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Trading options: In tonight's video, we're going to go over all the closing trades and opening trades that we had for Tuesday. I'm sorry, Wednesday, November 4th. Now, this is a cool video because it's funny all the time on my end. I wish sometimes people could see just the types of emails that I often get throughout the day, some from members, some from non-members.

Obviously, I'm doing this video now to people who are on either our pro or elite levels, but I get emails all the time from people when we have maybe like, two trades that go bad. Last week we had trades that worked against us. One of them was GoPro which we ended up turning around and only losing $9 on after making adjustments.

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We had trades like that that go bad, and then people email me and say, "Oh, well you know, you didn't pick the right stocks," or, "You know, you didn't have the right strategy," or, "You didn't do this or that." At the end of the day, all of this stuff again is just a numbers game. That's all it is. It's nothing more; it's nothing less.

People over-complicate this business so much. It is just a freaking numbers game. What that means is that we have days like today where we went three, four for four out of all the trading that we did, and people were emailing me, the same people from last week, saying, "Hey, great picks, Kirk." You know, "You had the right strat-" It had nothing to do with that.

It had nothing to do with great picks. It had nothing to do necessarily with the right stocks that we were selecting. It's just a numbers game. Sometimes you have four or five losers in a row. Sometimes you might have ten losers in a row, but you have to keep trading.

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You got to keep placing orders. They got to be small so that they can be manageable, and then you have a string like this. It's the same people last week who stopped and said, "You know what? I'm done with earnings," that are now missing out on all the profitable trades that we've had since then. Anyways, I thought it was just worth again repeating.

Look, this whole business is just a numbers game. You master the numbers, and everything else takes care of itself, but you have to be in the game long enough to see that happen. If you quit after a month or two months, it's never going to work out, because you're never going to have enough trades on to see the probabilities work out.

We'll be talking about this tomorrow when we do our podcast, and we're going to be recording that podcast on our new performance section which you guys can see now. It's all live and up there and inside the membership area. We'll be detailing it a little bit more. The first closing trade that we had today was in X.

This was US Steel, brought back our straddle for a $98 debit, took a $35 profit on this one. This one, although the stock had moved inside of the expected range ... So here is US Steel, didn't make as big of a move as was expected. Implied volatility has not gone down yet, so this is going to be one that we're going to be looking at tomorrow for a possible candidate to do a monthly trade on now that we're past earnings.

That's really why we didn't get the full value out of this earnings trade that we really should have if implied volatility had dropped. Implied volatility on the close was at about the 82nd percentile. For the next earnings trade that we closed out of, we closed out of Michael Kors, K-O-R-S.

We bought back our straddle for a 230 debit, took $175 out of this trade. Nice little trade. The stock dropped less than expected and also saw a drop in implied volatility. Or, I'm sorry, moved up less that expected, also saw that drop in implied volatility. Very fast, very quick because it was at that 100th percentile.

Very, very quick, fast drop in implied volatility. That's what made this trade profitable so quick. Other trade that we closed out of today is DDD. Closed out of this straddle as well. We bought it back for $77 debit, $63 on this one. Implied volatility dropped. It was still high when we closed it out, but again, just taking money off the table right at the open.

The stock moved much less that expected. It is kind of traded and opened right around mid-point and then rallied throughout the rest of the day. Had you gotten out right after the open or shortly after the open, that's when you had the biggest opportunity to make money. After that, you probably dwindled your opportunity to make money if you tried to wait throughout the rest of the day.

Again, that drop in implied volatility is so, so critically important for these earnings trades. That's where we make our money. Then the last closing trade that we had today was in TSLA. We just bought back our call spread side, so we just only closed out of the side that the market moved against.

Took this offer about an $8 profit, basically a scratch. We were just worried that at some point during the day after the market opened that TSLA would rally much higher. You can see it did rally from the open and it rallied up to and above about 231. It challenged us on the top side, but what we did see is that drop in implied volatility.

Unfortunately, it just was kind of on the border. Ends up being a win in our win column because we did end up closing it for a profit, but a very, very small profit. I'm glad we closed it early in the day. Probably could have saved a little bit of money by doing that.

All right, so two new trades that we entered today, we entered the straddle in WFM, which is Whole Foods, got a nice big credit of about $3.15. You'll notice again, the reason that we're doing this straddle is that implied volatility is in the 100th percentile. It has never been higher than where it is right now over the last year.

That just means that option pricing has to be aggressive when you do these types of trades. You have to sell at the money positions. You can see, implied volatility very, very high in Whole Foods. Tends to be a really good drop in implied volatility around Whole Foods after they announce earnings.

Now, after the market is done here today, I know that Whole Foods was trading lower, about 28.73, 28.75 or so. Looking at our payoff diagram still looks like this is going to be a nice, profitable trade. You can see most of our payoff diagram kind of peaks here at 30 1/2. With the stock trading about 28 and 85 cents or so, we should end up making about $100 or so or more tomorrow when this thing opens back up.

The other trade that we had today is in GOGO, G-O-G-O. Again, we took in a nice, big credit, $1.95. Implied volatility rank in the 100th percentile, super, super high implied volatility. Just purely selling options right at the money. I don't believe that GOGO announces earnings until tomorrow before the bell, so we'll have to see what happens with this one.

I mean, crazy, crazy high implied volatility. That means option pricing is real, really skewed on either end. Again, we just did this a little bit bearish because we had to pick a direction here, and went with the 14 1/4 just because of the overall trend that this thing's been on. Playing the down trend just a little bit that maybe earnings aren't going to be as good as maybe expected, or they might miss.

That's the way we're playing this one here. As always, I hope you guys enjoy these videos and all these new alerts and functionality. I know we've been getting a lot of great feedback from the many hundreds of members that we have. I appreciate all the feedback and all the updates.

We're working hard to make sure that everything rolls out as smoothly as possible. As always, if you guys have any questions at all, please add them right below here, and happy trading.

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.