April 4, 2024 • 38 mins
In this two-part episode, OIC host Mark Benzaquen first welcomes OIC colleague Mat Cashman in a return to Statistics 101 as they discuss probability, standard deviation, and tail risk in options. Then we turn to a special segment with Dr. Alan Ellman of The Blue Collar Investor, for a conversation about the value of options education and Alan’s take on mistakes investors new to options might make. Be sure to listen in to this episode of Wide World of Options, where industry pros come to talk.
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This is the Options Industry Council's Wide World of Options.
Before we start today's show, listeners should know that options involve risk and are not
suitable for all investors.
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Individuals should not enter into an options transaction until they have read and understood
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Now, here's your host, Mark Benzoquin.
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Hello everyone and welcome to OIC's Wide World of Options.
I'm your host, Mark Benzoquin, and for today's two-part episode, we're first going to take
our way back machines to our college statistic courses and discuss probability, tail risk,
and standard deviation, and then we're going to close out today's session with a visit
from Dr. Alan Elman of the Blue Collar Investor Corp.
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I had the privilege of sitting down with Alan recently at an industry event in Las Vegas,
and we talked about his bread and butter, which are covered calls, cash-secured puts,
and the teaching of which have made Alan one of the leaders in the options education space.
So with that being said, let's go ahead and kick things off by welcoming my first guest,
my friend, my OIC colleague, Matt Cashman.
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Matt, welcome back to the Wide World of Options.
Thanks for having me, Mark.
It's a pleasure to be here.
I am excited to talk about options again today.
Excellent, Matt.
So let's go ahead and kick things off.
Something fundamental when it comes to options, Delta.
Roma last month in her webinars talked about Greeks in depth.
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So when it comes to Delta, one of the things that we were talking about last month was
how investors might use Delta as a measure of probability.
What are your thoughts on that?
Yeah, I think it's important when you talk about that to really talk about what Delta
is to begin with, right?
So Delta is the measure of the sensitivity of an options price to changes in the price
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of the underlying asset.
It's essentially the rate of change of the options price with respect to changes in the
underlying asset price.
So Delta ranges from 0 to 100, or oftentimes it can be expressed as 1.00.
It's positive on the call side, and it ranges from negative 100 or negative 1.00 up to 0
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on the put side.
A Delta of 0.5 or 50 would, for instance, mean that for every $1 increase in the underlying
asset price, if we're talking about a call, that calls price would move up by 50 cents,
all other things being equal.
Now, traders often use Delta as an approximation of the probability of an option expiring in
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the money, just like what you said as far as you talked with Roma about this last month.
Higher Delta values generally imply a higher probability, or at least a higher perceived
probability by the marketplace of that option finishing in the money at expiration.
Now, this metric is particularly useful for traders when they're evaluating different
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strike prices and possibly maturities for option strategies, which sometimes can allow
them to tailor their positions based on their outlook and their risk tolerance and be able
to match those personal expectations with the expectation that the marketplace is telegraphing
to them through metrics like Delta, especially when you view it in this way as a perceived
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probability of finishing in the money.
Right.
The traditional definition of Delta for most people is the perceived move or the anticipated
move in the value of the option as it correlates to the price of the stock, but there are also
other definitions.
The secondary definition, we're talking about the probability of the contract finishing
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in the money.
Now, something that I like to make, which I feel is an important distinction, that there's
a difference between probability of finishing in the money and being profitable.
So just because it's got a high Delta and it's got a high probability of finishing in
the money doesn't necessarily that the investor is going to be profitable on that.
Yeah, absolutely.
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That's a really good distinction to make and it's something that in a lot of the literature
that I look at and see from an educational perspective, many times those two things are
kind of cross referenced in a way that is not always accurate.
So I think it's important to make that distinction, especially when we talk about it from our
perspective, from our seat as educators, we like to really make that distinction and draw
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that line in the sand to make sure people don't accidentally mistake one of those concepts
for the other.
Right.
And make money on this, not necessarily the case.
Yeah, exactly.
Excellent breakdown, Matt.
Thank you.
One of the other things that you're going to be talking about in your upcoming webinar
and something that was hammered home to me back in college, my statistics courses with
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standard deviations.
How do traders utilize standard deviations when it comes to options trading?
Yeah, I think that's a good segue there.
I think standard deviations, generally speaking, are when you learn it in a statistics course,
it's the actual statistical measure of the dispersion of prices or the variability of
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a set of values.
All right.
Now, let's say that in a non-professorial way.
Right.
So if we take that down a level from a statistics 101 class into kind of regular speak as far
as options are concerned, standard deviations are often used to gauge the potential range
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of future prices for an asset.
Now, you can apply that to both underlying prices.
You can apply it to option prices.
You can apply it to really any set of data that you're looking at and trying to forecast
the future of what that data might be.
So in this case, standard deviations can be used in lots of different ways.
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But let me give you an example.
Some traders like to look at something called Bollinger Bands.
Bollinger Bands are basically just a set of potential prices for an underlying that are
then overlaid on top of a graph and give you an idea of theoretically how far away from
a moving average the current price of that underlying is.
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So in essence, Bollinger Bands are just the utilization of a simple moving average, having
some duration to it, 10 day moving average, 50 day, whatever.
But then what it does is it basically adds, usually adds two standard deviations up and
two standard deviations down to the downside and which create generally the actual range
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of prices that are used for that Bollinger Band.
That's one way that people might be able to kind of draw a parallel with what they see
on an everyday basis and how standard deviations are actually used.
Now that's not the only way that people use them, right?
I think standard deviations and an understanding of them is a really integral part of understanding
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how options and particularly implied volatility works within the option pricing model.
Standard deviations, and we've gone into this previously with something which we call the
Rule of 16, which is actually deriving a standard deviation or an expected amount of movement
on a daily basis from an implied volatility metric, right?
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And we're not going to talk about that now.
If you want to look into that or learn more about that, we have some educational assets
on our website that apply to that.
But it's really just using standard deviations is a great way for people to understand and
give a real hard metric as to what kind of price variability they can perceive of or
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think about going forward with an asset's price.
Okay, excellent.
Fascinating stuff.
And certainly on the surface, seems much more maybe complicated than it really is.
So I like that you tied this back to the website because we do have a lot of content on there
that help investors make a little bit more sense.
Now we've got the standard deviation, the ends of those deviations.
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If you think of a bell curve, again from our college statistics class, the very ends of
it to the upside and to the downside, those are called the tails and tail risk.
Why don't you explain a little bit about what tail risk is and why it should matter to investors?
Yeah, I think that's great.
What you refer to as kind of a normal bell curve.
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Right, normal distribution.
Yeah, we think of as a normal price distribution.
