lystn

Hey everyone, Kirk here again at Option Alpha and welcome back to the daily call. On today’s call, we’re going to talk about how using options trading software affects your decisions, good or bad. Look. Ultimately, I think that software is a huge tool and asset. That’s why frankly, we’ve spent hundreds of thousands of dollars here at Option Alpha to buy loads of data and data streams and build software and tools for you guys because I think ultimately, it helps all of us. I say this actually selfishly. I build software for myself too and I know that it helps out for everyone else. But look. Software absolutely helps streamline the process. It helps us make better decisions more quickly than we could if we didn’t have software otherwise. Now, software can also be very clunky, so that's always the trade-off, is – What do you include? What do you take out? What we try to do here at Option Alpha is we try to include the things that really, really steer the ship in a different direction, so the critically important things, not just things that might be cool to have or might be features that are one-off that five people could use. That’s not really what we’re trying to do. We're trying to build software that ultimately helps us make insanely better decisions and really moves the needle. Sometimes what we get with other software… I think Thinkorswim is a great example of this, of just having literally every bell and whistle, it seems like you’re in a jet engine cockpit and that can sometimes be debilitating and can be overwhelming. I know that on the Thinkorswim platform, I literally probably use five sections of hundreds of sections that’s available because they want to be a software for everybody and have every bell and whistle. Again, sometimes that can actually hold you back and set you back from actually making decisions which is the whole point of software, is to allow you to make better decisions. I think when it comes to decision-making though, it's all about the inputs and how you interpret them. The good or bad decisions of a software generally are not going to be seen until we figure out how you input your information or you’re inputting the right information and how do you take those outputs from the software, those intelligent pieces of data or strategy type in our case for options trading and actually make decisions based on those, make trades based on those. I think about our trade optimization software in particular here because what we wanted to do is we wanted to minimize the number of inputs that you had to make before the system would run complete optimization of every strategy out there, every back test that we've run to figure out what is the best options strategy at the exact moment. We tried to minimize the number of inputs, so that it was easy, it was fast, it was efficient, it took literally a couple of seconds and the outputs are the really important part because then, you can make decisions about what type of strategy you want to use. It basically gives you a list of say the best 10 strategies that are available right now at this exact moment based on the current market conditions, how far you are from expiration, what type of account you have, are you bullish or bearish or neutral, where is implied volatility and then it gives you a list and it says, “Look. These are the best strategies that you can trade at this exact moment.” From there though, all of your decision-makingness, (if that’s really a word, decision-makingness) good or bad, comes into actually just using and acting on that software, on that data set that comes out of software. I think though that you have to have a level of trust with the data set and with the strategies before you can really go all in, hands-off. What we've definitely done and I've done in particular is I’ve started to lean more and more on our software as I get better with it, as I get more familiar with how things play out. There’s definitely a lag time in options trading which requires us to be more patient. With stock trading, you can enter a stock, go long or short the stock and immediately see results. With options trading, those results sometimes don't materialize until 30 or 60 or 90 days later when you start approaching expiration and go through many different trades. And so, that requires I think a little bit of patience and trust with software and data before you actually start to get to that point where you feel like you're being successful. Ultimately, I think software helps. I think it affects our decisions as long as we remove our emotions. It helps us make smarter decisions, helps double-check our thought processes to make sure that we’re making the best decision at the exact moment in time that we can based on all information possible, but ultimately, it's up to us to act on that information and I think that that's the biggest differentiator between people who are successful and not. People who are not successful run a lot of analysis, do a lot of looking, but they just don't do a lot of trading. I think what you'll find as you mature in this business maybe is that people who are super successful oftentimes will do less analysis than the analysis paralysis people, but because of their activity in actually doing the thing they need to do i.e. trading, they end up being more successful. Hopefully this helps out. As always, if you guys have any comments or questions, let me know. Until next time, happy trading!