I think the real answer is, I fell in options trading almost on purpose because when I was a kid, I grew up in a very great household. My parents were amazing parents. I’ve never taken anything away from them. But the only downside is my parents were both in the same industry all the time. So they worked in the same industry. And so because they worked in the same industry, our income as a family would fluctuate like crazy. And we’re talking like crazy volatility.
I could tell as a kid, and seven years would be really, really bad, and I can tell as a kid. And they just had no choice. I mean, there’s no optionality in their life, it was either really good or really bad. And so I guess you could say like, by default, like subconsciously, I just now avoid as much volatility as humanly possible. So when I started actually trading, I started trading and did all of the normal things that people do.
I tried to do stocks, trying to do day trading, trying futures, I babysat Forex trades all night. And like, what I ultimately ended up in was the situation, subconsciously, that I’ve been in my entire life, which is lots and lots of volatility with no real insight. And so I think because I understand the mathematics behind options, and it felt like, at least initially, and what kind of like led me down the path, was it felt like I had more control over what I was doing. It wasn’t just like whimsically throwing money into something that I didn’t understand. So my path to options trading started that way, to try to understand, okay, “How do I gain a real edge in the market? And if I gain an edge, if there is, like, how do I get better at doing that?” And you know, fast forward 11 years now, I’ve been doing this, and that’s still the mission I’m on is to figure that out, or do a better job, guess.
Robert Leonard 3:35
I’m guessing your parents weren’t options traders.
Kirk Du Plessis 3:38
No. They were not options traders, they were in the mortgage business. So if mortgages were really good, it was really good. And if mortgages were really bad, it was really bad. And I know that now. And I didn’t learn that until, I mean, like, literally six months ago. It’s like, “Holy crap! My entire life has been like just this avoidance of volatility.” And it’s, you know, spurred in everything I do.
Robert Leonard 3:56
In one of your recent podcast episodes, you talked about how investors should get started investing with options early in their careers, even if they’re brand new. Talk to us about that idea a little bit. That really piqued my interest. Because even though I trade options myself, I never would have thought to recommend that to someone who is a new investor. And so I’d love to hear why you think that is.
Kirk Du Plessis 4:16
To me, it’s really easy. Because look, if I believe that options are one of the supreme ways in which you can control risk, control your investment, take a non-directional or, you know, multi-directional approach to the markets. And why wouldn’t I think that somebody should start it early, right? Like, I think about my kids, and our youngest daughter, she just actually started kindergarten today, literally, today when we’re recording this. But you know, she had an interest a couple of months ago in real estate. So like, my wife does all the real estate buying for us.
We had a handful of rental properties. And my daughter had an interest in it and I could have just said, ‘Well, you know, it’s like a grown-up thing. You know, like, you’ll do it later on.” I thought to myself, like, “That’s a stupid response. And like so ignorant. Like, why can’t she start learning about this, even on her level right now? Like, why can’t she take some money from her piggy bank and start to like, invest it into like a property?” So she actually helped us buy a property and she put $22.13 and now every month in the mail, like we secretly, and if she listens to this later on, I’ll be totally found out… We secretly put $1 in the, you know, the mailbox, and it’s in an envelope and it says Molly on it. So she understands like those mechanics of how you should do it.
So to get back to the real question, I think that if you’re a beginner trader, you have so much time ahead of you. It would only work to your benefit to start trading early. Because if you can learn the mechanics now, while you don’t have your life to gamble with, then you’ll be much better equipped in the future when you actually have a family. And it matters when you have kids and it matters if you blow up your account or not. And you know, a lot of people like they get into options trading late, and they don’t realize that they’re literally on borrowed time. If you get into options trading in your, you know, 60 or 70 years old, no disrespect, but it’s just that you don’t have that much time left, you know? And so like, the quicker you can get started, the easier it will be for you to increase your trade count, which ultimately helps with your ability to generate successful income. So I think the earliest you can start like all investing, the better.
Robert Leonard 6:09
And if you do blow up your account, it’s likely smaller when you’re just getting started than it is 30 years into your investing career.
