A Complete Review of Option Alpha Free, Pro & Elite Lifetime Membership: The Good, The Bad, and Everything In Between
Important Note: This review was written in January 2021, before the general release of Option Alpha’s bot trading platform. I have an Option Alpha membership, but I do not yet have access to the bot platform, which is being released in several stages. Not all members have access, so I cannot comment on it as of yet.
I’ve been dabbling in options as a stock trader for decade or two. Like most, I was introduced to options through the covered call. After losing on a covered call trade, I got sucked into the world of options trading and came across Option Alpha as I was investigating on YouTube how to manage a losing covered call position.
Options Alpha offers a lot of different content with most of it free and only some of it behind a paywall. I was a free member for over a year and used their educational material and I decided to purchase the Elite Lifetime Membership as I learned more and got more involved in options trading.
I’ve used pretty much every aspect of their service — the education, the trade alerts, the research reports, their backtester, watchlist, etc. This is a review from a customer who has tried it all and continues to use the service today, although much less frequently than when I was just beginning to learn about trading options. This review is unsolicited, I was not paid anything to write it, I didn’t get anything for free for writing it, and I get no benefit if you decide to join Options Alpha after reading this. This is just me giving you my opinion after I spent $2000 on an Options Alpha Lifetime membership.
Free Membership
I was first introduced to Option Alpha via their podcast. On a particularly long flight I must have listened to 6 hours of podcasts straight through and began my journey into the world of options trading. The free educational materials that form part of the free membership is the best part about Option Alpha. Kirk Du Plessis is a very engaging educator and has plenty of useful materials, especially for beginners who are just getting started in options trading. I learned quite a bit about options trading and many of the more complex strategies that are out there thanks to Kirk and his educational videos and podcasts.
There are of course other educational sites as well. Tastytrade has a ton of educational material available, along with a beginner options course. Over time, and after having studied this market for quite some time you come to realize that the Option Alpha material is very similar to Tastytrade. Kirk takes a similar approach that is focused on selling options instead of buying them.
Some of the educational material requires a free account, but none of it is behind a paywall which is great. After creating the free account, you’re invited to choose a beginner, intermediate, or advanced options course. You’ll get a series of youtube videos to watch and written materials to help you study. There’s plenty of other materials as well, including PDF guides, trade checklists, video lessons, blog entries, FAQs, etc.
The Options Alpha educational material is pretty much identical to Tastytrade, but I find Kirk more engaging, focused, and easier to listen to than Tom Sosnoff. Kirk’s podcasts are great for learning on a flight or during your daily commute. I highly recommend them. Options are complex and require time and study to understand fully. Kirk is also a down-to-business kind of guy. I find the small talk on the Tastytrade videos to be boring and I’m quickly trying to fast forward to get past the banter and find the content. I like Kirk’s style, there’s no wasted time and he gets right to the point.
There’s nothing to criticize in the free membership / educational tier of an Option Alpha membership. I highly recommend the materials and, since its all free, the price can’t be beat.
If I must criticize something, I’d say the Tastytrade videos have better production values. The Tastytrade whiteboard videos use a green screen, while Kirk will be drawing on a piece of paper. It's clear Kirk has a smaller organization than the folks at TastyTrade. Still, I find Kirk to be more engaging. I could listen to 5 hours of Kirk on a plane, I don’t think I could do that with Tastytrade.
Pro Membership ($100 / month)
Once you decide to take the leap to a Pro Membership, there are two additional features that are opened up. You get to follow Kirk’s trades and you get access to a private membership forum with discussions between members.
Kirk’s official title on the Option Alpha platform is “head trader”. If you choose to follow his trades, you’ll find that most are iron butterflies and credit spreads on a set of uncorrelated liquid ETFs, such as SPY, TLT, EEM, GLD, EWZ, XBI, FXI, etc. His portfolio is beta weighted to SPY to be delta neutral.
Typical Option Alpha Trades
A typical trade might be a $5 wide credit spread. If the trade is successful, he’ll usually close early after reaching 50% of the original credit received. If the trade was challenged, he’ll adjust by selling the opposite side, converting the trade into an iron butterfly.
