In this episode, we explore the concept of optionality—how small, strategic decisions can lead to outsized rewards with limited downside risk. From ancient philosophy to modern financial strategies, discover how recognizing and seizing options can unlock opportunities in both life and investing. Topics covered include: How call and put options work The difference between American and European style options and why it matters Why options are positively skewed Examples of using … [Read more...]
486: How Retail Traders Lose Big While Enriching Wall Street
Gambling in the stock market is increasing, with most traders losing money while generating billions of dollars per year for brokerages and wholesalers. Will all this trading lead to big market swoons? Topics covered include: Why sports gambling has grown so much How gambling in the stock market is measured, and how prevalent is it Why most traders lose money but continue to trade anyway How uninformed traders improve market liquidity and encourage trading by informed … [Read more...]
471 Plus More on Covered Calls, Shorting Volatility, and Investing Emergency Funds
On Plus episode 471, we compare covered call strategies, selling puts, and shorting volatility. We explore the purpose of emergency funds and how to invest them. … [Read more...]
359 Plus: Hedging Interest Rate Risk and a Deep In the Money Call Option Strategy
In Plus Episode 359, we calculate how much of the Simplify Interest Rate Hedge ETF (PFIX) to purchase in order to protect against rising interest rates. We also look at how purchasing deep-in-the money call options is a way to get cheap leverage to magnify the returns of a specific index or asset. … [Read more...]
337: Why in the World Would You Own Bonds?
With interest rates rising does it still make sense to own bonds? Yes. This episode explores the role of bonds including why they are more effective at hedging stock losses than protective put options. Topics covered include: David's business and investment philosophy How bond funds have performed in 2021 Three disparate views on the direction of interest rates from Capital Economics, Ray Dalio, and Hoisington Investment Management Company How to invest in China … [Read more...]
Tail Events and Tail Risk
What is tail risk and how do you protect against it? ARTICLE TABLE OF CONTENTS (Skip to Section) Tail RiskHow to Manage Tail RiskProtecting Against Stock Market LossesSelf Insurance Against Tail Risk Selling Tail Risk ProtectionReserves to Protect Against UncertaintyTail Risk Podcast Tail Risk Tail events are rare occurrences that are well outside of the norm. Tail risk is the personal harm caused by these tail events. In the worst case, tail risk can ruin us. We … [Read more...]
321 Plus: More On Hedged Equity and When to Sell Company Stock
In Plus Episode 321, we take a deeper look at hedged equity and outcome based ETFs like the JP Morgan Hedged Equity Fund and the Innovator ETF series. We also answer a member's question about selling his employer's stock that now comprises 75% of his portfolio. Finally, David discusses his recent trade to increase his allocation to the WisdomTree CBOE S&P 500 PutWrite Strategy ETF (PUTW). … [Read more...]
311 Plus: Option Strategies, Volatility Investing, and Hedging Stock Portfolios
Plus Episode 311 shares the audio from a new video on how call and put options work, how put options can be used to protect against portfolio losses, options-based ETFs and how to go long and short volatility. … [Read more...]
291 Plus: Mid Month Update, When to Increase Risk, Mortgage REITs and Covered Call Writing
In Plus episode 291, for the week of March 21, 2020, we review market returns and the latest economic releases. We discuss the recent changes to the model portfolios. We also consider what needs to happen before we increase risk by investing more in stocks. We review what is going on in the mortgage REIT space where securities have gotten hit extremely hard. Finally, we answer a member's question about covered call writing on a stock that comprises a large percentage of his net worth. … [Read more...]
164: Optionality—When To Keep Your Options Open and When To Commit
How to use the asymmetric payoff of options, trial and error, and commitments to better yourself financially and in other areas of your life. Photo by Alexandre Chambon In this episode you’ll learn: Why the asymmetry of options is their most valuable characteristic. Why option holders don't care about the average outcome. The importance of trial of errors. How commitments lead to less options but higher growth. Show Notes Story of Thales of Miletus by Aristotle in … [Read more...]