It's just the distribution of prices using a randomized idea going forward if you assume
that Brownian motion is part of how the actual market works that you would expect that there
would be some sort of normal distribution curve to the actual prices of the underlying
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tail risk really refers to extreme or unexpected events that fall outside of the range of normal
prices.
Right, like those black swan events we hear about.
Indeed, yeah.
I think the black swan event, a lot of people look at things that are written by a guy named
Taleb who talked about things like that.
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If you have black swan events, they are multiple, multiple standard deviations outside of the
normal range of price distribution.
These events and the reason why we talk about them in our context can lead to significant
losses for people that are carrying underlying equity positions.
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I mean, like options, I think, provide a way to be able to hedge for those tail risk events.
Things like downside puts, right, protective puts are a way that people actually utilize
those options to hedge out those tail risk events potentially when you're talking about
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downside puts to the downside, right?
Right, that's what I was going to mention or interject, those downside puts.
That's the reason that we have skew because years ago when we had the market crash, we
saw that that protection was costing more for the downside than the ability for the stock
to go up, for example.
The relationship between out of the money calls and puts got skewed, for lack of a better
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word.
Absolutely.
I've done a presentation on skew before on the OIC webinar.
If you have questions about skew, make sure to get in touch with us and send us email
questions at options@theocc.com because we love to talk about skew.
The reason why skew exists is because of that kind of slightly skewed distribution of prices
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and people look at it and look at the movement to the downside historically in equity prices
has been more violent than the move to the upside.
That's what you get is exactly what you just referenced, which is those puts become theoretically
more valuable or perceived to be more valuable by the marketplace and thus are priced higher
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than the commensurate upside calls are.
As far as hedging tail risk, people use things like downside puts.
There's another way that people can actually utilize options in that regard.
It utilizes the actual downside put, but also there's another strategy that we've discussed
multiple times, which is often referred to as the risk reversal or the combo or the protective
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collar.
Lots of people have different words nomenclature for it.
A lot of times it depends on which actual asset class you're using.
The funny thing about options is that different asset classes have different words to describe
the same option strategy.
If you're talking about it in the equity market, it's called a risk reversal.
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If you're talking about it and you're trading Eurodollar options, they call it the combo.
If you talk about the combo in the actual equity options market, people think you're
talking about the actual synthetic stock position that's created.
That notwithstanding, there's a lot of different ways that you can use these downside puts
or what I like to refer to as the risk reversal, which is you would have the same position
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that downside put.
You don't have to do it along the downside put, but then you incorporate the upside call
and you sell the upside call against that downside put, which we create this combo or
this risk reversal position.
What that essentially does is it utilizes the premium that you're collecting from the
upside call by selling it to offset the cost of that downside put.
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Many times when people have this position, they do it against an already pre-existing
long underlying position.
It's important to remember that even when you're hedging tail risk like this, that you're
not-- you can't fully take your underlying position out of the equation.
You're still long the stock, but what it does is it gives you some flexibility as far as
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being able to potentially exercise that put to the downside if you were actually to go
through that strike and it became economically advantageous for you to do that.
The ability to actually offset the cost of that put by selling the upside call against
it.
That's another way that people can actually hedge that.
Excellent insight, Matt.
Thank you.
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In understanding of delta, standard deviations, tail risk, et cetera, is going to be crucial
for options traders in assisting them to make their decisions.
Let's go ahead and take a deeper dive into each of these if you could.
If you could elaborate a little bit more on the nuance of delta and how traders might
use it.
Yeah, absolutely.
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Delta is one of those things that you can look at it in lots of different ways.
We've given you a potential way you can look at it as a measure of the market's expectation
for that option being in the money at its expiration.
But it's also important to realize that delta is a dynamic thing and it moves just like
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other risk parameters move as option prices move.
Delta is one of those things that it's sensitive to an underlying asset price and also other
metrics.
Things like implied volatility and time can affect how much delta an option has.
It's important to understand how delta and time are related as time comes out of options.
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In the money options become more in the money and out of the money options become more out
of the money.
Right.
And that's the fact that options can only be bound by zero and 100 and in the money
option will tend more towards 100 as you pull time out of it and out of the money option
will tend more toward the zero bound as you pull time out of it.
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What you mean by pulling time out of it, you're simply saying is the days fall off the calendar,
we approach expiration.
Absolutely.
Yeah, that's what I mean.
The more that you understand about how time and actual duration works as far as additionally
implied volatility of those options, as far as the delta is concerned, the more you're
going to be able to be able to find the option that best fits what you're looking for and
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what your risk tolerance is.
It's important to understand that delta is dynamic.
And that it changes.
Right.
And so it's something to keep your finger on the pulse of what the delta of your position
is because especially as you start moving those things around, your delta is going to
be dynamic just as you move things and also it's going to be affected by the underlying
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move as well.
So it's important to make sure you keep your finger on that pulse as well.
Right certainly it's going to require monitoring, right?
Yeah.
Just like anything else in options, you know, it's not necessarily a set it and forget it
kind of product.
You need to stay on top of it.
You need to stay vigilant and the delta is as the stock is going to move, your risk is
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going to move with that option position as well.
So yeah, it's definitely something that you need to keep your eye on.
Let's go ahead and get back to standard deviation if you don't mind.
How do traders use that to assess volatility, for example?
Yeah, I think it's important to talk about standard deviation relative to what we refer
to as historical volatility and how that ties into implied volatility.
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Generally speaking, standard deviations and what I said before is that we have some educational
assets that give you an idea of how you can actually derive a standard deviation value
from an implied volatility level.
Implied volatility levels are oftentimes implied volatility levels of options are oftentimes
tied to the actual historical volatility of the underlying.
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It's not absolutely, you know, there's no, um, the R squared is a hundred percent.
It's not fully tied to it, but it's like, you know, a lot of times when you see things
that have exceedingly high historical volatility levels, meaning that the underlying is moving
around an awful lot, you will sometimes see that the actual implied volatility levels
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moving up in, you know, sympathetic moves to that because of the way that options are
priced relative to the underlying movement.
But as far as the actual standard deviations are concerned, what that means is that generally
speaking, traders who are looking at implied volatility levels as a metric that actually
mirrors the movement that's happening in the underlying marketplace are going to know that
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the actual standard deviation or the larger, you know, the, the range of prices moving
forward are going to be slightly larger in both directions because of the way that implied
volatility works.
And that standard deviation is going to be larger.
What a lot of times people will do is they'll actually utilize the standard deviation numbers
to actually guide them as to potentially what strikes they might use.
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Certainly, you know, standard deviation can provide valuable, valuable insight into volatility,
help traders adapt to their strategies, et cetera.
Speaking of strategies, you'd mentioned strangles.
What other strategies might traders look to that might be designed to manage tail risk,
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for example?