When trades lose, he’ll try to roll them out to the next month, as long as he can do so for a credit. Sometimes he’ll go inverted on an adjustment. Once he can no longer roll/adjust for a credit, he’ll call it quits and close a trade for a loss.
Trading Alerts
The trading alerts are sent out by email or mobile phone. The trades are real, they are real fills, with real pricing. I’ve received better and worse fills during the time I was mirroring their trades. Kirk is the real deal, nothing is faked. There are even video updates where you can view the trades Kirk makes on the Thinkorswim trading platform. Kirk records all his trades and so you get to see his thinking as he makes and adjusts each trade.
Trade Results
The problem I found with Option Alpha’s trades is that they were not profitable most of the time. I lost money overall. His trading plan has you closing out your winners very early in the cycle while letting losers ride as long as possible hoping they turn around. He doesn’t use stop losses for his defined risk trades. So you end up having lots of small wins and then several large losers that end up wiping out your profits on the winners.
He’ll explain on his podcast that it is a numbers game and that many are turned off of options by large losses and that you just need to stick with it and that over time you have more winners than losers. However, I think Kirk’s plan of going delta neutral all the time (even in a raging bull market) is not a good plan to make money.
I used the Wayback Machine on archive.org to crawl the public Option Alpha Performance page to see how their performance evolved over time. It have no reason to doubt the statistics presented here. Everything leads me to believe the Kirk is publishing the real results of his trades. During March 2016 it seems the portfolio was doing well with winners and losers about even, losing just a bit more on losing trades than earning on winning trades, but with a much higher win percentage.
By early 2019 the figure were different. Losing trades now lost about twice as much as winning trades.
And by 2020 the picture became even worse with losing trades now 2.5x as large as winning trades. In fact, the expected outcome by June 2020 was now less than $30 a trade and that’s over thousands of trades and many years. Kirk obviously has given back in losses in recent years what he earned in profits over the initial years. Using a little arithmetic we can multiply the win rate by the average win (74.9% x $186) and then multiply the average loss by the losing percentage (25.1% x $436) to get the average expected outcome of $29.87. This has been going down over time.
Shortly afterwards (and as of this writing) the site’s performance page no longer discloses the average profit and average loss and is just showing just the win rate. It is clear the Option Alpha portfolio has not outperformed vs a simple buy and hold SPY approach and this seems consistent with my own personal results during the months that I followed Kirk’s trades.
I finally threw in the towel and stopped using his trades after he opened up bear call spreads on SPY two months in a row with the S&P making new all time highs day after day during each month. And with the S&P marching to new highs every single day, there was no cutting losses, no stop loss. Just mechanically converting to an iron butterfly and selling the put side as the calls were breached again and again.
In fact, due to his delta neutral strategy I found myself constantly getting challenged on the call side of his trades in this raging bull market. My losses on my losing trades more than wiped out my earnings on the winning ones.
I think if he were to orient the portfolio depending on the condition of the overall market, he’d have a lot more winners. He knows how to identify trends, support and resistance, and obviously understands technical indicators. If I was to ever speak to him, I’m sure he would tell me to stick with it, that over time the math will work itself out, and that I hit a long streak of losers, but everything Kirk has done recently shows me that even he knows that’s not really the case. And it is a shame because I think the bad performance is something that is caused by him mechanically adhering to a dogma that doesn’t hold up in today’s market.
The whole Option Alpha platform will soon switch to automated bot trading and Kirk is going to discontinue the alert service. I think this is primarily because Kirk isn’t producing profitable alerts anymore so it is probably for the best. The trades are not adding value for customers. I would encourage anyone signing up for Option Alpha to not blindly follow Kirk’s alerts. Use them as a suggestion or as ideas for your own trades.
Private Membership Forum
I didn’t find the membership forum very helpful. The interface was rather clunky and dated and there wasn’t much activity compared to other online options communities. There is livelier options discussion on reddit in the r/options and r/thetagang communities. I never found myself making much use of the Option Alpha forum.