Kirk Du Plessis 6:15
Yeah, I would hope it would hurt just as much. Honestly, like, I would hope it would hurt your ego just as much so you understand what that feels like. But at the same time, if you blow up a $1,000 account, which should not be the mission and goal to like, you know, rodeo cowboy this thing and throw $1,000 in and just play. But you should have some sort of system and process in place and learn how the mechanics and the process, and how the mechanisms of the market work. And what better way to do it than to jumping into options trading, which you can do on a much more controlled and risk-defined basis. So I think when people say, “Well, you should start with stocks.” Well, you know, tell me that to someone who invested in Tesla six months ago, and Tesla’s totally tanked, right? Like they lost probably just as much money in Tesla as they could ever have lost in a simple options strategy with defined risk.
Robert Leonard 6:57
And if you can’t trade a small account, then having big accounts is not going to help you either, right?
Kirk Du Plessis 7:02
Never going to help. Yeah, I was going to say… I love saying that, like people always think that money is the issue. If they only had more money to trade, and I always tell people like a bigger account is just going to be a recipe for you losing money faster. So that’s why I actually hate when people start with a little amount and they literally email and they say, “Well, I’m just gonna try it out. I’m just going to gamble.” They don’t say gamble. It’s just code words, things like I’m going to try strategies, I’m going to, you know, see what works for me, I’m going to test some things out. It’s all code word for gamble. And I usually just tell people like quit while you’re ahead, because you’re basically just, you know, setting yourself up psychologically for failure already.
Robert Leonard 7:35
So how can a millennial exactly generate cash flow from options while also protecting their downside risk?
Kirk Du Plessis 7:42
Well, I don’t think you can ever protect your downside risk. I think you can manage your downside risk. So the only way to protect downside risk is to stay in cash, and even in cash, you’re going to lose money to inflation. So I think the beauty of options allows you to take what little capital you have, and more effectively spread that capital, and diversify that capital. And so if I look at somebody who just blindly invests in the SPX, or the SPY, or you know, some index, but there are so many other things that you could do beyond just the market to improve your likelihood of success.
I mean, many people have shown that even like a simple 60-40 bond portfolio that balances at the right time or use even like a very simple momentum strategy, can crush the market. So okay, so now we’re just ahead by just using some simple, you know, momentum and timing factors to improve our performance, something you can do once a month. So now, why not try to use capital more efficiently, you know, use an options strategy that would replicate most of the stock, if not all of the stock, without all of the capital that’s required to purchase stock out. I think it’s a much better use of your time.
Robert Leonard 8:40
Can you give an example of a specific strategy or trade maybe that a millennial could put on?
Kirk Du Plessis 8:45
Yeah, I think if you’re starting, the best place to start is with spreads. Because it’s defined risk, defined profit. So everything you do with a spread, you know exactly what you’re getting yourself into, there’s no guesswork involved. And really, it’s all defined math, and you know how much you can make, you know how much you can lose, and you know the probability of success. So to me, that’s the best way you can start. Like, there’s no out for you on that if you overallocate, like, if you invest too much money, that’s on you.
If you’re just like wildly gambling, and you know you have a low probability of winning, but you’re trying to go for that home run, and it doesn’t work out, that’s on you. So I think that it allows people to learn how things really function very quickly. So if you’re starting young, if you’re a millennial, if you’re just getting into this, you probably want to focus on spreads, because they can control risk so much better. And so to me, I think spreads are an easy way to do it because everything’s defined. It’s knowable, there’s no unknown factors, like margin fluctuations, and it makes a lot easier for somebody starting out.
Robert Leonard 9:40
For those who might be new to options trading, can you explain where the odds or probabilities come from?
Kirk Du Plessis 9:46
Yeah, so in options trading, it’s much different than a stock, because at a regular stock trade, everything that is known obviously about the stock, or is expected about the stock, is priced in. And there’s only one choice with a stock trade, you either buy the stock at the current price, or you sell the stock at the current price. There’s no future movement. You can’t buy the stock prematurely at a future price, and someday. Everything’s done on a cash basis rght now. With options contracts, options contracts entertain two additional elements that make it more confusing and a little bit more complex to calculate, though, can be done.
The two additional elements are time. So option contracts can have various timelines, no different than when you buy insurance for your car or your house. You can write a policy or buy an insurance policy for six months, or a year or two years. Even my life insurance policies, there are 20-year terms, or 10-year terms. So the longer that you buy protection, the more expensive generally the contracts become. And that’s because they’re capturing a longer time period.