Oh, that's a good question.
There's I mean, the whole gamut of strategies can really, you know, you can tailor them
to potentially, you know, hedging different tail risks.
But a lot of times what people will use are strategies that incorporate both at the money
and out of the money options within those strategies.
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So things like iron condors or things like butterflies or, you know, different ratio
strategies that have what we call wings, right?
These out of the money options and utilizing them versus the at the money options, right?
But what you end up really doing is trying to conceive of what your risk is relative
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to those kinds of positions and trying to kind of extrapolate from your position that's
been in effect given to you by the market as to what kind of risk you're carrying and
what you might be able to characterize that as, right?
We would look at it and say, Oh, this looks like we're long the, you know, 10, 20, 30,
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40 Condor.
And what that does is it allows you to actually look at that position and think about it in
a much more kind of general way.
And it allows you to zoom out a little bit and be able to not think about like exactly
what those strikes are.
But more generally, like how does this act?
What does this look like from a risk perspective and be able to evaluate your risk in a much
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more holistic way like that?
Right?
I mean, that's one of the things that we use those things for.
Yeah.
Excellent information.
Thanks for sharing.
Absolutely wonderful listeners.
I want to encourage you to attend Matt's two upcoming April webinars.
You can do so to register via the event section of our OIC website optionseducation.org.
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And as Matt is one of our top presenters, I definitely want to encourage everyone to
register as Matt's going to be talking a lot more about tail risk, standard deviations,
Delta probability, et cetera.
Sure to be a very informative, very engaging presentation.
So I want to encourage everyone to register for that, please.
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And Matt, I want to thank you for joining us today.
This was a lot of fun.
Absolutely.
It's always a pleasure to be here.
I hope I get invited back.
Well, we'll see about that.
Now we're going to listen into a conversation that I recently had with Dr. Alan Elman of
the Blue Collar Investor Corporation.
Alan has been a friend of OIC's for years.
And I recently caught up with him at an industry trade show in Las Vegas, where we talked about
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the value of education and the option space, common mistakes investors might make, and
how Alan became one of the leaders when it comes to talking about covered calls and cash
secured puts.
So let's go ahead and listen in now.
We are live from the expo floor of the Money Show Las Vegas.
I've got a very esteemed guest with us, Dr. Alan Elman of the Blue Collar Investor Corp.
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Alan, thanks for stopping by.
Certainly appreciate it.
My pleasure, Mark.
Nice to talk to you.
Always, Alan.
Thank you.
Alan, you're going to be talking about covered calls and cash secured puts.
That's kind of your wheelhouse, your bread and butter.
Let me ask you, when it comes to education, when it comes to speaking with your customers,
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do you find that there's a certain mistake or some misconception that they're making
time and time again?
Do you find that there are certain problems that people run into normally?
Yes.
As a matter of fact, when I do my presentations, one of the issues that always concerns me
is that a lot of the attendees are so excited about these strategies that can generate cash
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flow on a weekly or monthly basis that they want to get started like tomorrow.
I tell them that it takes some time to master what I call the three required skills necessary
to achieve the highest level of returns.
Those are, what underlying security are we going to select?
Could be a stock or it could be an exchange traded fund.
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That's one.
Number two, what option are we going to sell?
And number three, how do we manage our trade?
Stock selection, option selection, and position management.
Those that are just starting out need to take months before investing even one penny of
their hard earned money.
That is one of the mistakes that I see covered call writers make is they don't take the education
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as seriously as they should, whether it be through my venue or the options industry council
which I leaned on quite heavily and still do for education.
>> Yeah, thank you.
So obviously people need to learn how to walk before they run, learning about the ins and
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outs of covered calls, learning about assignments, learning about risks in pricing, et cetera.
So you're thinking that people really need to educate themselves first before they're
putting their hard earned dollars down on a trade.
They have to do the due diligence first.
It'll be well worth it in the long run.
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I tell people all the time, invest three to four months in the education, paper trade,
practice with hypothetical portfolios, iron out the wrinkles.
I didn't get to where I am today by not educating myself.
Now I was self-educated along with assistance from the OIC, but it took a while and now
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that I've experienced almost 30 years of covered call writing and selling care secured puts,
I can get people from point A to point B.
>> Right, right.
Okay.
So you're talking about a 30 year track record.
Obviously you've got the designation doctor, you've earned your medical license.
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Tell me about that.
How do you go from being a dentist to a covered call guru?
>> Well actually Mark, I had a pretty good gig as a dentist from New York.
I had a partner and a practice of 15 employees that worked for me, which included four dentists
and three hygienists.
So we had nine producers all together.
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So I was able to work a 25 hour work week and still support my family comfortably.
However, in the 1990s I realized that at some point in time I would need a passive form of
income and I had no clue how to self-invest.
So I decided that I was going to teach myself how to invest in the stock market, which ultimately
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led to options and in the real estate market.
And I always had a bit of a knack for math.
I started developing various formulas, rules and guidelines, algorithms, calculators for
both.
And then what happened Mark was in 2006 I was invited to speak before a real estate
investment club of 250 investors about some deals I was doing in Austin, Texas.
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And during that presentation Mark, one sentence came out of my mouth that was about to change
everything for me, including my career.
I said to the audience that I purchased my first investment property with the profits
I earned from selling stock options.
Well after I went through this whole real estate presentation people were coming up
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to me saying, "How do you do that stock option thing?"
Oh that's funny.
And then I started getting emails and phone calls.
So I said to my wife Linda, "Maybe I should write a seminar."
So I wrote a seminar, I rented out a room in the local Holiday Inn, the woman who owned
the real estate club was very generous, allowed me to send out an email blast, sold out.
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That's great.
And then I wrote three more, advanced, and then ultimately that led to the publishing
of my first book, Cashing in on Covered Calls, which went right to number one on Amazon on
options at that time.
And here I am today having recently published my ninth book and invitations to speak all
over the country.
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So you never know Mark, you never know.
That's excellent.
Interesting story.
I love that.
Thank you for sharing that.
Now speaking of Covered Calls, that's, as we mentioned, that's your bread and butter,
that and cash-secure puts.
For investors that maybe are just getting into options and maybe not so familiar with
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Covered Calls, can you give us a bird's eye overview of what they entail and what they're
all about?
Sure.
Let me first start with breaking down the three words in the term Covered Call Writing,
and then I could, if it's okay with you Mark, set up a hypothetical example to make everything
come alive.
Perfect.
So that means that we know our cost basis.
We buy the underlying securities before we sell the option.
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Call is the type of option we're selling.
So we are agreeing to sell our shares at a certain price called the strike price that
we determine, buy a specific date known as the expiration date that we determine.
So we set the parameters of the contract.
Now let me set up for you a hypothetical example.
