T O P

Hi Reddit, I’m Brian Overby, Senior Options Analyst for Ally Invest. I’ve been working in finance for over 25 years, and I’ll be here with Ally for the next hour to answer your questions about options trading for beginners. Time is money so let’s get started - AMA.

Hi Reddit, I’m Brian Overby, Senior Options Analyst for Ally Invest. I’ve been working in finance for over 25 years, and I’ll be here with Ally for the next hour to answer your questions about options trading for beginners. Time is money so let’s get started - AMA.

Dewrito

How much time do your co-workers spend on /r/wallstreetbets?


sugardaddy98765

Hi, Brian, thanks for doing this AMA! What would you suggest folks to do to prepare for the possible looming recession?


allyfinancial

Great question. Options were actually invented as a means of insurance on different investment products. So one of the easiest strategies is to buy protective puts on stocks in your current portfolio or use index put options to protect an entire portfolio. This “put” allows you the right to sell the stock at the strike price of the put, fixating your sell price no matter where the stock goes. For example of the stock is at $50 and you buy a put with a $45 strike price, this means if the stock goes below $45, you can put your stock to the seller of the option contract at $45 meaning the most you can lose on the stock is the difference between the strike price and the current stock price which, in this example, would be $5. This is similar to car insurance where you have a $500 deductible on your policy. If you crash your car, you only lose your deductible and the price you paid for the policy.


DialMMM

> the most you can lose on the stock is the difference between the strike price and the current stock price which Well, you are also out the cost of the put.


allyfinancial

You are right. It's like losing your car insurance deductible and the price you paid for the policy, which is the put.


[deleted]

Hello, thank you for doing this AMA! Is it true that with the advent of analytical algorithms and other computer-based technologies, investing as an individual is becoming less and less viable? Follow-up question: if individuals are increasingly a smaller portion of the investment market and more and more analysts are relying on software to make predictions about the market, are we not approaching a point in which there is a complete dehumanization of the stock market - a point at which computers will not only be analyzing but controlling the stock market?


[deleted]

I don't often say this, but the silence is alarming.


rollt22

Should I use my company’s Target date fund for my 401k?


esmereldazela

What are your thoughts on bitcoin?


etatdejouer

Do you recommend any good books on options trading?


allyfinancial

> Do you recommend any good books on options trading? Yes, I actually authored a top selling book on Amazon called "The Options Playbook". It's written in a way that's easy to understand whether your just getting started or are a veteran trader. Also you can check out the content for free at optionsplaybook.com.


ExoticaFox

Commenting to follow.


NotDereck

Are you guys hiring data analysts / jr data scientists? Would love a referral haha


ogrotrabajador

Have you ever ventured into r/WallStreetBets? IF so, please give us a professional opinion on how different your office/coworkers are compared to the... characters on r/WSB.


SerengetiLover

What do I need to know about starting some kind of investment account with ally? Would this be a good path for someone who's trying to making money off investments?


PalsgrafBlows

What’s the best option play to gamble my whole account on? Looking for a 10-bagger, but a triple up would be nice too. And don’t say JCP puts, I’m already neck-deep and wishing I bought more


Frankfusion

Bitcoin, should we invest in it and other crypto currencies, and how do we go about it?


throwaway__official

What is your philosophy for dividend vs growth stocks? Which does Ally direct itself towards and which do you direct yourself towards.


The_Wolf_Pack

What are your reccomendations for a novice who wants to learn the the ins and outs?


allyfinancial

> What are your reccomendations for a novice who wants to learn the the ins and outs? In general I have found that option traders love in person meet up groups. There are sites online you can search for in your area of the country. Other good recommendations include books such as the one I authored called “The Options Playbook”. Also, videos could be a great way to learn and you can find some good ones on YouTube. We have some ourselves but there’s plenty of good ones to choose from.


[deleted]

I am a college student What do you suggest I invest in?


DJRoxxic

Do you have any good resources to help with teaching someone how to invest?


breathe393

You hiring software engineers? :) Primarily a backend guy with rails experience, but also comfortable with mobile (iOS and React native)


critical2210

How does market recessions affect the options market?


allyfinancial

> How does market recessions affect the options market? This is a great question. Options are priced much the same as insurance products. The price of an options is even referred to as the premium just like when you pay your home owners insurance. When disasters are on the way, the premiums go up. This will be true of the options market. If a recession is on the horizon, you will pay more to buy puts and calls because of the potential volatility in the marketplace the recession could create.


