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Hey everyone, Kirk here again at optionalpha.com and welcome back to the daily call. Hopefully you guys had a really good Thanksgiving yesterday. Today, I figured why not talk about how Option Alpha makes money. I think that this is an interesting question, one that we… I don’t know if we've talked about specifically like this in a targeted format. We talk about it all the time because people ask and people ask via email and so, I have lots of responses where I tell people how we make money and I think it's important to just openly tell you guys where we’re at because if you’re part of our community or want to be part of our community, should you know? I would want to know. I often ask people who are running other websites like, “How do you make money? How do you keep the lights on? How do you generate income, etcetera?” I want to first take a step back and tell you the progression of where Option Alpha is because I think it’s important that you understand how things have progressed over time. I’ve actually been running Option Alpha basically now for about 10 years. I mean, my first go at online was never any intention, really, the first couple of years of doing Option Alpha and running the original blog. That’s all it was originally. It was a blog. It was just a chronicle in my own journey to share what I was doing not only with myself, so I have some sort of like journal that I could look back on, but also with other investing friends that I still had relationships with from my time in New York and from school, etcetera. I wanted to just have something there that I had as a public display of what I was doing. I was trading at home and I was making trades and I was doing this full time and I wanted to show what I was doing and have that out there. For the first couple of years, that’s all it was. It was just me writing blog post sometimes. Originally, it was a couple of lines that are sentences and that was a “blog post” which nowadays we don’t do that because it just clutters up everyone’s inbox and nobody really cares. But for me, it was back then, I would write about how I felt about that day and where the market was, etcetera. Basically, everything I do mostly in video updates now. Just in that time, it was just all written format. Eventually, people started coming to me and saying, “Hey, I’m following what you’re doing and I’m seeing your trades. Could you let me know when you make some trades?” That’s originally how it started. Originally, I started taking subscriptions from people and saying, “Yeah, sure. I’ll add you to an email list.” That’s all it was. I just had like a simple group if you remember those in your email service provider. I would have a group of these people and if you pay me a couple of dollars at that point, it was, “Hey, you want to get in?” It was a couple of dollars, whatever, very nominal notional fee and then I would send you anything that I did. It was really nothing more than that. We didn’t post trades to the website. We didn't have all these video tutorials, etcetera. As that started coming in, people started asking questions like, “Why do you do this and how do you do this? Tell me about the process behind this?” Eventually, it got to the point very quickly that I realized that one, there was a huge gap in understanding in the market not only between the people that I was dealing with, but also things that I wanted to figure out as well. I wanted to progress as a trader myself and I knew I couldn’t do that without buying data and buying research, etcetera. I started getting the same questions over and over again. I started getting a lot of basic questions and I started getting a lot of strategy questions and I realized there had to be a better way to serve people online with also being cognizant of my time that I couldn't reply back all these detailed emails to people with 45 pages of notes and details. That’s eventually where we started doing some video training, some video courses, video tutorials. That’s honestly originally how everything started. It was the need to not only fill a gap that people had questions, but also that I felt I could answer those questions and provide unbiased… As a nobody who was part of a brokerage, I didn’t have any affiliate relationships, none of that. I was just totally a third party. I was an independent trader and still am and so, I want to provide that type of third party service where I can teach and also be useful for my time. I didn’t have to reply back to a million emails. If you take that progression then and kind of fast forward to where we were say three years ago from now because that was like the next major tipping point for us, most of what we did at Option Alpha at that time was just training and then basically people subscribing to our alerts. People would come and still do… That’s what we still do and we’ll still have this forever obviously. But people would subscribe to get notifications for our trades. We’d post them to the website, we do the video review. We’ve been doing that now for I think like almost six years we’ve been doing the video review. We have a huge backlog of video reviews that we’ve been doing every night and all these trades that we’ve been posting, etcetera. At that point, we started to generate enough money on the people who had signed up that I started to be able to buy… About three, three and a half years ago now, we started to be able to buy data in raw format. My goal has always been to take what we collect as far as income or revenue from subscriptions and keep it so that we have the ability to buy data. That’s what I always did. Option Alpha is an independent company for me, myself and I have continued to just pour the same money that I collect from income and revenues and subscriptions