The Option Alpha Podcast 11: Picking The Best Option Strategy Is A Process Of Elimination NOT Selection
Dec 2, 2014
Discover how to simplify your options trading with a 3-step elimination process. Learn why strategy selection should focus on narrowing down choices rather than forcing a favorite. Kirk shares insightful analogies, like a carpenter choosing tools, to illustrate effective decision-making. Explore how directional assumptions and implied volatility drastically reduce viable strategies. Plus, see practical applications through case studies with OIH, Yahoo, and MasterCard, underscoring that sometimes, waiting for the right opportunity is the best approach.
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Strategy Selection Is Process Of Elimination
- Options offer many strategy choices which creates flexibility and confusion for traders.
- Strategy selection should focus on narrowing possibilities rather than picking from a full toolbox.
Carpenter Grandfather Teaches Tool Selection
- Kirk recounts his grandfather the carpenter who asks many questions before picking tools.
- He used only the necessary tools and discarded irrelevant ones to fix a wall efficiently.
Three-Step Filter For Picking Strategies
- Follow a three-step process: decide direction, check implied volatility, then choose a strategy.
- Use those two filters to shrink the strategy universe to a few viable trades.