The Option Alpha Podcast

Show notes: http://optionalpha.com/show143Choosing which ticker symbols and option strategies to use when entering new option trades can sometimes seem overwhelming. In fact, many of our pro and elite members continually ask about the rationale behind why we choose one ticker symbol over another or use one strategy over another when building our portfolio. Today's podcast will help you understand the four-step process we use for evaluating how we choose ticker symbols and strategies when creating our options trading portfolio for each expiration. This framework should help guide you into understanding why IV rank is at the heart of our selection process but also why portfolio diversification becomes the true mechanics that govern which tickers ultimately get selected.

Show notes: http://optionalpha.com/show142Many new options traders worry about what might happen to their portfolio during a short put option assignment scenario. They wonder how they can recover or if they have enough capital to hold onto the stock position.  just a few weeks ago we were assigned on one of our short put options in EWZ and were forced to buy stock well above where the stock price was trading at the time. In today's podcast, I want to walk through the entire trade, including the short put option assignment and help you understand how being assigned options impacts your account and how you can still trade around these events by using a couple key strategies.

Show notes: http://optionalpha.com/show141In the futures trading world, there are two words that sound cool to say but also might be very confusing for new traders; contango and backwardation. Yet, both of these future pricing concepts are very easy to understand once you know the relationship between three key items. In today's podcast, I want to slowly walk through the concept of contango and backwardation while offering a couple different examples to show you how it works in real life and how we might be able to use the awareness of futures pricing as part of an options strategy in our portfolio.

Show notes: http://optionalpha.com/show140Have you ever gotten the feeling that some of your trades just end up exploding in your face and turn into "massive" losing positions? They just never seem to go the way you thought it would and always demand or steal your attention right? Well, there's likely a couple reasons why this happens and it gets back down to some of the most basic principles of options trading. In today's podcast, I'll walk through the psychology behind many of these "bad trades" and help offer a strategy to help manage them.

Show notes: http://optionalpha.com/show139We all fear losing money, it's a natural human emotion. Myself included, I fear losing money just as much as the next person. But today I want to try to walk through a rational and logic sequence of questions that I believe, if follow the series, will help you uncover the only true risk in the market to your portfolio - and more importantly how to avoid blowing up your trading account in the process. I'd even dare to say that if you follow my 4 question logic sequence in the beginning of this show, you cannot help but come to the same conclusion about trading options including why the "staying alive" framework all but ensures you'll find success in any market.

Show notes: http://optionalpha.com/show138I'm going to go out on a limb and publicly declare that this podcast will be one of our top 3 to 5 shows we ever recorded. Aggressive and overly confident, maybe - but I have absolutely no doubt this podcast episode will be a game-changer for hundreds of thousands of options traders. The expected probability paradox for options traders, as I have coined this problem, is one of the most understood aspects of option selling and premium strategies. The root of this problem starts with the misunderstanding of initial strike price probabilities, perfect pricing of option spreads, and the impact of implied volatility on when rates and drawdowns. On today's show, we are going to dive deep into the three main areas of the expected probability paradox to help you understand why option selling, even in its purest form, even if you cannot find perfect pricing, still outperforms the market. We'll also talk about why laddering in some additional active management strategies such as profit-taking and making adjustments or rolling trades helps stabilize portfolios and increase returns. Put simply, skip this show at your own risk.

Show notes: http://optionalpha.com/show137Implied volatility in option pricing is one of the most critical and yet least understood aspects of this business. Today show focuses on a deep dive into options skew and the volatility smile for both inter-month and intra-month option contracts.  in addition, we'll talk very specifically about the impact of skew as expiration approaches and how Vega for near-term option contracts increases dramatically which can make it seem like option skew is predicting a huge move right before expiration - but is it really the case, and does this "predictive power" work in reality? 

Show notes: http://optionalpha.com/show136Are you new to options trading? Do you have a small account and want to start trading iron condors and iron butterflies? Today's podcast will be very important as we help you understand how to calculate breakeven prices on iron condors and other risk defined strategies the correct way. Plus, we'll walk through a multi-month adjustment to an existing IWM iron butterfly in which we nearly doubled the credit received by rolling contracts to the next expiration period.

Show notes: http://optionalpha.com/show135Today we'll condense potentially an entire semester of financial engineering into a single podcast episode. The goal being to help completely understand how implied volatility works, why we need it, where it comes from, and how we can profit from it as option sellers. This show is a little longer than normal but I think the time spent walking through the foundational elements of implied volatility and it's impact on option pricing are critical for anyone interested in generating long-term income as an option seller. I encourage you also to listen to this episode multiple times if needed. Enjoy!

Show notes: http://optionalpha.com/show134Nobody's trading or investing journey is a straight road or easy path. We never just magically trip into a perfect system or investing philosophy without a couple bumps along the way. Today's podcast focuses heavily on overcoming the stigma attached to being "wrong" and having the humility and grace to learn from trading mistakes and transition into new habits.  In addition, I want to describe in more detail the two major mistakes that I've made over the last couple years with regard to trading that have changed the way I look at positions and my portfolio. Both of these have been discussed before in various formats but never in one place under this topic. I hope that by sharing my story, it helps give you the courage to make changes or alterations to your own options strategy for the better.