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Let's say we buy 100 shares of stock at $48 a share.
Now the reason I say 100, Mark, is because one options contract involves 100 shares of
that underlying security.
So for every one contract we sell, we must first own 100 shares of that underlying security.
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I'm talking now 99% of the time.
So our cost basis is $4,800.
The 100 shares at $48 is $4,800.
Now we are covered or protected.
We own the shares.
Now we are free to sell the option.
So let's say we sell a $50 call option, higher than the current market value.
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That's called out of the money.
Now let's say we generate a premium of $1.50 per share or $150 for the 100 shares or for
the contract that we sell.
And now if that underlying security is more volatile, the premium would be higher.
If it's less volatile, the premium would be lower.
But this is a good kind of in-between.
So we generate $150 in cash.
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The instant we click the button on our computer and the trade is executed, $150 per contract
is generated into our cash account.
Now we are obligated to sell our shares at $50 at any time until contract expiration.
If we sell a monthly contract, it expires the third Friday of the calendar month, most
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of the time, 4 p.m. Eastern time.
Now there are two possible major outcomes.
Let's assume for a moment the price of the stock does not supersede that agreed upon
$50 sales price.
Why would the option buyer exercise that option and buy our shares for $50 when they're trading
at market at a lower price?
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Not going to happen.
So the option expires worthless.
We still own the shares.
We generated the $150 per contract, which is ours to keep no matter what, and now we're
free to sell another option in the next contract cycle.
The second possible major outcome, and I'm setting aside exit strategies because there
are 14 different exit strategies we could use for covered call writing, but let's assume
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we don't.
The price of the stock does in fact move higher than $50, even by a penny, at expiration.
And we take no action to buy back that option.
Well our shares will be sold the next day, that's Saturday after expiration Friday.
You'll go to your brokerage account, you'll see shares are gone and the cash is in your
account $5,000 per contract.
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Now we generated $150 on the sale of the option plus another $200 on the sale of the stock,
$48 to $50 times $100.
That's a $350 profit, realized profit, on a cost basis of $4800.
That's better than a 7% one month return.
Now Mark, before everybody in the audience gets super excited.
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All right, here we go.
Let me tell you, there is no strategy that is without risk.
So in that hypothetical, if the price of the stock moves below the breakeven price point,
which is $46.50, the $48 we paid minus the $1.50 in premium, we can start to lose money.
(33:45):
And that's where that third skill set of position management comes into play.
And as I alluded to earlier, we have 14 different exit strategies for covered call writing that
can help mitigate losses, turn losses into gains or even enhance gains to even higher
levels.
Yeah, that's excellent.
(34:05):
Thank you.
A very wonderful example, very succinct description of one of the most popular strategies out
there.
I certainly appreciate that.
Alan, before I let you go, let me ask you one last question if I can.
You've been a options mentor for 30 plus years, speaking with thousands of investors around
(34:26):
the world.
What is your favorite thing about education, about teaching these people what you know?
What gives you the most satisfaction?
The testimonials.
I am humbled by the email testimonials I get from people from all over the world.
(34:47):
Mark, I could never have imagined that I would have members of the blue collar investor following
me from countries, dozens and dozens of countries outside the United States.
And when what I teach makes a difference in their lives, a lot of them will send me an
email.
(35:07):
I print out every single email testimonial.
I have binders and binders of them in my house and this is what keeps me going.
That's great.
And that's why I can never see myself stopping what I'm doing now.
I feel like I'm one of the luckiest people in the world that have had an opportunity
to have had two careers that I absolutely love where I got such great feedback from
(35:33):
those around me.
And so I'm actually humbled.
But that, to me, the feedback I get from people that have benefited, even in a small way,
is what keeps me going and is one of the highlights of my life.
Yeah.
It's nice to know that the efforts that you do are appreciated and impact people in a
(35:54):
real way.
Yeah, that's wonderful.
So no chance of going back to root canals any time in the near future.
Well, if you open wide, I'll let you know.
Alan, thank you so much.
Thanks for visiting us here at The Money Show.
Always great to see you, sir.
Thank you, Mark.
Appreciate it.
All right.
We'll see you soon.
Thank you.
Yes, sir.
(36:14):
That's going to do it for today's episode of Wide World of Options.
Thanks to my in-studio guest, Matt Cashman, and to our friend Alan Elman for all the great
info and insight they shared with us today.
And thanks again to all of our listeners and supporters out there.
As a reminder, please be sure to register for Matt's upcoming sessions on probability
and standard deviation.
And as always, please feel free to send us your questions via email at options@theocc.com
(36:40):
or live chat with us on our website.
Take care, everyone, and we'll be talking with you again soon.
You've been listening to the Options Industry Council's Wide World of Options.
If you have questions about anything you've heard on today's show, email options@theocc.com
or visit www.optionseducation.org and chat with OIC's investor education team.
(37:04):
Interested in connecting with OIC on social media?
Subscribe to the OIC YouTube channel, like them on Facebook, follow them on Twitter at
options.edu, and follow their page on LinkedIn.
Thanks for listening, and be sure to tune in to the next episode of Wide World of Options.
(37:25):
And listening to the Options Insider Radio Network, the home of the Options Podcast.
For more quality options programs, visit theoptionsinsider.com or search for Options Insider
Radio Network in your podcast provider of choice.
Listeners can also access all of our programming through our mobile app available on the iTunes
(37:47):
and Google Play stores.
Options programs are also available via livestream at mixler.com/options-insider.
That's mixlr.com/options-insider.
Don't forget to follow along with your favorite programs and submit your own questions for
the hosts at twitter.com/options, stocktwits.com/options, facebook.com/theoptionsinsider, or via questions
(38:17):
at theoptionsinsider.com.
You're listening to the Options Insider Radio Network, the home of the Options Podcast.
For more quality options programs, visit theoptionsinsider.com or search for Options Insider Radio Network
in your podcast provider of choice.
Listeners can also access all of our programming through our mobile app available on the iTunes
(00:22):
and Google Play stores.
Options programs are also available via livestream at mixler.com/options-insider.
That's mixlr.com/options-insider.
Don't forget to follow along with your favorite programs and submit your own questions for
the hosts at twitter.com/options, stocktwits.com/options, facebook.com/theoptionsinsider, or via questions
(00:52):
at theoptionsinsider.com.
This is the Options Industry Council's Wide World of Options.
Before we start today's show, listeners should know that options involve risk and are not
suitable for all investors.
(01:13):
Individuals should not enter into an options transaction until they have read and understood
the disclosure document, characteristics, and risks of standardized options.
Available by visiting theocc.com or by contacting your broker, any exchange on which options
are traded, or the Options Clearing Corporation at 125 South Franklin Street, No. 1200, Chicago,
(01:34):
Illinois 60606.
