Option Alpha Review – Tools and Education for Options Traders

Who Runs Option Alpha?

Optionalpha.com is an online options trading education service. The site is operated by former Deutsche Bank investment banker and BB&T Capital Markets REIT analyst Kirk Du Plessis. Plessis is a now full-time trader and consultant to hedge funds specializing in options strategies. He is the main course instructor and regularly posts his options trades with the community of over 47,435 traders. The site boasts a win rate north of 70-percent and appears to be very transparent about the trades.

Styles of Trading

Du Plessis primarily swing trades options contracts using various spread strategies to collect premiums. He believes that financial market price movements are completely random but fall in line with probabilities. Traders need to let those probabilities play out by putting on as many higher probability trades as possible. The more trades you place, the more the probabilities will work themselves out over time risking just 2-to-5-percent of max risk per trade. He notes that the odds of going bankrupt on 5% in each trade is 1-in-3.49 billion.

Strategies: Du Plessis favors income generation strategies that incorporate selling implied volatility (IV) premium through debit and credit spreads ranging from single to multiple leg strategies from calendar spreads to butterflies and iron condors. He also likes to place volatility-based trades on impending catalysts with straddles. Du Plessis also focuses on very liquid options usually on benchmark indices, liquid ETFs and very liquid widely held S&P 500 stocks.  

Set-Ups: Underlying equity breakouts and breakdowns triggered by technical and fundamental catalysts are the types of set-ups. Based on the macro analysis, Du Plessis likes to devise spread strategies to capture premiums and or directional gains. Primarily, he scans for stocks with excessively high IV to structure premium generation strategies around key price levels.

Timeframes: Most set-ups are at least overnight to several weeks to months, especially the multi-leg spread trades. Long-term investors can also utilize the methods to generate income from existing stock positions as well as hedge portfolios with various index option strategies.

Option Alpha Trading Courses  

Option Alpha offers comprehensive trading courses for free and with registration and membership (similar to Motley Fool Options). The training material is very comprehensive and split up into modules and course levels from beginner to intermediate and advanced. Topics range from options basics to setting up iron condors and multi-leg spreads. I was very impressed by the depth and volume of content provided which is equivalent to courses charged by other sites for thousands. Their YouTube channel also contains lessons, testimonials and free podcasts to sample with new videos uploaded every few days to over 97,000 subscribers. Du Plessis operates a weekly podcast that members and users can register for the live session.

Trading Software  

Option Alpha offers their proprietary software Toolbox as an ADD-ON service that can analyze an options trade in “less than 18-seconds…”. The Toolbox enables scanning, back-testing and optimization of trades based on the lifetime license package.

The Toolbox LITE costs a one-time $47 fee for lifetime access. It enables access and software updates, watch list scanning and filtering and live weekly earnings calendar.

The Toolbox PLUS costs a one-time $497 fee for lifetime access. It includes all the LITE features plus options back-testing, unlimited strategy back-tests and real-time trade optimization.

Real-Time Alerts

While there is no chat room for the service, ELITE and PRO members have access to alerts and real-time posts of the trades that are executed. This really forces members to plan out and execute their own trades and not rely on piggybacking off Du Plessis. There are no short-cuts and members are responsible for their own executions. This is the best way to learn the methods and analysis.  

Is Option Alpha Right For You?

Option Alpha is ideal for all levels from beginners to advanced options traders. Swing traders are the best suited, but attention and access must still be given intra-day to manage volatility spikes with these strategies. Investors can also benefit from the strategies especially if holding a long-term portfolio of positions making it an ideal way of generating income to hold positions which can offset some of the headline and systemic risk.

The combination of training courses and real-time access to live trading makes it an excellent value from a learning standpoint to idea generation. There are two paid membership plans:

The PRO plan is $99-per month and includes daily e-mails and SMS trading alerts on live trades, nightly video review, access to current portfolio, member’s only forum and premium PDF trading guides and checklists. Prepaid annual billing available for a two-month $198 total savings.

The ELITE plan is $299-per month and includes everything in the PRO plan plus weekly live strategy calls, monthly live Q&A with Kirk Du Plessis, monthly live group coaching webinars, bonus training modules and HD recordings of all past event and priority support. Upgrades are available to LIFETIME membership for a $1,997 one-time payment.

The Option Alpha Toolbox software is a great add-on that users should consider once they get through the Intermediate course. The automatic pre-screen watch list and risk management tools are worth it. The probability and back-testing functionality is very useful for determining your risk and reward to determine what kind of sizing to use.

Pros   

• Lots of free tutorials just for registering an e-mail
• Solid trading courses for beginner, intermediate and advanced traders
• De Plessis is a great instructor with a knack of simplifying complex strategies
• Massive community of traders with over 47,000 registered to site and over 90,000 subscribers on their YouTube channel
• Solid risk management for income generation
• Strong Toolbox Add-On simplifies the scanning and management process
• Self-paced and engaging support teams

Cons

• Need level 3 options permissions for naked options trades
• Minimal technical analysis