and anything else that we do. I pour it back into research and software and development. It’s like a constant cycle for me to reinvest it back into other stuff. The reason I do that is because I think that's the best use of the money right now to be frank. I could take the money and I could just totally liquidate it every month and use it for myself totally and I’d have that right and frankly, I’d have that ability to do that as the business owner, as somebody who runs Option Alpha now. But for me, it’s a self-serving purpose because if I can take let’s say a group pot of collective money that people have paid and now have the ability to then redeploy that capital into buying raw data from the CBOE or from the NASDAQ or from IVolatility or from all these different sources and then build back-testing software and all of this stuff, like basically redistribute that data, that software, that service back out for an insanely low value compared to the cost of one person had to this by themselves, I think it’s totally a win-win across the board. For me, selfishly, I get to learn so many new things. I get to learn how to tweak strategies and how to improve my own trading which this is by far a trading journey for me just like it is possibly for you. Like I said, we started about three years ago, actually started to buy data in raw. Now, we’ve bought… I would not even say the dollar number that we’ve bought as far as data that we’ve paid in programming and software and development and back-testing. But by far, it's definitely a seven figure if you want to just use that as a raw basic benchmark for where it could be. For me, that's important for you guys to know, listening to this podcast because frankly, you couldn't do this by yourself if you wanted to get all this data or if you did, you’d have to have an account size dramatically more than that to make it actually useful. I think it's a good crowd-sourcing way for us to do research and development and then give it back to you at a fraction of the cost of what it cost us on our end, but it just generally makes up for it in the end. Again, about three years ago, we started doing all this and now, the basic model for Option Alpha for me going forward is still to offer free training, still to offer free courses. That will never change. We do that because I think it's a great way to build a relationship with you. I think it's a lot of transparency in the market. I know there’s other companies out there that are rightly mad at us for doing this, for offering it for free. I’ve gotten the emails to prove it where I get emails from a founder of another company or somebody who owns a website or a service and they’re basically requesting that I take down our free training and that I actually charge something for it because they’re losing people that go from their $2,000 training course to our free training course which is 100 times better anyway. But I will never change that. We’ll never do ads. We don't do ads on the website. We never have. I've never actually liked going to a website ever and seeing it riddled with ads. In fact, I actually think it’s a huge distraction. That’s something that we also never do and we can do because it’s just me. It’s me running this company. I’m in total control obviously. Now moving forward, even though we have free membership and free training, you can always get the free courses. That will never change. We’ll keep adding to that. We’ll keep improving that. Keep doing more training and more courses as you guys let us know what you need. Now, the next step I think is just something that you guys have seen over the last year or so, but it's really software and research that kind of compliment our membership. The reason that we do that and the reason that we generate income from that and then we basically plow it back into more research and more development which we’ll talk about here in a second. But the reason that we do that is because not everyone we’ve learned wants to be part of our membership and I get that and I'm totally cool with that. If you don’t want to be part of our pro or elite membership, I’m not going to force you to do that and I never do. It’s your choice to upgrade or not. You can be a free member forever if you want to and use all of our training and then go and I'm totally good with that. But we also found that people have this gap where they felt like they had some missing understanding that could be filled with just buying a research report and paying money for some of that research and some of that back-testing data. Now, we’ve started to develop software, so that it makes it easier for not only us to find and execute trades, but also for you to find and execute trades. We found that people like the ability to have choice. No pun intended. They want options and the ability to follow our trades or use our software and use our research and do their own or a combination of the two. Really, at Option Alpha, that’s where we generate our revenue. That's how we make our money, is through membership obviously which funnels into software and research and then software and research just self-fulfilling cycle where it just funnels into more and more software and research. At the exact moment in time that we’re recording this call on the 24th right now, we’re literally in the process of finalizing more research reports that we’ll be pushing out. Our big report that we did this year which was really the hallmark or major report that we did was our profit matrix report where we analyzed millions of different option strategies over decades and lots of ticker symbols and lots of setups and that was for us, really groundbreaking to get that out there because nobody's done this much research in the options trading space ever. It's never been published on a large scale like