The Options Industry Council is an industry resource provided by the Options Clearing
Corporation, collectively OCC.
Any strategies discussed are strictly for illustrative and educational purposes only,
and are not to be construed as an endorsement or solicitation to buy or sell securities.
Commissions, fees, margins, interest and taxes have not been included in any of the examples
(01:57):
used in this show.
These costs impact the outcome of all stock and options transactions.
Consult your tax advisor about any potential consequences.
OIC was created in 1992 to educate investors and their financial advisors about the benefits
and risks of exchange traded equity options, and the Wide World of Options radio show is
(02:18):
one of several resources investors can utilize to learn more about options.
Other resources OIC offers include webinars, articles, and self-guided options related coursework.
For more information, check out www.optionseducation.org.
Now, here's your host, Mark Benzoquin.
(02:42):
Hello everyone and welcome to OIC's Wide World of Options.
I'm your host, Mark Benzoquin, and for today's two-part episode, we're first going to take
our way back machines to our college statistic courses and discuss probability, tail risk,
and standard deviation, and then we're going to close out today's session with a visit
from Dr. Alan Elman of the Blue Collar Investor Corp.
(03:06):
I had the privilege of sitting down with Alan recently at an industry event in Las Vegas,
and we talked about his bread and butter, which are covered calls, cash-secured puts,
and the teaching of which have made Alan one of the leaders in the options education space.
So with that being said, let's go ahead and kick things off by welcoming my first guest,
my friend, my OIC colleague, Matt Cashman.
(03:28):
Matt, welcome back to the Wide World of Options.
Thanks for having me, Mark.
It's a pleasure to be here.
I am excited to talk about options again today.
Excellent, Matt.
So let's go ahead and kick things off.
Something fundamental when it comes to options, Delta.
Roma last month in her webinars talked about Greeks in depth.
(03:50):
So when it comes to Delta, one of the things that we were talking about last month was
how investors might use Delta as a measure of probability.
What are your thoughts on that?
Yeah, I think it's important when you talk about that to really talk about what Delta
is to begin with, right?
So Delta is the measure of the sensitivity of an options price to changes in the price
(04:12):
of the underlying asset.
It's essentially the rate of change of the options price with respect to changes in the
underlying asset price.
So Delta ranges from 0 to 100, or oftentimes it can be expressed as 1.00.
It's positive on the call side, and it ranges from negative 100 or negative 1.00 up to 0
(04:35):
on the put side.
A Delta of 0.5 or 50 would, for instance, mean that for every $1 increase in the underlying
asset price, if we're talking about a call, that calls price would move up by 50 cents,
all other things being equal.
Now, traders often use Delta as an approximation of the probability of an option expiring in
(04:58):
the money, just like what you said as far as you talked with Roma about this last month.
Higher Delta values generally imply a higher probability, or at least a higher perceived
probability by the marketplace of that option finishing in the money at expiration.
Now, this metric is particularly useful for traders when they're evaluating different
(05:23):
strike prices and possibly maturities for option strategies, which sometimes can allow
them to tailor their positions based on their outlook and their risk tolerance and be able
to match those personal expectations with the expectation that the marketplace is telegraphing
to them through metrics like Delta, especially when you view it in this way as a perceived
(05:46):
probability of finishing in the money.
Right.
The traditional definition of Delta for most people is the perceived move or the anticipated
move in the value of the option as it correlates to the price of the stock, but there are also
other definitions.
The secondary definition, we're talking about the probability of the contract finishing
(06:07):
in the money.
Now, something that I like to make, which I feel is an important distinction, that there's
a difference between probability of finishing in the money and being profitable.
So just because it's got a high Delta and it's got a high probability of finishing in
the money doesn't necessarily that the investor is going to be profitable on that.
Yeah, absolutely.
(06:28):
That's a really good distinction to make and it's something that in a lot of the literature
that I look at and see from an educational perspective, many times those two things are
kind of cross referenced in a way that is not always accurate.
So I think it's important to make that distinction, especially when we talk about it from our
perspective, from our seat as educators, we like to really make that distinction and draw
(06:50):
that line in the sand to make sure people don't accidentally mistake one of those concepts
for the other.
Right.
And make money on this, not necessarily the case.
Yeah, exactly.
Excellent breakdown, Matt.
Thank you.
One of the other things that you're going to be talking about in your upcoming webinar
and something that was hammered home to me back in college, my statistics courses with
(07:14):
standard deviations.
How do traders utilize standard deviations when it comes to options trading?
Yeah, I think that's a good segue there.
I think standard deviations, generally speaking, are when you learn it in a statistics course,
it's the actual statistical measure of the dispersion of prices or the variability of
(07:37):
a set of values.
All right.
Now, let's say that in a non-professorial way.
Right.
So if we take that down a level from a statistics 101 class into kind of regular speak as far
as options are concerned, standard deviations are often used to gauge the potential range
(07:58):
of future prices for an asset.
Now, you can apply that to both underlying prices.
You can apply it to option prices.
You can apply it to really any set of data that you're looking at and trying to forecast
the future of what that data might be.
So in this case, standard deviations can be used in lots of different ways.
(08:18):
But let me give you an example.
Some traders like to look at something called Bollinger Bands.
Bollinger Bands are basically just a set of potential prices for an underlying that are
then overlaid on top of a graph and give you an idea of theoretically how far away from
a moving average the current price of that underlying is.
(08:42):
So in essence, Bollinger Bands are just the utilization of a simple moving average, having
some duration to it, 10 day moving average, 50 day, whatever.
But then what it does is it basically adds, usually adds two standard deviations up and
two standard deviations down to the downside and which create generally the actual range
(09:05):
of prices that are used for that Bollinger Band.
That's one way that people might be able to kind of draw a parallel with what they see
on an everyday basis and how standard deviations are actually used.
Now that's not the only way that people use them, right?
I think standard deviations and an understanding of them is a really integral part of understanding
(09:28):
how options and particularly implied volatility works within the option pricing model.
Standard deviations, and we've gone into this previously with something which we call the
Rule of 16, which is actually deriving a standard deviation or an expected amount of movement
on a daily basis from an implied volatility metric, right?
(09:53):
And we're not going to talk about that now.
If you want to look into that or learn more about that, we have some educational assets
on our website that apply to that.
But it's really just using standard deviations is a great way for people to understand and
give a real hard metric as to what kind of price variability they can perceive of or
(10:16):
think about going forward with an asset's price.
Okay, excellent.
Fascinating stuff.
And certainly on the surface, seems much more maybe complicated than it really is.
So I like that you tied this back to the website because we do have a lot of content on there
that help investors make a little bit more sense.
Now we've got the standard deviation, the ends of those deviations.
