, so until they do, we won't have the ability to integrate with their platform. But what I love about Tastyworks is that they are focused on options traders. Even IRA accounts have the ability to trade naked options which is something that we don't really see a lot in brokers out there and their commissions are really good. In many cases, you're just playing a dollar per contract with no closing cost fees, so it ends up being very, very cost-effective for an options trader. Now, the problem with Tastyworks, obviously at this point is that they don't integrate with our platform which for me is a big one because I want to have the ability to use our auto-trading technology to automatically scan, enter and exit trades as I see fit. In the future, if Tastyworks does have the ability to integrate with our platform and they do open up a public API, that might be something that we start transitioning over to or start working with them on very quickly.

The other major platform that's out there that is getting a lot of attention is obviously Robinhood. Now, we've had the cofounder of Robinhood on here, Baiju before doing an interview. Obviously, Robinhood is zero commissions across the board. The unfortunate thing about Robinhood is in some respects, you pay for what you get. It's a completely free platform, but they have a lot of limited functionality and like ability. In fact, some of their charting is just absolutely like very basic bare-bones and they do that on purpose. I mean, that's who they are trying to attract, somebody who doesn't care about that type of stuff. They don't have a lot of the IV ranking, the technology stuff. They don't have integrations with auto-trading yet. A lot of the functionality that you might otherwise need to make smarter decisions is not there and not present. Yes, you could save money on commissions, but if you're still making bad decisions and getting into the wrong trades, what good is there to save a dollar or so in commissions if you're not getting into the right strategies? I think Robinhood is going to be a player in the future. I think hopefully if they continue to invest and continue to partner up with people, hopefully like Option Alpha to integrate their technology and their commission structure to what we're doing, I think it could be a really interesting opportunity.

The last one I want to talk about is Interactive Brokers and the reason I threw this one in there is not at all because of the technology. I think the technology on Interactive Brokers is terrible and old and very antiquated, but it has the widest reach for many people. When it comes to being able to access US markets from an overseas base or an overseas country, Interactive Brokers is probably one of the best, if not, the only that has that ability. Now, their commissions are also pretty fair and pretty low. I mean, you're not paying that much for commissions, but there's a lot of trade and technology fees that go into it. You got to pay for your own data streams. You got to pay for your own quotes, etcetera. There's a lot of things on the outside that seem like when you look at their pricing page and it's no trade base and $.70 a contract and $.1 per share, but there's a lot of intangibles that they don't really show you as far as data feeds and exchanges that you want to pay for to be able to get and use that trading capacity.

Again, each broker is a little bit different. I mean, like it literally is like looking at different people. I mean, they all have their own personality, they all have their own client that they're trying to attract and person that they're trying to move over to their platform, so I think it's worth the time and effort to go through the different broker platforms and see which one kind of suites you. Now, again, we've got a couple of guides on all of these different brokers and we do a nice little write up for you on each of them and show you all of their cost and fees that are associate with them, so you can just search brokers on the Option Alpha platform. You should be able to find that page really easily. As always, hopefully you guys enjoyed this. If you have any comments or questions, let me know. Until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha. Welcome back to the daily call. Today, we're going to be talking about the importance of blocking and tackling, throwing and catching and shooting and passing. And you might think to yourself, "What on earth does this have to do with options trading?" But what it really comes down to if you look at most sports and the reason this is, I guess a sports related analogy is that most sports teams that are really good, win championships, have high-scoring teams, etcetera, what it ultimately comes down to is always the basics. It's being able to block and tackle in football. It's being able to throw and catch in baseball. It's being able to shoot and pass in basketball. It's really these very basic fundamentals and mastering those to the nth degree that leads teams to be very successful. When it comes to options trading, it's obviously no different. Even like in the world of finance and budgeting, it's saving money and able to invest. When you are trying to be healthy, it's working out and eating right. Like there's always a couple of things that it comes down to and these basics are things that have to matter no matter what because it's what's going to get you to the point of being successful and then it's going to keep you there.

