Option Alpha Review

Is Option Alpha Worth the money?

One of the side hustles I dabbled with for a while was trading options. I was new to the options trading world and heard about Option Alpha on a podcast so I signed up and gave it a shot.

Kirk Du Plessis is the founder of Option Alpha which is a subscription based service where you can follow all of Kirk’s trades in real time. 

But is Option Alpha worth the $99 per month subscription fee?

Warning: Commissions Will Kill Your Options Trades!

If you’re account is under $50k then you MUST reduce your commissions. When I started trading options I had a 10-20% performance hit just from commissions.

The best choice for anyone starting options trading is Robinhood. They have no commissions on stocks or options and no fees anywhere. I do all of my trading with Robinhood now and can’t recommend them highly enough.

How I got started with option alpha

I stumbled across Option Alpha when the founder, Kirk, did a podcast interview on the Smart Passive Income podcast which you can find here.

I had heard about options trading before and read a couple of books about it but never had the guts to dive into it fully.

At about the same time that Kirk did this podcast, Tastytrade was getting ready to launch their trading platform.

Tastytrade was a new broker that had really low fees.  Just $1 per option contract and it was free to close out a trade.  In the past, these same trades would cost about $6 to open a position and $6 to close it back out.

After hearing Kirk’s interview and seeing the huge reduction in cost, I decided to pull the trigger and get into options trading.

At the time I had about $25k in my Roth IRA.  I transferred $5k over to Interactive Brokers, then TD Ameritrade, then finally Tastytrade.

After a few weeks of trading and getting comfortable with the platform I transferred over an additional $15k or so and got to work.

Getting Started with Option Alpha

Kirk has done a really great job of putting together amazing training resources on options trading and he’s made it all available for free.  You can check it out here.

For anyone who is new to options trading, I can’t think of a better resource for getting started.  If you have any interest in trading options I’d recommend this as your starting point in your education.

I went through all of the training tracks and watched every video.  I had read a couple of books on options and how they work in the past so a lot of the information was a repeat of things I already knew.

The screenshot below shows the different courses that Kirk has made.  All of the videos are nicely organized and they’re usually only 5-10 minutes long which makes them easy to digest.

All of the free content on the site comes with no strings attached other than requiring you to sign up and create an account.

From there you’ll get news updates from Kirk and an invitation to buy a couple of his one off products.  There’s an ebook about technical trading signals and a watch list that you can use to find companies who have high implied volatility ranks, or IVR.  

I eventually gave in and paid the $40 for the watch list.  It was kind of handy but didn’t really give me much direction.  I could find companies that had high implied volatility but unless you know what strategy to apply in each scenario, it isn’t that useful.  This information is also completely free on Tastyworks which was my broker.

The next step up is a $99 per month package where you can get all of Kirk’s trade alerts in real time and copy his strategies.

Option Alpha trade alerts

The underlying philosophy for most options traders is that implied volatility is overstated compared to realized volatility.  So you can sell an option and be short volatility with the expectation that int he long run, the realized volatility will be less and you’ll make money.

This is the same options strategy that Kirk uses on Option Alpha which means most of the time you will be selling options; usually spreads, butterflies and occasionally iron condors.

Kirk usually doesn’t buy options.  There might be a 1-2% rate of buying options, usually going into earnings trades, but for the most part he’ll be selling options and buying them back later if the price comes down.

The way you get notified of new trades is through email and text.  When Kirk enters, adjusts, or exits any position, you’ll get an alert.  Here’s what an entry alert looks like:

And here’s what an adjustment alert looks like:

And finally a closing alert:

All of these alerts are formatted similarly except for the adjustments which usually have a little more explanation and rationale behind the move. 

This makes sense since an adjustment is usually being made on a trade that has gone wrong so Kirk wants to let you know what went wrong and why the adjustment you’re making is going to help.

One of the really nice things about Kirk’s notification set up is that you can receive alerts via text message as well.  Every time a trade was made I’d get a text message right away on my phone so I could make the trades at the same time from my mobile trading app.

Warning: Commissions Will Kill Your Options Trades!

If you’re account is under $50k then you MUST reduce your commissions. When I started trading options I had a 10-20% performance hit just from commissions.

The best choice for anyone starting options trading is Robinhood. They have no commissions on stocks or options and no fees anywhere. I do all of my trading with Robinhood now and can’t recommend them highly enough.