(10:42):
If you think of a bell curve, again from our college statistics class, the very ends of
it to the upside and to the downside, those are called the tails and tail risk.
Why don't you explain a little bit about what tail risk is and why it should matter to investors?
Yeah, I think that's great.
What you refer to as kind of a normal bell curve.
(11:04):
Right, normal distribution.
Yeah, we think of as a normal price distribution.
It's just the distribution of prices using a randomized idea going forward if you assume
that Brownian motion is part of how the actual market works that you would expect that there
would be some sort of normal distribution curve to the actual prices of the underlying
(11:27):
tail risk really refers to extreme or unexpected events that fall outside of the range of normal
prices.
Right, like those black swan events we hear about.
Indeed, yeah.
I think the black swan event, a lot of people look at things that are written by a guy named
Taleb who talked about things like that.
(11:48):
If you have black swan events, they are multiple, multiple standard deviations outside of the
normal range of price distribution.
These events and the reason why we talk about them in our context can lead to significant
losses for people that are carrying underlying equity positions.
(12:12):
I mean, like options, I think, provide a way to be able to hedge for those tail risk events.
Things like downside puts, right, protective puts are a way that people actually utilize
those options to hedge out those tail risk events potentially when you're talking about
(12:36):
downside puts to the downside, right?
Right, that's what I was going to mention or interject, those downside puts.
That's the reason that we have skew because years ago when we had the market crash, we
saw that that protection was costing more for the downside than the ability for the stock
to go up, for example.
The relationship between out of the money calls and puts got skewed, for lack of a better
(13:01):
word.
Absolutely.
I've done a presentation on skew before on the OIC webinar.
If you have questions about skew, make sure to get in touch with us and send us email
questions at options@theocc.com because we love to talk about skew.
The reason why skew exists is because of that kind of slightly skewed distribution of prices
(13:26):
and people look at it and look at the movement to the downside historically in equity prices
has been more violent than the move to the upside.
That's what you get is exactly what you just referenced, which is those puts become theoretically
more valuable or perceived to be more valuable by the marketplace and thus are priced higher
(13:46):
than the commensurate upside calls are.
As far as hedging tail risk, people use things like downside puts.
There's another way that people can actually utilize options in that regard.
It utilizes the actual downside put, but also there's another strategy that we've discussed
multiple times, which is often referred to as the risk reversal or the combo or the protective
(14:13):
collar.
Lots of people have different words nomenclature for it.
A lot of times it depends on which actual asset class you're using.
The funny thing about options is that different asset classes have different words to describe
the same option strategy.
If you're talking about it in the equity market, it's called a risk reversal.
(14:34):
If you're talking about it and you're trading Eurodollar options, they call it the combo.
If you talk about the combo in the actual equity options market, people think you're
talking about the actual synthetic stock position that's created.
That notwithstanding, there's a lot of different ways that you can use these downside puts
or what I like to refer to as the risk reversal, which is you would have the same position
(15:00):
that downside put.
You don't have to do it along the downside put, but then you incorporate the upside call
and you sell the upside call against that downside put, which we create this combo or
this risk reversal position.
What that essentially does is it utilizes the premium that you're collecting from the
upside call by selling it to offset the cost of that downside put.
(15:23):
Many times when people have this position, they do it against an already pre-existing
long underlying position.
It's important to remember that even when you're hedging tail risk like this, that you're
not-- you can't fully take your underlying position out of the equation.
You're still long the stock, but what it does is it gives you some flexibility as far as
(15:47):
being able to potentially exercise that put to the downside if you were actually to go
through that strike and it became economically advantageous for you to do that.
The ability to actually offset the cost of that put by selling the upside call against
it.
That's another way that people can actually hedge that.
Excellent insight, Matt.
Thank you.
(16:08):
In understanding of delta, standard deviations, tail risk, et cetera, is going to be crucial
for options traders in assisting them to make their decisions.
Let's go ahead and take a deeper dive into each of these if you could.
If you could elaborate a little bit more on the nuance of delta and how traders might
use it.
Yeah, absolutely.
(16:29):
Delta is one of those things that you can look at it in lots of different ways.
We've given you a potential way you can look at it as a measure of the market's expectation
for that option being in the money at its expiration.
But it's also important to realize that delta is a dynamic thing and it moves just like
(16:49):
other risk parameters move as option prices move.
Delta is one of those things that it's sensitive to an underlying asset price and also other
metrics.
Things like implied volatility and time can affect how much delta an option has.
It's important to understand how delta and time are related as time comes out of options.
(17:16):
In the money options become more in the money and out of the money options become more out
of the money.
Right.
And that's the fact that options can only be bound by zero and 100 and in the money
option will tend more towards 100 as you pull time out of it and out of the money option
will tend more toward the zero bound as you pull time out of it.
(17:38):
What you mean by pulling time out of it, you're simply saying is the days fall off the calendar,
we approach expiration.
Absolutely.
Yeah, that's what I mean.
The more that you understand about how time and actual duration works as far as additionally
implied volatility of those options, as far as the delta is concerned, the more you're
going to be able to be able to find the option that best fits what you're looking for and
(18:04):
what your risk tolerance is.
It's important to understand that delta is dynamic.
And that it changes.
Right.
And so it's something to keep your finger on the pulse of what the delta of your position
is because especially as you start moving those things around, your delta is going to
be dynamic just as you move things and also it's going to be affected by the underlying
(18:26):
move as well.
So it's important to make sure you keep your finger on that pulse as well.
Right certainly it's going to require monitoring, right?
Yeah.
Just like anything else in options, you know, it's not necessarily a set it and forget it
kind of product.
You need to stay on top of it.
You need to stay vigilant and the delta is as the stock is going to move, your risk is
(18:48):
going to move with that option position as well.
So yeah, it's definitely something that you need to keep your eye on.
Let's go ahead and get back to standard deviation if you don't mind.
How do traders use that to assess volatility, for example?
Yeah, I think it's important to talk about standard deviation relative to what we refer
to as historical volatility and how that ties into implied volatility.
(19:14):
Generally speaking, standard deviations and what I said before is that we have some educational
assets that give you an idea of how you can actually derive a standard deviation value
from an implied volatility level.
Implied volatility levels are oftentimes implied volatility levels of options are oftentimes
tied to the actual historical volatility of the underlying.
(19:35):
It's not absolutely, you know, there's no, um, the R squared is a hundred percent.
It's not fully tied to it, but it's like, you know, a lot of times when you see things
that have exceedingly high historical volatility levels, meaning that the underlying is moving
around an awful lot, you will sometimes see that the actual implied volatility levels
(19:56):
moving up in, you know, sympathetic moves to that because of the way that options are
priced relative to the underlying movement.