And so, when people become, I think successful in anything that they do, they tend to forget about the basics which is one of the reasons why I still love doing this daily podcast. I love writing. I still love replying to emails. I still love actually making trades every single day because I have to keep the basics in check. I've got to do the same things that made me successful and got me to this point and I've got to keep doing them because that's what got me here. Many people forget that and so, today's show is hopefully just a quick reminder that the most important thing sometimes you can do are just absolutely the basics. If you're trying to save money, it's just budgeting, budgeting and spending less. That is the basics. Everything else, the way you go about it, what apps you use, do you use Excel versus Mint versus Personal Capital. The tools of doing it are no different, but the actual mechanics of it are really what is important. Are you actually budgeting and are you actually saving money? Those things, you can master and then will lead you to being able to save more money and invest.

When it comes to options trading, I think what it comes down to is consistency and persistence, doing the right thing every single time even when it feels like you shouldn't be doing it, so continuing to sell options even when it feels like you shouldn't, continuing to take money off the table even when it feels like you want to get greedy and stretch for more profits. It means leaving positions on even when you get challenged because we know the research shows that stop losses create more losing trades. It's getting into a small position even when you have a really good feeling for a trade because we know that nothing is always guaranteed and things could always blow up in our face. It's keeping these basics in check all the time, so that when things go wrong, we can fall back on our fundamentals. Hopefully this helps out. As always, if you guys have any questions, let me know. Until next time, happy trading.

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are going to be going through a little ultimate guide here to OTC stocks. As we've done just over the past week and I don't know why I'm just dovetailing into these little areas, but it's always stuff I want to talk about. I never thought that the weekly podcast, doing it as a longer form episode was really the right medium for this. But I get a lot of questions on futures and OTC stocks, etcetera, so I want to do a quick little podcast on what OTC stocks are, do I trade them, do I not, where can you find more about them and just kind of a little guide on that.

OTC stands for over the counter stocks and basically, all you need to understand about this is that these are stocks that do trade on these dealer networks or dealer exchanges that are not traded on the regular exchanges, I would say or the bigger exchanges like the NASDAQ or the NYSE, etcetera and for whatever reason, these stock either are too low in price, too low in float, didn't meet certain requirements for listing capabilities and so, they choose to have their security traded on these over the counter networks. There's a lot of different over the counter networks that are out there, the OTCQX, OTCQB. There's a lot of ones that are out there. And a lot of the quotes that you see are often published on what are called pink sheets. And so, people will talk about pink sheets all the time and the terminology gets thrown around, but it's basically just an update of where these over the counter prices are. And many of the technology stuff now has actually really improved to the fact that you could basically trade these and look at them in semi-real-time if you wanted to.

The problem with OTC comes into a couple of different forms, really. One is that with an OTC market, there's a lot less that's known about the company and the requirements. There's a lot smaller hurdle to cross over to get onto these exchanges. And so, as a result, many individual investors have to assume a lot of that kind of unknown risk or fear of the unknown risk. The other thing is that it has a strong lack of liquidity. In many cases, if a stock is listed on the OTC, it's because the share price is too low or it becomes some sort of a penny stock and so, liquidity becomes an issue. If you wanted to get in or out, who is going to be the other counterparty to that trade to help facilitate that transaction?

If you want to learn more about these though, I mean, I could probably go into more details on this, but there's a lot of stuff about OTC markets that you can dive into. I do not trade OTC markets, never have. I don't really think it's anywhere that you need to be. There's no scalability in my opinion there and definitely no options capability in the OTC market, so that really puts a damper on things for me. But if you want to learn more about it, probably the best resource to go to is otcmarkets.com. It has a lot of information on it. You can start digging into it. But again, don't be sucked down, I think a rabbit hole when it comes to over the counter markets and the possibility because there's a lot of things that still have to go right for you to make money in those markets and it's not something that I put any money into at all. If you want to, knock your socks off for sure. I just want to give you guys a quick understanding of how those markets generally work and what they are used for. As always, if you guys have any questions, let me know. Until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. On today's episode, we want to again, go back through some of the futures market basics and I want to try to do this all in less than seven minutes. Now, the idea behind today's call as opposed to some of the other ones that we've just done previously is that I want talk about more of the structure of the futures market and just generally how it works. We talked about the E-minis, we talked about some commodity futures, but I want to kind of run through some of these specifics on just general futures contracts and how the futures market behaves and what it can do for you as a trader or a speculator because I think it's really important to understand.

