Well, I was always curious how premium sellers manage to scale up. Below is a big shift in how Options Alpha has been operating(according to them). He says this will allow him to scale from current 11% (eleven!?) to up to 30% allocation. This is just tail risk hedging. What do you guys think?
I imagine Kirk makes more money from his site and his coaching than trading. I have been told he is open about his returns and that he is profitable (though it may be a smallish number for his ROI). I did learn a lot from his site and you don't have to pay a penny. Anyone wanting to learn option selling basics won't be disappointed with his free content and it's very organized. As I've said in another thread, I'm not saying option writing is the greatest strategy in the world, it's just where I decided to focus.
Well, it's a way of hedging. He’s great guy. Not sure what do you mean by OA being nervous? Because of looking for hedges? I think it’s just a part of a process he’s been planning to improve. Some pro volatility traders say that both VIX and SPX options are too expensive for hedging and a waste, but mainly when holding a portfolio. It may work differently for active trading. I find and test many ways of hedging, and know of buying VIX calls as one method, but wouldn’t give it high priority. Now I may take a look sooner.
I mean, after so many years, now he starts hedging? Maybe he is sensing a top? Personally, I think many of his clients are oversizing, so he is coming up with a way to make sure they don't blow up. That's the dilemma, how do you make enough money to justify the effort while making sure you don't wipe out years in a single event? I like the guy too, but the whole thing just doesn't make any sense to me.
Like playing Russian Roulette, you win most times but when you lose it is catastrophic. Perhaps the right strategy for writing options is looking for the right moment, leverage to the hilt and play once, then quit. Like the traders who shorted MBS back in 2008-09.