#610 - If You're In College, You Should Already Be Trading

Episode of: The "Daily Call" From Option Alpha

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May 24, 20194m
#610 - If You're In College, You Should Already Be Trading
May 24 '194m
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Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why if you’re in college, you should already be trading. One of the passions that I have that I will probably explore at some point later in my life is a passion to actually teach very young kids, high school, college-age kids about finance and personal finance, investing, trading. I don’t feel like it’s something really being taught in the universities. Now, I went to a university and got a degree in finance and I learned about options pricing. I manually calculated options pricing, but we really didn’t do any serious trading. We really didn’t do any portfolio modeling or back-testing in that program and that’s really sad that actually, I went through that entire program and we really didn’t learn that much about actual active trading.

Now, if you’re in college right now or if you have a kid in college, my general opinion is you should be trading or teaching those children how to trade. That doesn’t mean that you should have these massive accounts and all of this risk. I think everything should be done on a very risk defined level, so everything is done with credit spreads, iron butterflies, iron condors, so you can control the risk and teach the mechanics. But the sooner that you start or the sooner your child starts trading, the longer time period they have to accumulate the required amount of trades and numbers to see this thing work out. One of the things that is really tough for me when people come into Option Alpha is that if somebody comes to Option Alpha and they’re at the later stage of their life, maybe they retired and really, they’re only going to be trading for another 10 or 15 years, that’s really tough because now, we’re starting much later in the game and you’ve got to get enough trade count up to see some success, it may not happen as soon as they expect.

My thought process on this is of course, like compounding of interest over time, the sooner that you start, the better off you’re going to be in the long-term and in many cases, many of these college kids that are coming out these days are just riddled with debt and student loans and so, that’s going to be a drag on them regardless. It would be great if they didn’t have to go through massive drawdowns in whatever money they save or invest on the process of paying off this debt and kind of stabilizing their lives. I think in many cases, it’s really tough these days to come out of college, have a lot of debt and then God forbid, we get hit with another black swan or market decline and what little money they’ve saved up and kind of put away now gets hit by 50% or 60% or 70% and they’re left stuck in an even deeper hole. Again, my thought process on this is kids or college students should absolutely be trading already. Don’t go crazy with it. They shouldn’t be doing these large trades, undefined risk, super risky trades. Do the very basics, the credit spreads, the iron condors, the iron butterflies. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

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