The "Daily Call" From Option Alpha

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Can I buy VIX stock?” No. You cannot buy VIX stock itself. It’s actually not anything that you can trade. It’s not an ETF. It’s not an underlying stock security. The VIX is an index, but you can trade options on it and you can trade derivative products that are based on the VIX. One of the derivative products that’s very popular to trade is VXX which is an...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Why is back-testing important?” I actually get a lot of pushback on this and I think that many people look at back-testing as irrelevant and I think that back-testing has a lot of relevance if you use it correctly. Sure, back-testing is not perfect in the sense that a perfect back-test is not going to be the perfect expectation of what we should expect...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Is VIX actually implied volatility?” The simple answer to this question is yes, it’s implied volatility, but only for the S&P 500. The VIX itself is basically derived off of the expected future S&P 500 move and the S&P 500 index options over the next 30 days. You could look at VIX as actually the implied volatility reading on the S&P 500. Now, people use the...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What makes a stock volatile?” The simple answer to this question is just changes in expectation and when changes and expectation are not in alignment with what people had thought previously, that’s what causes stocks to become volatile. If you really think about how stocks get really volatile particularly around earnings events, it’s only driven by the fact...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What is implied volatility rank or what’s commonly referred to as IVR?” IVR is way for us to normalize implied volatility readings across different ticker symbols and ETFs to get basically an apples to apples comparison. When we are looking at a trade and we are searching for and scanning for high implied volatility setups, it’s not enough in our particular...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Is TD Ameritrade’s Thinkorswim free?” The short answer is that yes, the platform is free to investors and traders. However, if you do want to have options trading privileges and get the ability to trade on margin, usually, they require a $2,000 deposit. Now, this is the time of this recording, so it may be different in the future and always check TD...

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 why I believe you should trade on desktop and manage on mobile. I’ve said this a number of times, but actually, I think it’s a really good technique to use because as the brokerage industry continues to evolve and move towards more of a mobile friendly style and platform, I think it’s really important that you still make a lot of your trades on desktop especially...

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 why fear comes from a loss of control. This is actually really interesting if you think about it, but we have this really strong primitive desire to control everything in our environment and really, the people and the things that we interact with. We see this all the time in markets because people will pay thousands of dollars for indicator signals and for...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What is long volatility?” Long volatility can just be described as an options trading strategy or a trading strategy in general that profits from an increase in volatility. When someone says that they’re long volatility, that basically just means that they’ve bought into a volatility product that would profit if implied volatility in the underlying shares or...

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 why you should trade without technical analysis first. I’m a big proponent of using technical analysis, but I think that technical analysis is a secondary type of analysis that you should do when you’re trading. I do not think it’s a primary source of analysis. And what I mean by this is that a lot of people when they start trading, they get into technical...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “Is trading really profitable?” I think the short answer to this question is of course, yes, trading is profitable, but it’s profitable for those people who frankly just stick with it and have a system in place. We hear all the time this quote that’s thrown around which is that 90% of traders lose money. I don’t think that’s actually true. I think that...

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why you should go beyond outcomes and focus on the process. This is something that I talk about often with coaching clients and especially with our Pro and Elite members here at Option Alpha and it’s this idea of focusing really, really hard on the process and not so much the outcome. Now, this doesn’t mean that you totally reject the outcome of what you’re doing....

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Is TD Ameritrade good?” Truth be told, I actually get this question a lot. It comes from a lot of our members and subscribers here at Option Alpha and they always ask me, “Hey, look. I know you use TD Ameritrade, but is TD Ameritrade good to use?” And my answer is always the same, is I think that they’re one of the better brokers out there. I think that...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Do you need a lot of money to invest in stocks?” The short answer to this is yes, you do, relative to something like options trading. Now, you don’t need a lot of money to buy any particular stock in and of itself, but if you don’t have a lot of money to start with and you have a smaller account, many brokerages defines smaller accounts as accounts under...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “What is the process of online trading?” Online trading is simply the process of buying and selling securities, whether it’s stocks, options, futures, Forex, commodities, etcetera through the internet. This process is actually relatively new because say 25, 30 years ago, very few, if any, brokers were actually allowing retail traders to go online and...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “How does a put option make money?” A put option contract (and we’re probably specifically talking about a long put option contract) makes money in two different scenarios. The first scenario is that the stock continues to move lower or makes a large move lower during the time that you’re holding that put option contract. This would be the most obvious...

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 to bet against the market and going over three ways in which you can do that. Again, there’s essentially three things that you can do to bet against the market or basically take advantage of or profit from the market moving lower. The first and most obvious way is you can actually short stock. Now, this is the default mechanism for many investors because...

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 why ignorance in trading is actually bliss. And don’t get me wrong and don’t start sending me a bunch of emails about this. I’m not talking about ignorance when it comes to market risk and position sizing and trying to pick tickers and strategies. What I’m talking about is once you actually have a system in place, you know what strategy you’re going to use, you...

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 happens when you close an option?” This is actually a question we get often and the short answer is nothing. Nothing happens when you close an option because if you are closing the option order, whether it was on the buy side or the sell side, if you have now completed the trading loop as we like to refer to it here at Option Alpha, then nothing happens...

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How do you short an option contract?” Shorting an option contract is very much a new term for a lot of people when they get started trading, this idea that you can actually sell something that you don’t even own yet in the marketplace and then collect a premium. But of course, there’s always a little bit of a catch and the catch is that you always have to...