The second element that introduces a little bit of complexity into option pricing is the idea of strike prices. So strike prices, like we already talked about, our example, can be wildly different than what the stock is actually trading out right now. So if the stock is trading at $100, you could strike a deal. And that’s why I usually like to refer to the strike price as you striking deal with the other party at a price point that is much higher than where the stock is trading now, or much lower than where the stock is trading. So now that we have these two additional elements that are kind of baked into option pricing, we now have some sort of time factor. So how far out is the contract until it expires. And then we have a strike price, which is how high or low you know, or how much higher or below the stock price is the strike price of the option contract, like where it actually kicks in and starts to make money or lose money or whatever.
Now we have these two elements, we need to bring them all together in some sort of expectation of how volatile the stock is going to be. And so this is really where the probabilities are derived from. And they’re derived from market participants, actually. So like when people always ask, like, “Who comes up with volatility?” Volatility is a function of market participants. So the more active people buy or sell contracts, or more actively bid up the price of a contract or not, determines how likely they expect the stock to move in the future.
And I always tell people that the good analogy of this is like, let’s say you’re buying a piece of property, and you think that there’s gold beneath that property, like you don’t know for sure, but you think that there’s gold beneath that house. So you’re probably more willing to pay for that house, maybe even above and beyond its asking price, because you’re so confident that there’s something beneath the surface. You don’t know for sure but you expect something. And that’s a case of high volatility, because either you’re going to be really, really right, or you’re going to be really, really wrong.
We actually see this a lot heading into an earnings event, where stock volatility will start to go up, people expect a big move because there’s an earnings event coming up. And they don’t know which direction the stocks is going to move, but they expect it to move in either a big upward move or a big downward move to reprice after earnings. So that’s where this volatility kind of factor comes in.
And once we figure out how much people think the stock is going to move, again, just simply apply simple statistics and probabilities to say, “Look, there’s a 70% chance that the stock gets to this level, based on what people think right now. Or an 80% chance that it gets to this level, based on what people you know, think and how they’re trading right now.” So it’s a tricky subject, for sure. But it’s not overly complicated that it couldn’t be understood. But that’s where it comes from. It comes from option pricing.
Robert Leonard 13:11
And you have to trade enough times to let that probability play out because just trading one time, two times, you might get lucky or you might get unlucky. But you have to really trade over a significant number of times in order to let those probabilities play out to their true potential. And actually, you know, if you have a 70% chance of being right, the price staying above a certain amount in that being a 70% chance, you actually have to trade that option enough times to let that actually take place. Correct?
Kirk Du Plessis 13:36
Yeah, I mean, I think it’s one of the things that absolutely fascinates me about just human psychology and behavior as an investor, is this idea that a future expectation, and future probability will play out after 10 occurrences. And I always challenge people on this, like, if I was flipping a coin with you… so me and you are flipping a coin. And I tell you that this is a fair coin, like it’s 50% heads and 50% tails, you would agree with me, right? Like you’d say, “Yeah, that’s a fair heads and tails coin.”
So I flip the coin five times in a row and lands on five heads. Now what a trader would do in a situation, right, if they were trading, you know, 50% chance of success trading and they lost five times in a row, they’d be like, “That’s it. Markets are rigged. This is a scam, you’re a scam, this whole thing is a scam. I knew it. I knew this stuff was like totally bogus.” You know, you cannot even judge anything until you’ve had a couple hundred trades under your belt. I mean, really, realistically, you know, 10 trades isn’t going to do it. 50 not a hundred, you might get lucky.
Knowing that going into it should change and shift people’s perspective on trading, you know, like, if you know, you’ve got to get to say 500 trades, well, now it becomes a game of surviving, like making sure that somewhere, randomly, in that string of 500 trades, you don’t let something knock you out, like don’t overallocate. Don’t be one-directional. I need to get to 500 trades, you know, let this thing really work out.
Robert Leonard 14:56
Yeah. And that goes back to having realistic expectations, which is something that I always like to talk about, because I think if you go into investing, whether it be options, or stocks or anything really in the markets, if you have unrealistic expectations, that plays into human psychology, and that leads to bad investment decisions. So I want to talk about Warren Buffett. He’s obviously very famous for his value investing, but he’s also a really big investor in options. But that gets very little coverage in relation to his value picks. Why do you think options trading gets relatively little coverage compared to other strategies? And why do you think more investors don’t invest in options?