The first thing you have to understand about a futures contract is obviously, it's just simply an agreement between two people in the future for a specific asset at a specific price. Now, this is a little bit different than implied volatility in options trading because futures contracts have a P&L diagram that's very similar to a short stock. It's very much a one-dimensional payoff diagram. See, they're just going to be at that future price higher or lower or not. There's no implied volatility basis that's factored in because the futures contracts trade basically at the money or to a slight discount or premium to the future price. In this case, it's a lot more similar to stocks to some degree except for the fact that they derive their value from some actual physical asset. Now, in many cases, futures contracts are what's called, cash settled which means that at the time of expiration or at the time that the contracts expire, the only thing that changes hands is cash between investors. Now, there are some contracts like corn contracts which are actual physical delivery. At the time that you actually get to expiration of a corn futures contracts, you might actually have to deliver the physical commodity if you're short or take delivery if you're long. But look. Again, most people don't ever want to do this because of the holding cost and the risk that's associated with it and frankly, like what are you going to do with billions of bushels of corn in your backyard. Many, many, many of the futures contracts end up being cash settled and I think it's only less than 2% or less than 1% of all futures contracts that actually go through full to delivery. And so, again, that just shows you that most of this market is just money changing hands back and forth and risk changing hands back and forth.

Now, most of the contracts that trade for the futures market are traded on quarterly expirations, so March, May, July, September, December, those types of expirations for contracts. It's not always that they trade March and May. They may trade March and July and September and December, but you have to check and make sure you understand which contracts you're trading, but those are kind of the most common months that those contracts are generally traded and then obviously, the options contracts behind them can have a lot more expiration dates including weeklies. Now, when it comes to the futures contracts, one thing that people should understand about these futures is that they do have slight premiums for longer duration contracts. Now, again, that makes total sense. If you're locking in a price or you're locking in a contract that's a little bit longer out in time, say six months out versus three months out, then those longer dated contracts are going to have maybe a slight premium that's associated with that extra time and that extra risk and that also means that they're going to have a little bit less liquidity as well because they're further out and that increases the cost to buy or sell those contracts, it also increases the risk that maybe not a lot of people want to be trading or speculating that far out in the future just yet. That's probably one of the biggest differences, is just that associated cost over and above an underlying stock or ETF position.

And the final thing that we want to talk about with futures contracts is the leverage that's involved. Now, leverage obviously can be good or bad. But when it comes to actually physically buying stock or choosing to buy a futures contract, usually, a futures contract will be a little bit more favorable when it comes to capital that you have to outlay. You'll have to outlay just a little bit of margin to cover that position or set aside some margin in your account to cover that position versus a stock position, you'd have to outlay the entire cost to do that. This leverage obviously comes at potential risk because if you're over levered and you basically get yourself into a situation where the margin on all futures contracts or on the market starts to go up, then you could run into a margin call situation. This again, presents an opportunity for you to use a futures contract to hedge or speculate or potentially play a different market with a little bit of capital compared to actually trying to play that market with the actual underlying value of the stocks or ETFs or kind of associated securities in that market. Hopefully this helps out. Again, I think I did it under five minutes or so or right around five minutes or so, so hopefully that helps out. If you guys do have questions, we'll be doing more of these daily podcast on futures trading a little bit just to kind of start helping you understand a little bit more about how the market works and if it's worth it for you to start trading. As always, hopefully you guys enjoy it. Until next time, happy trading.