Elite Membership ($300 / month)
Subscribing to elite membership gets you some extra content compared to a Pro membership. You’ll get Weekly Strategy Calls and Live Office Hours as well as discounts on their research reports and software package.
Weekly Strategy Calls
These calls are short 15–20 minute calls each Sunday night where Kirk will open his broker platform and show you what’s going on with each of his open trades. He will explain what he plans to do with the portfolio during the week ahead. He does not take questions during the call. I found the calls helpful when I was actively using Kirk’s trades, but since I stopped using his trades, I no longer tune in to these calls. They are not of any real use if you are not copying his portfolio. Maybe after the bot trading goes life, they might be relevant again if he decides to do a general market overview for the upcoming week.
Live Office Hours
Once a month Kirk will have office hours. This is the only way you can actually get feedback from Kirk himself about a trading question or issue. The format is not the best. You need to email your question ahead of time and then you can tune in and watch as Kirk answers each question one by one.
There is no back and forth or opportunity to follow up. I had a couple of questions for Kirk and he spent about 20 seconds on each and didn’t take the time to fully address either one. My feeling was that it’s just Kirk with a huge list of emailed questions answering them as quick has he can so that he can go back to doing other things with his day. The format doesn’t really lend itself to adding value to either party.
The sessions are recorded and you can access them later. I recommend this, since there is no reason to tune in “live”. These office hours sessions do not have any interaction. If you tune in live they get to your questions after all the emailed questions, so be prepared to wait.
Elite Lifetime Membership ($2000 one time)
Adding the lifetime membership gives you access to everything in the pro and elite membership packages plus a few more features: a software toolbox and research reports. I signed up for the Elite Lifetime Membership at the time it also had the promise of the bots and the autotrading. However, I haven’t yet been giving access to use those features, so I can’t comment on it as of yet.
Software Toolbox
The toolbox comes in two varieties, it contains an earnings calendar, a watchlist / mini stock screener for a one-time fee of $50. You can also spring for a backtester and a trade optimizer for a one-time fee of $500. If you get the Lifetime package you get everything. I found the most useful to be the screener, but I’ll go over each one.
The earnings calendar is a simple list of earnings for the current week on the filtered list of tickers they recommend for options. It isn’t a complete list of earnings. I didn’t find it too useful. You only get the current week’s earnings and you can’t check earnings for the next week. It would have been more useful if they provided earnings trades several weeks in advance. They’ll also calculate the expected move of the ticker based on the options pricing.
The watch list has 120+ liquid options tickers that Option Alpha has preselected for options traders. You can then filter those tickers by earnings, IV Rank, or ETFs. Traders with small or large accounts can also filter out high or low priced tickers as well. In the example above, I’ve filtered all 120+ tickers to show only the 3 tickers with a high IV Rank today. IV Rank is of particular interest to option sellers.
After you determine which ticker you want to trade, that’s when things get a bit more interesting. You can click a dropdown and get a list of Kirk’s recommended trade set-ups based on the stock’s current IV conditions.
The upper right corner is also marked with an announcement icon to alert you that earnings are near on this ticker.
The software will also calculate the expected range based on the current options pricing. The screener is basic and oriented towards beginners. It's not going to be recommending you sell options on Chinese penny stocks or anything weird. These are the most liquid big name tickers that have been preselected by the Option Alpha team. I think its strength lies in the simplicity.
The backtester lets you try out 10 different options strategies on a preselected list of 50 or so tickers from the Option Alpha watchlist. None of the strategies include naked selling or outright option buying. You get calendars, credit spreads, debit spreads, iron condors, iron butterflies, strangles, and straddles. And that’s it.
Each individual options trade will let you alter the backtest a little more. For example, the call calendar backtester will let you choose 60 or 90 days for the back month and then choose delta for the front month. You can also configure profit taking levels, portfolio allocations, stop loss, etc. The backtest is conducted from 2007 through 2016. The results will show how you performed compared to buy and hold SPY during the same time period.