Kirk Du Plessis 15:32
You know, I think Buffett’s a wonderful case study for many different reasons. When you look at the businesses he’s in, and you actually go through and read the 10-Ks and the 10-Qs, which are all public information anyway. So anybody can do this on Berkshire, anyway. He deliberately talks about the value that is inherent in insurance business. And then therefore he’s got sections when he started selling the option premium, no different than what you or me should be doing generally as investors as well.
He talks about the inherent premium that’s embedded in volatility and the overpricing in volatility. It’s like black and white, it’s right there in his 10-Ks and 10-Qs. He talks about, you know, the implied volatility premium and why we’re doing this. And so, if you look at him as an investor, his biggest stakes and companies are insurance, all he’s doing is selling option contracts. An insurance contract is no different than selling an option contract. Different underlying assets, same mechanics go into play. And so I would argue that his actions being in the insurance business therefore definitely make him, if not the biggest, one of the biggest that ever walked the face of the planet, option sellers and pure option sellers, and look at how successful he’s been, generally, in doing that.
Robert Leonard 16:40
Why do you think that doesn’t get more coverage?
Kirk Du Plessis 16:43
I don’t think it’s attractive. I think it’s complex to some degree. I think it’s easier to talk about Buffett’s investment in Apple. It’s hard to dissect options trading in a 15-minute segment on Warren Buffett. I mean, it’s a very interesting concept of why people don’t look at that business a little bit differently. But he’s a big proponent of the insurance business for very much the same reasons why I love the options business that I’ve studied.
Robert Leonard 17:06
I’m surprised that you know, and I certainly haven’t listened to every question that’s ever been asked at a Berkshire meeting. But the ones that I have listened to, there are rarely questions about options. And that kind of surprises me.
Kirk Du Plessis 17:16
I think what surprises me is that when he did a big investment, I forget if it was in 2007, or 2008. But he wrote basically like $5 billion worth of options contracts on major indexes. And so to me, a five and a B, a $5 billion worth of options contracts is worthy of a mention, but you didn’t really see it anywhere. In fact, it was like very loosely written about. Some bloggers wrote about it, some other investing publications picked it up. But otherwise, it was very loosely written. And that was, you know, at the height of high volatility market collapse. And here he is walking in doing what many people would say you should never do. It looks like that trades are going to pay out handsomely.
Robert Leonard 17:51
In news headlines, you know, seeing options trading, and although that doesn’t sell as good as seeing Buffett and Apple in the headlines.
Kirk Du Plessis 17:58
Robert Leonard 17:59
You know, interestingly though, he hasn’t and his predecessor, Ben Graham, neither of them have talked about options trading in any of their books, either, which I found really interesting.
Kirk Du Plessis 18:08
Well, he does in the sense that he’s called them weapons of mass destruction, which would be the first question I would ask him. And they talked about the insurance business, the flow model of insurance, collecting premiums, being able to invest those premiums and cover losses and damages, and all of the investing concepts that make you know, regular investing, so uninteresting that it’s just coated in insurance. So if you replace insurance, pretty much, all of their conversations can easily be replicated with just options health.
Robert Leonard 18:36
So what is the popular myth or misconception about options trading that you’d like to debunk? And why do you think it exists? What is the actual truth?
Kirk Du Plessis 18:45
I have to continuously struggle and break people down to some degree to reframe how they think about trading. And it’s mostly because people get into options trading, assuming that it’s a quick win and a quick buck. It’s just not, it couldn’t be further from the truth. Now, could you make money quickly with option contracts? Yes, but that’s all gambling. So you could make money quickly going into casinos. So I think the biggest myth, is this idea that you can make money quickly. I would say the second one behind that is that if it works, and why doesn’t everyone do it? And like, why is this edge still persistent?
That I think is actually a really interesting question. And a question I’m so glad that a lot of people ask, because a lot of people will go through our free training and courses and they’ll say, “Kirk, all this stuff makes sense. I see that there’s an edge and selling options. But why on earth is this still here, right?” If there’s an edge, the market should be able to, you know, close that edge, if there’s an arbitrage opportunity, the market should be able to squash that and capture that. Option contracts do something that is impossible to to at this point, right? They factor in the future. And because they have to guess with where the future is going to be like how far stock may or may not move in six months, which is still completely unknowable.