What about slippage?

One issue with following trades and copying them is that you can change the price.

For small time traders this isn’t a big deal.  If you buy 100 shares of Pepsi and you tell your buddy to do the same, you won’t really move the stock price.

But if you start selling out of the money spreads on Pepsi and you alert 5,000 other people and they try to do the same thing you can see some huge changes in price.

To Kirk’s credit, most of the time he is trading extremely liquid ETFs.  Kirk really likes to trade sector ETFs and country ETFs.  These underlyings have a lot of liquidity and usually you will be able to enter the trade for about the same price that Kirk mentions in his alert.

It wasn’t uncommon for me to see a 1-3% increase in price from when the alert went out to when my trade got executed, but for the most part I was able to enter the trade at a good price and get out at the same time as Kirk.

Some other investment subscriptions that trade penny stocks are particularly notorious for front running their subscribers.  Basically the guy running the site will buy a bunch of stock in a company for $0.02 per share, send the alert to his 10,000 subscribers who bid it up to $0.10 per share.  He gets out after capturing the 5x return and his subscribers are left holding the bag as everyone sells and the price drops back to where it’s started.

To be perfectly clear, Kirk does NOT do this at all.  

He focuses on liquid stocks and he keeps in mind that he has a huge following that has the potential to sway prices.  This is built in to the trading strategy and it makes you feel like you’re getting a good deal too.  

I subscribed to another options trading service called Steady Options that was the exact opposite of this.  The guy running the site would send out an alert in some illiquid underlying and by the time I got in on the trade it would have already moved by 20%.  So he made off with a nice profit that he could report on his website and I was stuck trying to figure out if I should enter at this inflated price or just sit and wait for the next trade.  Not a good experience.

What options strategies does option alpha use?

As I said earlier, Kirk likes to sell premium which means his strategies mostly consist of:

  • Selling call and put credit spreads
  • Selling iron butterflies
  • Selling iron condors
  • Occasionally selling calendars
  • Occasionally making earnings plays, but they were usually selling butterflies that expired the next day

If you check out Tastytrade or any other options trading videos/books, they tend to use a similar strategy.

Should you subscribe to option alpha?

I can’t make this decision for anyone.  If trading options is something you’re interested in, I’d encourage you to spend 3-6 months watching videos and reading books to learn as much as possible, then another 6 months of only paper trading so you aren’t risking anything.  Only after you’ve waited 12 months would I recommend signing up for any services or starting to trade with real money.

Of course, nobody ever listens to this advice.  

I was in your shoes at one point in time, having spent a few months learning by watching videos and reading books and I took the plunge.  I just couldn’t get interested enough in paper trading so I went in with my real money and lost quite a bit of money.

The second thing to think about is the subscription fee and brokerage fees.  If you have a small account of less than $5k-$10k, it probably doesn’t make sense to subscribe at $99 per month.  

If you’re paying $1,200 per year and you only have a $5,000 account, that means you have to make a 24% return just to break even on the subscription fee.

Until your account is at least $15k, I wouldn’t sign up for any subscription services. 

At $15k, the $1,200 per year is “only” an 8% drag on your account.  Ideally you’d wait until you had at least $25k where the fees would drop to under 5% per year.

Ultimately, if you want to try Option Alpha, go for it.  You can cancel at anytime so you’re only on the hook for 1 month’s payment at a time and compared to some of the other options on the market (see what I did there?), Kirk probably runs the most beginner friendly website and really focuses on helping you understand the process behind his trades.

If you liked this article you should sign up for my email list below.  Even though I’m done trading options after my spectacularly horrible results, I usually write about starting side hustles and saving money towards early retirement.

Warning: Commissions Will Kill Your Options Trades!

If you’re account is under $50k then you MUST reduce your commissions. When I started trading options I had a 10-20% performance hit just from commissions.

The best choice for anyone starting options trading is Robinhood. They have no commissions on stocks or options and no fees anywhere. I do all of my trading with Robinhood now and can’t recommend them highly enough.

Some links on this website may earn me a small commission if you click on them at no extra cost to you. For more information please click this text to see the full affiliate disclosure.

You may also like

2 comments

Leave a Reply

Your email address will not be published. Required fields are marked *