[deleted]

Some of the most fun trading I ever did was VIX options through the 2011 grexit. Shorted a straddle after the spike as vol decreased, made out like a bandit. I worked on BLKs trading floor in lending, but it wasn't ever as interesting as my options days. Unfortunately nowadays, you have to be a quant to work on the institutional side, and I was always just shy on my math/programming skills. R is an awesome tool though. Sorry I'm just having some nostalgia.


Incubus910

Do you trade options or hold & execute them for their value? Or is this strategy a case by case decision? Do you ever trade options around earnings season, or generally do you stay away? I’ve made great money trading options around earnings. I’ve also lost great money trading options around earnings. Isn’t it simply a gamble?


allyfinancial

> Do you trade options or hold & execute them for their value? Or is this strategy a case by case decision? > > Do you ever trade options around earnings season, or generally do you stay away? > > I’ve made great money trading options around earnings. I’ve also lost great money trading options around earnings. > > Isn’t it simply a gamble? To your first question, yes this is a case by case decision. To your second question, yes, I do trade options around earnings because generally that’s a time the stock moves and yes, I have also made and lost money around earnings. Is it a gamble? It can be. It’s all about your mindset when trading options. They can be used to speculate. They can be used to invest. And they can be used to enhance a portfolio. The biggest thing is to spend the time to learn and understand why you are trading them in the first place – to speculate, invest or enhance.


Incubus910

Thanks for the answer. Disney Q3 got me good 🤦🏼‍♂️🤦🏼‍♂️🤦🏼‍♂️


caboshrimptaco

Is there any hope for my 302 SPY calls expiring Friday? Do you think tariff man will call it off by then?


ticktocktoe

Obviously predictive and statistical modeling has been an integral part of trading for a long time - what are some of the more recent innovations and strides in machine learning that have made impacts on the way people trade options?


pbtrooper

How risky is options trading?


Lone_Logan

We all know that pee is stored in the balls, but where is the best place to store long term financial assets in a market hinting towards recession? Thanks in advanced.


marco918

Wouldn’t the typical person on this thread who isn’t a retail or institutional (ie expert) investor be better staying away from options and stick to passive strategies such as investing in index funds?


kustamakari

What is options trading and why should I begin doing it?


allyfinancial

The reason you want to learn about options is that it’s possible to profit whether stocks are going up, down, or sideways. You can use options to cut losses, protect gains, and control large chunks of stock with a relatively small cash outlay. Options can be used to design your outlook for a stock to be profitable no matter where the stock is going next. Also, you can use options to enhance your current stock portfolio – ie a mix of both stocks and options. There’s something called a “put” option which you could use to protect a stock position against a downward market movement. This strategy is called a Protective Put. Also, you can sell a “call” option to generate income on stocks that you currently own. This strategy is called a Covered Call. This is just the tip of the iceberg as to your question on why options.


rubic

How many times have you told someone: *"You have no business trading in options?"* This is not a snark, nor a hypothetical question. (I know several people who have no business playing in the options arena.)


allyfinancial

> How many times have you told someone: "You have no business trading in options?" > > This is not a snark, nor a hypothetical question. (I know several people who have no business playing in the options The non-snarky reply is that it depends on how option trading is being used. If you’re using options purely for speculation, then your statement may apply. For example, only buying out-of-the-money calls and puts to speculate on stock price movement. However, options can be used to reduce risk and this is the way they were first intended to be used. If options are being used to enhance your portfolio of stocks then option trading may be appropriate to everyone. I outlined this in more detail in this article titled “The top 10 mistakes option traders make”. You can check it out at https://www.ally.com/do-it-right/investing/top-10-option-trading-mistakes/.


i_jlp_you

What are the best options for investing at 19 knowing that I have absolutely no idea what I’m doing with my investing money? I’ve researched many different methods (CD, mutual fund, etc.) but I’m still scared to take the leap into one of them.


onestop77

Hello, Thanks for your time! What's the best way to invest about 100k I have in savings? Thanks


RenaR0se

What should someone with little money and no understanding of investing do aside from putting money in the bank?


Austamos

How do you feel about gaming?