I mean, I don’t know if anything that can predict the future yet, if something were to come up, that could predict the future, it would totally crush options trading for sure. Until that day, because the future is unknowable, an edge in selling premium and volatility will always be there. The sheer fact that there is an unknowable force that could move the market at any moment creates a little bit of panic, like a hurricane, like we don’t know what’s going to hit, but we kind of think it might hit, and they’re willing to offset risk in order to protect themselves. And so that creates an opportunity. And so now, the thing is, the most beautiful thing about options trading, that really a lot of other investing vehicles don’t have, is they have this very defined edge. That’s not going away anytime soon, the catalyst will change. Before it was terrorism attacks and it was the Fed and like in the future, it’ll be something else. But that is a huge advantage for traders.
Robert Leonard 20:43
So how would somebody…you know, with the internet, there’s obviously so much information out there. And you’re saying that options are not a way to get rich quick, which I completely agree with. But then there’s also a lot of gurus out there, who are trying to sell courses and all this other material, saying that options is a great way to get rich quick. How can people know what’s really a trustworthy resource? And how do they know what to really look for?
Kirk Du Plessis 21:07
I mean, look, it’s like mostly smell test stuff that smells bad, it probably is bad. There’s really no like getting around it. So to me, I think most of it is a small test. I mean, look, at some point, if you get promised 50% returns per week, at that compounding rate, you would own the world in a couple of years, you know, and it just doesn’t make logical sense when you actually take it to its nth degree.
Robert Leonard 21:29
I completely love that example because it’s so true. When you look at it on the surface, you’re like, you get really excited. But when you actually run up the numbers, like you said, you’ll own the world in a couple of years, which obviously doesn’t make sense. I also like to think about it in the sense of how is this person making their money, you know? If they’re making all of their money from selling courses, you might not want to take options trading advice from them, or stock trading, or whatever it is, you probably want to take advice from somebody that’s doing that just because they want to help people, not because that’s their main source of income, you know. You probably want to listen to some that actually made money trading options or stocks or whatever it may be, not from those courses.
Kirk Du Plessis 22:05
I do have a different opinion on that. To some degree, that’s totally true. I do think there are good people out there who if they have a course, and if they have something to say, and they value their time, and they want to charge for it, then no problem, right? Do enough digging to understand who you’re really working with and what their presence is online.
Robert Leonard 22:25
Now, I want to talk about your entrepreneurial ventures. Can you talk to us about your strategy? Why do you give away a lot of your content for free rather than charging for it?
Kirk Du Plessis 22:34
I think it naturally just developed. So I don’t think it was a foregone conclusion like I didn’t start it and say, “Okay, I’m going to run this business model. And I’m going to, you know, run Option Alpha this way.” It was very much something that evolved over time. And so when I started what was the beginnings of Option Alpha, it was just literally a Google blog. And when I started trading at home, I needed some outlet to get my thoughts on paper, because I was also paranoid about going back and reviewing my own psychology, like what did I think that time six months ago when this happened?
And I still do that. I like to hear what I say and like how I have transitioned in thinking and how I’ve matured and evolved as an investor. And so much of Option Alpha started that way where I was just writing out on Google on like, a Google blogspot. And I started getting comments and people asking questions. And frankly, I was very selfish, and I didn’t like to answer the same question twice. Now that was inefficient.
And so I started putting up a couple videos that would explain it better than me typing it out on email. And for some reason, somebody just said, “Look, you know, you got all these videos, like, why don’t you put together just a quick little course on options, basics, or something like that.” And so, it very much evolved that way. We’re just totally, like selfish in the sense, I want to give away a lot of stuff, but eventually what happened in Option Alpha was one, I think that this market is— it’s funny with traders and investors, you know, like, we want to do better, but we need a safe space to learn because we don’t want to look like idiots. Like, my self-sabotaging belief is that I’m not good enough.
So like, as a result, I have to overcome that by trying to do things perfectly. And I know that mentality because I don’t want to ever put myself out there. And I don’t feel like I’m you know, good enough. I don’t do that as much now because now I can openly talk about all this stuff and I understand myself a lot better.
But I think traders and investors needed a safe space. And to me, Option Alpha was that safe space where you could ask, you know, questions and get responses. And over time, it basically evolved into, you know, an area where I saw people starting to have a real need for education. So I really doubled down on it basically, in 2013, basically, right before my daughter was born, she was the catalyst. And I didn’t want her to ever feel like I didn’t put in enough effort and wasn’t a good role model for her that back, that whole not good enough concept, right? Like, didn’t want her to not think I was good enough. And so I doubled down on it.