this. It took a long time for us to do this and now, we’re starting to again, use the income that we got back after our significant investment and re-launching that report. The income that we’re now getting back from that original investment to again, go back into more research and more development and doing basically more research on volatility products specifically. We’re going to be launching a report on volatility products, so the VIX, UVXY, etcetera, how to trade around those volatility products by themselves, also more research on adjustments. One thing that we didn't do with the profit matrix report is we didn't test any adjustment strategies. Now, we’re taking some of the better strategies from that and starting to overlay and test adjustment techniques which complicates things even more on the backend as development and testing wise. But if we can do that now, now we can start to add and fill in all these gaps. Another report that we’ve been working on, another research field for us has been earnings trades. We've been testing a lot of different earnings trading strategies. Not only just doing what we typically do which is selling options the day before the event, but also selling options five days before or 10 days before. Do we close early? Do we buy options? Is there a scenario where buying options before earnings or during earnings works out? What is that scenario? Answering a lot of these questions again, with the income that we generate from all the sources that we have and plowing it back into more research and more development. The final stage I think at this point right now for software wise is we’re starting to develop portfolio tracking software. That to me is the next huge milestone for our software development team, is that portfolio tracking software because if we can develop software where you can now basically import your trades from whatever brokerage you’re using and have the ability to see where you are in your trading strategy… What a lot of people do right now is they use Excel files which is totally inefficient, but it’s probably the best thing we could do at the moment. There's nothing out there right now that allows you to import trades and then appropriately look and analyze the trades that come in. Are you winning more often on your iron condors or your iron butterflies? What’s your win rate on your credit spreads versus your calendars? And starting to look at that data to give you more information to make a smarter decision about your next trade. If you know that your iron condors right now, however you’re setting them up are the best position in your account, maybe you make more of those, maybe you trade more iron condors. And starting to give you that information to be able to do that. Then the future, some of the things that we’ll be working on for sure that I've earmarked that we haven’t been working on exactly right now, but we will be the future are software around auto trading and auto execution of trades. I think that’s going to be a natural progression. We talked about that I think in Show 99 of the regular podcast, the weekly podcast. But I think just the auto execution of trades in the future is something that we’re going to have in-house at Option Alpha where you can not only scan, optimize, back-test and then auto execute through the Option Alpha platform. Again, all of that requires progressively and progressively more revenue to actually pay for those cost and those servers and those integrations and the development cost around that. Hopefully you see the path that we’re going on and hopefully this makes sense. If it does, I’d love your guys’ feedback and comments on this obviously because it’s really important to me. But I think just having maybe a little bit more transparency about how we generate money through Option Alpha and basically what we’re doing with that money is really important because ultimately, it’s serving the community. I’ve told people from the beginning, from day one that when I actually started doing this and really thought about Option Alpha as being something that could help people and a resource and a business out there that could do a lot of good things, I envision this company to be around for decades. I want this to be around for decades. I want it to be the hallmark of the options trading industry. I often have told people that I move at a glaciers pace, meaning that I’m not concerned with moving insanely fast and doing things wrong. I want to move at a slow enough pace that things get done right in the first place and then we continue to move, so that it’s unstoppable. A glacier to me is this big mass that just keeps moving forward and you can’t stop it, you can’t slow it down and it’s just inching forward every day. That’s what I want Option Alpha to be. That’s why we’re also doing these daily podcast. We’re doing all the live trading that we’re doing. We’re launching all new versions of the website here soon where we have updated forums and updated courses and quizzes. We want to progressively improve the software and the platform and the training that we have, so that it ultimately serves you better, serves the community better. Hopefully that helps out. I’ve actually really enjoyed this podcast. I didn’t know I was going to ramble on for 15 minutes, so I apologize about that if I was rambling. But if you’re enjoying this, like I said, I’d love to know your opinion on this, I’d love to get your feedback or just shoot me an email and say, “Kirk, I really appreciate. I love the openness.” Whatever the case is. I think it was important for you guys to understand where we are, how we make our money, what we’re doing with our money and how we’re serving you and the community a little bit better. As always, hopefully you guys enjoy these. Until next time, happy trading!