But as far as the actual standard deviations are concerned, what that means is that generally
speaking, traders who are looking at implied volatility levels as a metric that actually
mirrors the movement that's happening in the underlying marketplace are going to know that
(20:19):
the actual standard deviation or the larger, you know, the, the range of prices moving
forward are going to be slightly larger in both directions because of the way that implied
volatility works.
And that standard deviation is going to be larger.
What a lot of times people will do is they'll actually utilize the standard deviation numbers
to actually guide them as to potentially what strikes they might use.
(20:44):
Certainly, you know, standard deviation can provide valuable, valuable insight into volatility,
help traders adapt to their strategies, et cetera.
Speaking of strategies, you'd mentioned strangles.
What other strategies might traders look to that might be designed to manage tail risk,
(21:05):
for example?
Oh, that's a good question.
There's I mean, the whole gamut of strategies can really, you know, you can tailor them
to potentially, you know, hedging different tail risks.
But a lot of times what people will use are strategies that incorporate both at the money
and out of the money options within those strategies.
(21:26):
So things like iron condors or things like butterflies or, you know, different ratio
strategies that have what we call wings, right?
These out of the money options and utilizing them versus the at the money options, right?
But what you end up really doing is trying to conceive of what your risk is relative
(21:48):
to those kinds of positions and trying to kind of extrapolate from your position that's
been in effect given to you by the market as to what kind of risk you're carrying and
what you might be able to characterize that as, right?
We would look at it and say, Oh, this looks like we're long the, you know, 10, 20, 30,
(22:11):
40 Condor.
And what that does is it allows you to actually look at that position and think about it in
a much more kind of general way.
And it allows you to zoom out a little bit and be able to not think about like exactly
what those strikes are.
But more generally, like how does this act?
What does this look like from a risk perspective and be able to evaluate your risk in a much
(22:34):
more holistic way like that?
Right?
I mean, that's one of the things that we use those things for.
Yeah.
Excellent information.
Thanks for sharing.
Absolutely wonderful listeners.
I want to encourage you to attend Matt's two upcoming April webinars.
You can do so to register via the event section of our OIC website optionseducation.org.
(22:57):
And as Matt is one of our top presenters, I definitely want to encourage everyone to
register as Matt's going to be talking a lot more about tail risk, standard deviations,
Delta probability, et cetera.
Sure to be a very informative, very engaging presentation.
So I want to encourage everyone to register for that, please.
(23:20):
And Matt, I want to thank you for joining us today.
This was a lot of fun.
Absolutely.
It's always a pleasure to be here.
I hope I get invited back.
Well, we'll see about that.
Now we're going to listen into a conversation that I recently had with Dr. Alan Elman of
the Blue Collar Investor Corporation.
Alan has been a friend of OIC's for years.
And I recently caught up with him at an industry trade show in Las Vegas, where we talked about
(23:43):
the value of education and the option space, common mistakes investors might make, and
how Alan became one of the leaders when it comes to talking about covered calls and cash
secured puts.
So let's go ahead and listen in now.
We are live from the expo floor of the Money Show Las Vegas.
I've got a very esteemed guest with us, Dr. Alan Elman of the Blue Collar Investor Corp.
(24:07):
Alan, thanks for stopping by.
Certainly appreciate it.
My pleasure, Mark.
Nice to talk to you.
Always, Alan.
Thank you.
Alan, you're going to be talking about covered calls and cash secured puts.
That's kind of your wheelhouse, your bread and butter.
Let me ask you, when it comes to education, when it comes to speaking with your customers,
(24:29):
do you find that there's a certain mistake or some misconception that they're making
time and time again?
Do you find that there are certain problems that people run into normally?
Yes.
As a matter of fact, when I do my presentations, one of the issues that always concerns me
is that a lot of the attendees are so excited about these strategies that can generate cash
(24:50):
flow on a weekly or monthly basis that they want to get started like tomorrow.
I tell them that it takes some time to master what I call the three required skills necessary
to achieve the highest level of returns.
Those are, what underlying security are we going to select?
Could be a stock or it could be an exchange traded fund.
(25:13):
That's one.
Number two, what option are we going to sell?
And number three, how do we manage our trade?
Stock selection, option selection, and position management.
Those that are just starting out need to take months before investing even one penny of
their hard earned money.
That is one of the mistakes that I see covered call writers make is they don't take the education
(25:40):
as seriously as they should, whether it be through my venue or the options industry council
which I leaned on quite heavily and still do for education.
>> Yeah, thank you.
So obviously people need to learn how to walk before they run, learning about the ins and
(26:00):
outs of covered calls, learning about assignments, learning about risks in pricing, et cetera.
So you're thinking that people really need to educate themselves first before they're
putting their hard earned dollars down on a trade.
They have to do the due diligence first.
It'll be well worth it in the long run.
(26:21):
I tell people all the time, invest three to four months in the education, paper trade,
practice with hypothetical portfolios, iron out the wrinkles.
I didn't get to where I am today by not educating myself.
Now I was self-educated along with assistance from the OIC, but it took a while and now
(26:45):
that I've experienced almost 30 years of covered call writing and selling care secured puts,
I can get people from point A to point B.
>> Right, right.
Okay.
So you're talking about a 30 year track record.
Obviously you've got the designation doctor, you've earned your medical license.
(27:05):
Tell me about that.
How do you go from being a dentist to a covered call guru?
>> Well actually Mark, I had a pretty good gig as a dentist from New York.
I had a partner and a practice of 15 employees that worked for me, which included four dentists
and three hygienists.
So we had nine producers all together.
(27:28):
So I was able to work a 25 hour work week and still support my family comfortably.
However, in the 1990s I realized that at some point in time I would need a passive form of
income and I had no clue how to self-invest.
So I decided that I was going to teach myself how to invest in the stock market, which ultimately
(27:51):
led to options and in the real estate market.
And I always had a bit of a knack for math.
I started developing various formulas, rules and guidelines, algorithms, calculators for
both.
And then what happened Mark was in 2006 I was invited to speak before a real estate
investment club of 250 investors about some deals I was doing in Austin, Texas.
(28:19):
And during that presentation Mark, one sentence came out of my mouth that was about to change
everything for me, including my career.
I said to the audience that I purchased my first investment property with the profits
I earned from selling stock options.
Well after I went through this whole real estate presentation people were coming up
(28:40):
to me saying, "How do you do that stock option thing?"
Oh that's funny.
And then I started getting emails and phone calls.
So I said to my wife Linda, "Maybe I should write a seminar."
So I wrote a seminar, I rented out a room in the local Holiday Inn, the woman who owned
the real estate club was very generous, allowed me to send out an email blast, sold out.
(29:02):
That's great.
And then I wrote three more, advanced, and then ultimately that led to the publishing
of my first book, Cashing in on Covered Calls, which went right to number one on Amazon on
options at that time.