And when I eventually learned in doing that, with like giving out free education and training, man, there’s this huge crowdsourced opportunity to really not only build an incredible business around this. So you know, you can take yourself back to 2013 or 2012. Even today, there’s not that much research on options. I mean, there’s a couple little white papers here and there from a couple places, AQR, CBOE has put up a couple papers, not a lot of research on option strategies. There’s research on individual little tweaks, but not broad-ranging strategies that you can use. And so my first thought was, okay, how can I figure out a way to, you know, run this blog and keep this thing alive, basically, with servers and emails, and keep people happy, but at the same time, take what revenue we are generating, and reinvest that back into research that would be self fulfilling to me. Like I would want to know the answers too.
And so what we’ve effectively done over the last 10 plus years now is done that basic cycle. So all the revenue that we take in, we spend almost no money on ads, and I tell you, like almost no money. I think we literally spend $22 a month if that on advertising. I mean, you think about that in the context of online media and stuff. We don’t spend any on Google ads, we don’t spend any on Facebook, nothing on Twitter, nothing on Instagram, nothing. It’s all word of mouth. So every dollar that we make, we just reinvest that in a better technology, better research. And then we just push that back out to the community.
Robert Leonard 26:07
I think it’s so important to understand when listening to this, if you’re interested in starting a business, that you don’t necessarily have to know exactly where you’re going, you just need to get started. You know, like I said, you didn’t know where you’re going in 10 years. Facebook didn’t know, you know, when Mark Zuckerberg started Facebook in his dorm room, he didn’t know that it was going to turn into the advertising powerhouse that it is today. He just thought he was creating a social network website where his friends could connect with one another. He didn’t know what he was building. So when you’re starting a business and entrepreneurship, you don’t necessarily have to plan that you’re going to be a billion-dollar company, you just have to get started. What is your team at Option Alpha look like now? How did it evolve?
Kirk Du Plessis 26:42
So we’ve got 18 full time people right now. Most of that is development work. We have great support, customer success team, that helps out with people and then just, you know, team members to do podcasts, videos, and editors. And, you know, it’s evolved. I mean, it’s definitely… We were at a junction last year where we had to make some really big decisions on how we wanted to invest kind of our war chest of capital and what we wanted to do, and I think it’s going to pay off, you know, wildly well for everyone.
Robert Leonard 27:08
So throughout this journey, throughout the last decade, what have been some of the biggest lessons or principles that you’ve learned while launching your business that millennial investors can learn from if they’re interested in starting their own business?
Kirk Du Plessis 27:20
Yeah, I think the biggest one, again, is like to take your time and just go slow with it. I would encourage people to go real slow, actually, I think that kind of like breaks the mold in that…. You know, a lot of people right now, and this is just maybe the time that we’re in is so fast, fast, fast, Gotta go fast to market, everything’s fast to market, raise a bunch of capital, raise a bunch of debt, get your name out there. A
nd then basically just see if it sticks, right? I’m more of a fan of talk to one person, see what their problem is, then talk to two people and see if they have the same problem, right, and investing. And this is what effectively, we’ve done over the last couple years, like the same questions and problems 200 times a day. So because we’ve taken our time to build a community now, slowly, we continuously hear the same problems. And when we hear the same problem over and over again, we try to solve it. If we can solve it, we push it out. And then guess what? We get new problems. So if you work your business that way, I think you will grow a more stable, sustainable, powerful, like, you know, community-changing business, than if you were to try to rush things.
Robert Leonard 28:25
From a human psychology perspective, how can somebody get over that hurdle? You know, they might have friends who are starting a startup, and they’re getting funding or doing all this crazy stuff that’s popular right now. Or maybe they just read the headlines, and they feel envious, or they have FOMO, the fear of missing out. How can somebody just overcome that mental hurdle to just do what you’re saying? Because I completely agree with you on that strategy. But that’s tough. For a lot of people.