Despite the fact we are in 2020 now, the backtester does not update with new data. All tests are always run from 2007–2016. So you won’t be able to calculate how your strategy might have performed against the coronavirus crash. I found the options to be somewhat limited. You can’t test rolling or adjustments when trades go south, for example. Also, after the backtest runs, you don’t get a list of the trades made, just the results of the strategy. So, you have to take their word for it. For more extensive backtesting (yet nowhere near as user friendly) there is Optionstack.
The Option Alpha backtester will let you try out an idea really quickly, but it isn’t detailed enough to build a trading strategy around it. There is also no technical analysis whatsoever, so if you are testing put credit spreads you can’t say “don’t sell a put spread when the RSI is over 70”. That makes it of limited use as real backtesting platform.
Finally, the trade optimizer lets you input the current conditions of a ticker and Options Alpha will let you know what trade set-ups are recommended. You can optimize for CAGR or Sharpe Ratio and also select the market outlook, account time, DTE, and IV Rank. The optimizer is ticker independent. So it is a generic recommendation engine that tells you what are the most profitable set-ups based on the backtesting that Option Alpha has done.
In my own personal trading, I haven’t used any of these software tools that much. But I think the most useful is the watchlist. The fact that Kirk has preselected good options tickers is half the battle. I have all these tools included in my Elite Lifetime membership, but I could recommend $50 as one time fee to have access to the watchlist. I think that’s a good deal.
I can’t recommend shelling out $500 for the backtester and trade optimizer. I don’t think it is worth it. If you are really interested in backtesting for the same $500 you can get access to 6 months of OptionStack and create extremely advanced backtests, customizing entries/exits and everything in between. What breaks it for me is the fact you can’t see and export the actual trades. If they at least let you export the trades to excel, you could use the backtester as a base and then add your own conditional entries/exits offline to see if you got better results, but as it is the backtester seems limited to me.
Backtesting Research Reports
Option Alpha currently offers 3 different backtesting reports: Covered Calls, Profit Matrix, and Signals. Here you get the results of Kirk’s backtesting studies in a few easy to digest PDF files. There are a few bonuses as well. The Covered Call report comes with an Excel file and the Signals report has an Add-On that shows you how to build a screener using Thinkscript in the Thinkorswim platform using the indicators that Kirk recommends.
Of the three reports I found Signals to be the most useful. I had contemplated purchasing this report before I was an Option Alpha member. Basically what Kirk did was backtest a number of technical indicators such as moving averages, RSI, MACD, ADX, etc. to find out if the entries and exits that were marked by these indicators were reliable or not. He compared these trades to buy and hold SPY over a number of different portfolio sizes and allocations.
The report also has the indicators organized in a table by win rate, sharpe ratio, CAGR, etc. So if you are looking for indicators that are optimized based on some kind of portfolio variable, you can find the indicators that worked best. The results surprised me. According to the research some indicators are much more reliable than others. Small tweaks to the inputs on each indicator could vary the results wildly. For example, he tested the RSI with the standard 14 day period, but also tested a faster 7 day and a slower 21 day period. He then varied the overbought and oversold levels on each indicator to see how that modified the entries and exits.
I can’t give away the report’s conclusions, but I’ll just say it opened up my horizons to indicators that I wasn’t using before reading the report and made me start doubting some of the indicators I was using previously. It left me wanting more, though.
I would have liked to see some examples of the trades so that I could independently verify them using the backtesting tools in Tradingview. Like much of what Option Alpha puts out, you just have to take their word for it. I have no doubt the research was conducted professionally, but since we are all do-it-yourselfers (otherwise we’d be investing in mutual funds with some manager), it would be great if he could at least show an example of the entries/exits on SPY or QQQ or some other example ticker so anyone could verify the work.
The profit matrix report is basically the same as the strategy optimizer. What you get here are the finished results of the different backtests that were conducted to find the optimal settings for each of the 10 options strategies that the report covers. For example, you get to find the CAGR for 10 day sequential entry straddles with or without IV filters and with or without profit taking targets. The idea is that you orient your trades a bit differently depending on the current context.
So if you are interested in this material I would suggest either the strategy optimizer or the profit matrix report, but not both. The difference is that the profit matrix report gives you all the data in a number of different PDF files. You could “recreate” the strategy optimizer by simply looking up the values in the different tables and seeing what the most optimal strategies are for the current environment you’re in. The optimizer on the other hand looks up the values for you and orders them by Sharpe or CAGR.