And here I am today having recently published my ninth book and invitations to speak all
over the country.
(29:23):
So you never know Mark, you never know.
That's excellent.
Interesting story.
I love that.
Thank you for sharing that.
Now speaking of Covered Calls, that's, as we mentioned, that's your bread and butter,
that and cash-secure puts.
For investors that maybe are just getting into options and maybe not so familiar with
(29:43):
Covered Calls, can you give us a bird's eye overview of what they entail and what they're
all about?
Sure.
Let me first start with breaking down the three words in the term Covered Call Writing,
and then I could, if it's okay with you Mark, set up a hypothetical example to make everything
come alive.
Perfect.
So that means that we know our cost basis.
We buy the underlying securities before we sell the option.
(30:07):
Call is the type of option we're selling.
So we are agreeing to sell our shares at a certain price called the strike price that
we determine, buy a specific date known as the expiration date that we determine.
So we set the parameters of the contract.
Now let me set up for you a hypothetical example.
(30:28):
Let's say we buy 100 shares of stock at $48 a share.
Now the reason I say 100, Mark, is because one options contract involves 100 shares of
that underlying security.
So for every one contract we sell, we must first own 100 shares of that underlying security.
(30:48):
I'm talking now 99% of the time.
So our cost basis is $4,800.
The 100 shares at $48 is $4,800.
Now we are covered or protected.
We own the shares.
Now we are free to sell the option.
So let's say we sell a $50 call option, higher than the current market value.
(31:10):
That's called out of the money.
Now let's say we generate a premium of $1.50 per share or $150 for the 100 shares or for
the contract that we sell.
And now if that underlying security is more volatile, the premium would be higher.
If it's less volatile, the premium would be lower.
But this is a good kind of in-between.
So we generate $150 in cash.
(31:32):
The instant we click the button on our computer and the trade is executed, $150 per contract
is generated into our cash account.
Now we are obligated to sell our shares at $50 at any time until contract expiration.
If we sell a monthly contract, it expires the third Friday of the calendar month, most
(31:54):
of the time, 4 p.m. Eastern time.
Now there are two possible major outcomes.
Let's assume for a moment the price of the stock does not supersede that agreed upon
$50 sales price.
Why would the option buyer exercise that option and buy our shares for $50 when they're trading
at market at a lower price?
(32:15):
Not going to happen.
So the option expires worthless.
We still own the shares.
We generated the $150 per contract, which is ours to keep no matter what, and now we're
free to sell another option in the next contract cycle.
The second possible major outcome, and I'm setting aside exit strategies because there
are 14 different exit strategies we could use for covered call writing, but let's assume
(32:39):
we don't.
The price of the stock does in fact move higher than $50, even by a penny, at expiration.
And we take no action to buy back that option.
Well our shares will be sold the next day, that's Saturday after expiration Friday.
You'll go to your brokerage account, you'll see shares are gone and the cash is in your
account $5,000 per contract.
(33:00):
Now we generated $150 on the sale of the option plus another $200 on the sale of the stock,
$48 to $50 times $100.
That's a $350 profit, realized profit, on a cost basis of $4800.
That's better than a 7% one month return.
Now Mark, before everybody in the audience gets super excited.
(33:24):
All right, here we go.
Let me tell you, there is no strategy that is without risk.
So in that hypothetical, if the price of the stock moves below the breakeven price point,
which is $46.50, the $48 we paid minus the $1.50 in premium, we can start to lose money.
(33:45):
And that's where that third skill set of position management comes into play.
And as I alluded to earlier, we have 14 different exit strategies for covered call writing that
can help mitigate losses, turn losses into gains or even enhance gains to even higher
levels.
Yeah, that's excellent.
(34:05):
Thank you.
A very wonderful example, very succinct description of one of the most popular strategies out
there.
I certainly appreciate that.
Alan, before I let you go, let me ask you one last question if I can.
You've been a options mentor for 30 plus years, speaking with thousands of investors around
(34:26):
the world.
What is your favorite thing about education, about teaching these people what you know?
What gives you the most satisfaction?
The testimonials.
I am humbled by the email testimonials I get from people from all over the world.
(34:47):
Mark, I could never have imagined that I would have members of the blue collar investor following
me from countries, dozens and dozens of countries outside the United States.
And when what I teach makes a difference in their lives, a lot of them will send me an
email.
(35:07):
I print out every single email testimonial.
I have binders and binders of them in my house and this is what keeps me going.
That's great.
And that's why I can never see myself stopping what I'm doing now.
I feel like I'm one of the luckiest people in the world that have had an opportunity
to have had two careers that I absolutely love where I got such great feedback from
(35:33):
those around me.
And so I'm actually humbled.
But that, to me, the feedback I get from people that have benefited, even in a small way,
is what keeps me going and is one of the highlights of my life.
Yeah.
It's nice to know that the efforts that you do are appreciated and impact people in a
(35:54):
real way.
Yeah, that's wonderful.
So no chance of going back to root canals any time in the near future.
Well, if you open wide, I'll let you know.
Alan, thank you so much.
Thanks for visiting us here at The Money Show.
Always great to see you, sir.
Thank you, Mark.
Appreciate it.
All right.
We'll see you soon.
Thank you.
Yes, sir.
(36:14):
That's going to do it for today's episode of Wide World of Options.
Thanks to my in-studio guest, Matt Cashman, and to our friend Alan Elman for all the great
info and insight they shared with us today.
And thanks again to all of our listeners and supporters out there.
As a reminder, please be sure to register for Matt's upcoming sessions on probability
and standard deviation.
And as always, please feel free to send us your questions via email at options@theocc.com
(36:40):
or live chat with us on our website.
Take care, everyone, and we'll be talking with you again soon.
You've been listening to the Options Industry Council's Wide World of Options.
If you have questions about anything you've heard on today's show, email options@theocc.com
or visit www.optionseducation.org and chat with OIC's investor education team.
(37:04):
Interested in connecting with OIC on social media?
Subscribe to the OIC YouTube channel, like them on Facebook, follow them on Twitter at
options.edu, and follow their page on LinkedIn.
Thanks for listening, and be sure to tune in to the next episode of Wide World of Options.
(37:25):
And listening to the Options Insider Radio Network, the home of the Options Podcast.
For more quality options programs, visit theoptionsinsider.com or search for Options Insider
Radio Network in your podcast provider of choice.
Listeners can also access all of our programming through our mobile app available on the iTunes
(37:47):
and Google Play stores.
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Don't forget to follow along with your favorite programs and submit your own questions for
the hosts at twitter.com/options, stocktwits.com/options, facebook.com/theoptionsinsider, or via questions
(38:17):
at theoptionsinsider.com.
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