Kirk Du Plessis 28:49
I’ve always had a much slower cadence for how things should go, right. And I don’t rush things. You know, when I think about just like psychology and mental toughness, whatever you want to call it, emotional awareness, I envision what I think it’s going to be in the future. And then I just start slowly chipping away at it. Like I know where Option Alpha is going to be in three years. I can see it in my mind, I have really good vision, and I know where I’m going to be when I’m trading. I know what my life is going to be with my family and what I expect it to be.
And I start slowly chipping away at it, knowing that I’m going to get there. It’s a foregone conclusion that I’ll be where I want to be. I just have to slowly chip away at it and you know, start to make progress. And I think people think about success differently in that they think that they have to build up to some success level in the future. And to me, that means that they force themselves to do things at a faster pace, like “I’ve got to build all this stuff like really, really fast.” But you don’t, you can just slowly peel away the layers of what eventually will become your business. So I think people just… They feel like a sense of urgency and this need to build something so quickly versus creating something that has more staying power.
Robert Leonard 29:57
Well, there’s so many things these days that are telling us the exact opposite, like UberEats, right? If you want food, you have instant gratification, you’ll have the food to you in 10-15 minutes. Or just Uber in general, you can have a car on demand, or Netflix, or all of these different things we have in our cell phones that can just provide instant gratification these days. And I think that that’s been ingrained in so many people’s heads that when it comes to business entrepreneurship, they just want instant gratification. And in order to do that, you need scale, and you need to grow quickly.
Kirk Du Plessis 30:27
I think there are businesses where like, you have an opportunity and your opportunities to… You have to just go for it right and you kind of go all in, but I’m just not that type of person. I would never raise capital to do that, knowing that there’s a high likelihood that I will fail, and I’m going to lose everyone’s money. Like, that’s just not my personality. So and then maybe that circles back to like my childhood and how it’s like I want to have a choice. Like I think your life should have options, not just options trading, like I think you should have options. And so running a business too quickly and over-stretching yourself in many different ways, like, you know, operational or leverage wise, you know, scale-wise, it’s just a recipe for disaster. I mean, the ones that we see are successful, we don’t see the thousands that tried and failed, you know. And so I think if you looked at the success rate of somebody who built a business slowly, over time, it’s probably much better than somebody who, you know, ran and scaled it up to a unicorn. That’s one in a million.
Robert Leonard 31:21
It’s so interesting that you’re saying this to me because when I first learned options, I thought it was this high-flying, super risky type strategy. So to hear somebody like you, who’s one of the big faces of options trading, and you know, we’ve gotten to know each other a little bit over the recent past. And it’s so interesting that it’s the complete opposite of what I expected. Whether it be about options, trading, or entrepreneurship, what is the number one piece of advice that you’d give to a millennial who has just a few thousand dollars that wants to invest in building an asset that will generate cash for them?
Kirk Du Plessis 31:54
I think you should be diversified in whatever you do. So if you’re going to build a cash flow, like don’t have one source of income. That’s where 99% of people’s problems come from, they lose their job, they lose their income. So like we already know, having two sources of income is better than one. So as you start to invest, invest in a multitude of different asset classes that would help you diversify your income. Number two is, don’t let anything become your sole source of income in that diversification stream. So even if you diversify, and you have some money in real estate, or some money in stocks, or some in options, you should have small positions in everything. So you know, like that would be my biggest takeaways is like, one, take your time. That should be a foregone conclusion, we shouldn’t have to say like, take your time, be patient, like let the numbers work out. You’re geared and wired for success like you’re going to be successful as long as you give yourself an opportunity and have enough patience to get there.
Robert Leonard 32:44
You’ve provided a ton of value throughout this episode, Kirk, and I’m sure the listeners are going to want to learn more. Where can people learn more about you and all the things you have going on at Option Alpha?
Kirk Du Plessis 32:54
I appreciate that. So everyone can learn more about what we do at optionalpha.com and then we’re everywhere on social media at Option Alpha.
Robert Leonard 33:01
I’ll be sure to link to all of his social media, optionalpha.com, and everything Kirk’s doing in the show notes. You guys can check it out. I’ve been a user of the platform and part of the community for a few years now. I’ve really enjoyed it. I highly recommend you guys go check it out. Kirk, thanks so much for coming on the show today.
Kirk Du Plessis 33:17
Yeah, thanks for having me. I appreciate it very much.
Robert Leonard 33:19
All right, guys. That’s all I had for this week’s episode of Millennial Investing. I’ll see you again next week.
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