Show notes: https://optionalpha.com/show166 When it comes to market signals and timing indicators, the Put Call Ratio is one that naturally jumps to the top of many lists. Because the indicator looks at volume in both put and call options, the logical conclusion is that we can interpret the ratio to signal us from an impending top or possible market bottom. But, is that really the case, and if so, how should we use Put Call Ratios moving forward in our analysis. All this and more on this week's podcast episode.
Show notes: https://optionalpha.com/show165 Personally, I don't like rules. Mostly because I value freedom and flexibility so when someone says that I have to follow the rules I naturally push back. Things that confine me or tell me what to do don't fly well with me. But that only applies to things outside of trading and investing. In the world of investing, and specifically trading options, you need to live by certain rules. Rules that keep you safe and protected from the unknown of the market. I imagine that the 11 "Golden Rules" I'm going to present in this podcast will cause many of you to push back and challenge their usefulness. Mostly because they'll cause you to trade different than you have in the past, and being different means being uncomfortable. I'm okay with that and I welcome the discussion around them. But don't misinterpret this level of understanding in adoption to also represent flexibility when it comes to these rules. These are "unbreakable" rules for me and should be for you as well.
Show notes: http://optionalpha.com/show164 Since we are option sellers and our edge comes from selling overpriced options out into maturity it's natural to assume that if we want to sell options when IV is high that buying options during low IV markets is a way to make money in the other direction. We get it and understand the rationale argument. When IV is low, and option premiums are cheap, you can and should buy options because they are cheap right? Not so fast bargain-buyer. This type of thought process and strategy, low IV option buying, has two major problems. And we don't use the word "major" lightly here. Each problem with option buying systems is so important that the probability of getting both problems right or solved is for all intensive purposes, impossible on a long timeline. Curious to know what these major issues are? Let's dive into today's show and find out.
Show notes: http://optionalpha.com/show163 This was a long trade. Maybe not the longest trade we've been involved in, but certainly one of the top ones as this short put option assignment lasted over 5 months. For most options traders looking to make a quick buck, this trade stretches their patience and conviction far beyond a reasonable level. Still, I think that today's case study is important to hear because it proves critical concepts to how we think about trading here at Option Alpha. And what better way to prove something than to show you how we managed the entire position, start to finish, with real money.
Show notes: http://optionalpha.com/show162 It might seem that the markets are a game of price, and while that might be mostly true, what they are is really a game of emotions. With enough self-awareness, the "average" investor can do incredibly well. Better than many sophisticated investors. There's so much to be said about controlling your emotions and recognizing biases that we could spend hours upon hours dissecting each one. I prefer a more optimized approach which is why I decided to do a podcast specifically on the top 8 biases that investors fall victim to. Once you learn to recognize them, you can then process the emotions behind the scenes so that it doesn't interfere with your trading.