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Can Options Trading Considered As Seeking Alpha?

"Although options may not be appropriate for everyone, they're among the most flexible of investment choices. Depending on the contract, options can protect or enhance the portfolios of many different kinds of investors in rising, falling, and neutral markets," as quoted from The Options Industry Council.

I like to break down simple options trading into two categorizes: offensive and defensive.

Offensive strategies: including (but not limited to) simple call/put, debit call/put spread

Defensive strategies: including (but not limited to) covered short call, married put strategies, credit put spread (to acquire the stock with a discounted price)

Of course, there are more advanced strategies: strangles, straddles, butterflies, and iron condors to bet all sorts of outcomes.

It is true that the prices of options change quickly; however, by understanding and using options properly, options can be a great way to reduce beta for the underlying stock holdings or set up for a long-term trade.

Options Trading could be Options Investing

By writing calls/puts, the edge of time decay is on the options sellers' side. By leveraging time, options trading could become options investing. Investing in time. A great way to demonstrate options investing is a credit put spread with a 3 months term. 3 months term is a great time frame as options decay the most in the last 60 days and the earnings report for the company is released every 3 months. By using the credit put spread, investors/options traders can acquire the stock at a lower price if the price falls below the strike price of the short put option. However, if the stock price closes above the strike price of the short put option upon expiration, investors/traders earn the premium.

Seeking Alpha as a great platform to Seek Alpha

As quoted from SA website, "Seeking Alpha is the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion." Further, "Seeking Alpha differs from other finance sites because it focuses on opinion and analysis rather than news, and is primarily written by investors who describe their personal approach to stock picking and portfolio management, rather than by journalists." Lastly, as stated from SA About Us Page, 'Alpha' is a finance term referring to a stock's performance relative to the market; it's used more loosely by fund managers to describe beating their index - so every stock picker is essentially "seeking alpha."

The main question now is, "Can options trading considered as seeking alpha?"


Options trading is here to stay and its value of hedging, reducing beta, and leveraging capital will always be there if used properly.

As reported from Bloomberg, "Fund managers learning to trade options are the "engine of growth" as they use more contracts to guard against stock fluctuations, speculate on share moves or bet on higher or lower volatility, according to the report from Andy Nybo, head of derivatives at New York-based Tabb."

Instead of closing options section on Seeking Alpha, perhaps, another approach is to create a special Seeking Alpha division dedicated to options.

Perhaps, a similar concept like "Seeking Alpha PRO" article, such as "Seeking Alpha Options" could provide more in-time actionable ideas for investors. Thus, create another new revenue stream for SA.

All things considered, SA is a great platform with great management and superb SA staff. Wish SA all the best for 2013 and beyond.