NlELLO

Will ally be bringing a cash back credit card back any time soon?


biigsnook

Where do I go to buy stock of a company I like and what is the smallest dollar amount that a person can start with? Please be specific.


mdeangelo331

If you have $400k invested but live at home, would you buy a property out right or put down 20% and leave the rest invested? Or rent?


fyxsius

Hi Brian, I’m a graduate with enormous student debt. Currently around $120,000. Half of it is subsidized while the other half is through a private education loan from Wells Fargo. What is the best way to pay this down while not breaking the bank? Should I look into anything to help myself in the long run as I attempt to pay nearly $1400 a month which leaves me with little excess cash outside of monthly bills? Should I just sell my kidneys instead?


Jo123412341234

Any good ways for a member of the army national guard with low credit get aproved for a homelone?


mfegert10

What is the best strategy to get your feet wet in options?


allyfinancial

Option trading is more complicated than trading stock. And for a first-timer, it can be a little intimidating. That’s why many investors decide to begin trading options by buying short-term calls. Especially out-of-the-money calls (strike price above the stock price), since they seem to follow a familiar pattern: buy low, sell high. But for most investors, buying out-of-the-money short-term calls is probably not the best way to start trading options. Maybe use options to enhance stocks that you currently own. Instead of buying those options, find a stock you wouldn’t mind selling and sell a covered call on that stock. This means if the stock gets to that price, the owner of the call can call the stock away from you. By selling the call, you get paid for saying that you will sell the stock if the price of the stock goes higher. So you are using options to reduce the risk of owning the stock outright. This is a great place to start trading options. Good luck to you!


oliverb33

Hi - what is open interest and why is it important?


allyfinancial

As opposed to stocks, which have a fixed number of shares outstanding, there’s no minimum or maximum number of option contracts that can exist for any given underlying stock. There will simply be as many option contracts as trader demand dictates. They track this by posting the open interest for a specific option contract. Remember: whenever you trade an option contract, you might be creating a brand-new position (opening) or liquidating an existing one (closing). That’s why whenever you enter an option order, it’s not good enough to simply say “buy” or “sell” as you would with a stock. You need to specify whether you are buying or selling “to open” or “to close” your position. In other words, options aren’t necessarily hot potatoes that get passed around and wind up in someone’s hands at expiration. Someone needs to look at the big picture and keep track of the overall number of outstanding option contracts in the marketplace. If an option contract has more open interest it means that more people are trading that option. This can mean that there is more liquidity in the market which can lead to tighter bid-ask spreads (which is a good thing). So the more open interest, the better it is for the individual trading the option.


mtc0913

Can you please help me get hired at Ally?


ashley419

As someone with absolutely no knowldedge whatsoever, where/how do i get started?


allyfinancial

In general I have found that option traders love in person meet up groups. There are sites online you can search for in your area of the country. Other good recommendations include books such as the one I authored called “The Options Playbook”. Also, videos could be a great way to learn and you can find some good ones on YouTube. We have some ourselves but there’s plenty of good ones to choose from.


mikfishfilet

I'm looking to be a business analyst in the future after college, so as far as being an analyst, what skills or experience would you say helps to secure your spot as an analyst?


cloud_throw

Why does Ally not use multi-factor authentication in this day and age? This seriously has me considering closing my accounts and moving to a bank that has a more modern security posture.


Tartwhore

I notice you only answered one question. Are we not worth your time?


AutoModerator

Users, please be wary of proof. You are welcome to ask for more proof if you find it insufficient. OP, if you need any help, please message the mods [here](http://www.reddit.com/message/compose?to=%2Fr%2Fiama&subject=&message=). Thank you! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/IAmA) if you have any questions or concerns.*


BlazeTiberius

With a looming recession, is now a good time to get into stock investing? What would you invest in?


AutoModerator

Users, please be wary of proof. You are welcome to ask for more proof if you find it insufficient. OP, if you need any help, please message the mods [here](http://www.reddit.com/message/compose?to=%2Fr%2Fiama&subject=&message=). Thank you! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/IAmA) if you have any questions or concerns.*


Mrs_Hillary_Clinton

If you so smart, why you so poor?


Atoms4Seneca

Is Ally Invest really paying clients to borrow their stock for short sale? That seems unethical. What am I missing?