The Predictive Power of Investor Sentiment
Be fearful when others are greedy and greedy when others are fearful. This classic Buffett quote has echoed through the ranks of investors for decades. But does the data support the methodology? Does investor sentiment, which for many investors is widely considered a contrarian indicator, have enough predictive power to warrant our time and attention?…
Trading Psychology & Emotional Intelligence for Options Traders
Greed, fear, FOMO, anxiety, panic, over-confidence, stubbornness, impatience. These are just a few of the many emotional and mental states that traders find themselves in. And while we cannot avoid these emotions and thought processes, we can learn to manage them through emotional intelligence. This week’s podcast was curated to help you learn how to…
Option Alpha’s New Auto-Trading Platform Updates
Important Note: This post will be the central hub for updates on the new platform. It’ll be updated as needed and as new milestones are hit and/or when feedback is requested. The newest updates will be added to the top of the post with older updates pushed lower for reference. We encourage you to bookmark…
Correlation Research Suggests Diversification Fails When You Need It Most
There’s an old saying in investing that a “rising tide lifts all boats.” While that might be true, when the tide goes out, all the boats sink and fall just as fast as when they rose together. Still, you’ll hear the pounding of drums in the name of classic diversification as the portfolio savior during…
The Best Covered Call Management Techniques
You’ve got your prized covered call setup, and it’s working in your account – now what? How do you manage or adjust the position in different market scenarios? Lucky for you, we are going to review the best-covered call management techniques on today’s podcast. If you think this show is just for stock traders, you’d…
LEAPS Option Contracts – A Complete Guide For Traders
Although we generally prefer to trade shorter duration option contracts here at Option Alpha, contracts a couple of weeks to a couple of months out from expiration, there’s a whole other classification of options contracts for traders that want to take longer-term exposure or positions. Long-term equity appreciation securities, or “LEAPS” as they are lovingly…
Box Spread Basics for Options Traders
Box spreads and arbitrage strategies are often synonymous with one another and referenced interchangeably in the options trading community. And after all, who doesn’t want a risk-free way to earn money, right? But like all things that seem too good to be true, box spreads carry some serious risks if you’re not careful in how…
The Trader’s Guide to Index Options
Index options have continued to grow in popularity. Perhaps because they are easy to use, available in highly liquid markets, have favorable tax treatment in some cases, and offer a simple settlement process. Therefore, we’ve dedicated an entire show to help you understand what index options are, how they work, how they are different from…
Protective Put Strategy Researching Findings
Hedging stock positions can be tricky business. One of the most common schools of thought is to use a simple protective put strategy whereby a stock investor would simply purchase a long out-of-the-money put option to act as “insurance” in case the stock fell. Sounds logical, but we’re skeptics here at Option Alpha and so…
The Impact of Volatility On Options
Stock trading is easy to understand conceptually because it’s one-dimensional. Either the stock goes up, or it goes down. Clear and simple, at least from a trading and profit or loss perspective. Options trading, however, is multi-dimensional. Price, time, and volatility all impact the value and price of an options contract. On today’s show, we’re…