The major results of this report are already available for free in Kirk’s When to Exit Guide. So you know that straddles work best at 25%, credit spreads at 50%, etc. If you’ve seen Kirk trade you’ve already seen the broad strokes. We’re getting into the fine details with this report.
Finally, the covered call research backtests 20 years of covered calls on 100+ stock and ETF tickers. This is the newest Option Alpha report and covers 1999–2019. It was very interesting and it might change your view on covered calls. Again, there are no example trades. You just have to take Kirk’s word for everything. Here Kirk does the same thing as the other research reports, he backtests portfolios to see what is the optimal DTE, profit-taking level, and use of stop-loss thresholds.
Like most who were introduced to options via the covered call, I consider myself pretty knowledgeable on this strategy. However, Kirk’s research revealed some interesting facts about covered calls that I didn’t know and I think he makes for some interesting conclusions, especially about the utility of covered call writing in a bull market.
Conclusions
Of course the elephant in the room with regard to Option Alpha is the auto trading bot platform. No one knows yet whether it will live up to all the hype. I hope to update this review at some point in the future after receiving access to the system.
The Good
Kirk and his team are at their best when they are creating original educational content. I think he’s an excellent educator. I enjoyed learning options from him and you really have to commend him for putting it all out there for free. I highly recommend you take advantage of it all, especially if you want to learn about selling options. The educational content is the best part of Option Alpha and shouldn’t be missed.
I found the Options Alpha research to be original, interesting, and informative. My main criticism is that it left me wanting more. I would have liked to see more detail on the trades used in the backtests. I don’t think the price is justified if you are buying it outright, though. It would cost over $600 to buy all the research reports by themselves. However, as part of a membership plan, the reports are a great addition and highly recommended.
The Bad
I admit that when I was following Kirk’s trades, I threw caution to the wind. I opened positions without looking at a chart. I went ahead and opened bear call spreads on ETFs making new all time highs. I would have never done those things if I was trading on my own, but I allowed myself to relax and I opened up positions without my own analysis because it was an alert from Kirk.
My problem is that I ended up thinking Kirk is some kind of trading savant and when I subscribed to his trading alerts I ended up with big losses. Trading options is hard. You’re up against Wall Street’s best and brightest in a zero sum game. So, I think that if you’re primarily offering options education, a trade alerts service is actually contrary to that mission. I think Kirk and his team have made a good decision to end the trade alerts and will help everyone trade on their own using the bots and what they’ve learned.
I understand Kirk’s method of trading is based on his own research and his desire to stay market neutral, but this goes against what I’ve experienced first hand. My best trades have been directionally bullish trades in the middle of this bull market. My worst trades were bearish trades that went against the trend, just for the sake of having some bearish exposure.
The In Between
Although I found Kirk’s office hours (which is the primary benefit of being an Elite Member) to be limiting in terms of the attention he gives to member questions, his team does a great job. I’d like to give a special mention to Mike Adamson and the people working in Customer Support. If you email Option Alpha during business hours it is likely you’ll get a reply within an hour or two. The customer service is excellent. If you have questions about the materials, they’ll walk you through it. I have no idea if free members get this kind of service, but as a paid member, the 2 or 3 times I needed to speak with someone about a question I had, it was resolved same day. There are good people on Kirk’s team.
The software toolbox with the backtester, strategy optimizer, watchlists, and earnings calendar can be somewhat useful, but the content overlaps with the Profit Matrix research. I wouldn’t pay $500 for this set of tools. But you may want to pay $50 as a one off fee for access to the watchlist.
The forum should be revamped and modernized to get more people participating. The clunky UI makes people go elsewhere when they decide to participate in an options community.
I hope you’ve found this review informative and I welcome your comments and opinions.
About the Author
Bruce Decker is a small business owner and part time stock and options trader. He’s been trading stocks for two decades and began trading options seriously in 2019. He is not affiliated in any way with Option Alpha or Kirk Du Plessis other than as a paying customer.
