Millionaire TradersTradeStation securities, the different ones here that give you the
online access. My favorite is Interactive Brokers.
Q: Let’s talk about Interactive because many readers use them.
When you’re trading option exchanges in the U.S., you’re now
able to make bid/ask. Do you use that facility when you’re doing
Interactive? Are you sort of trading typically like a Market Maker
these days or more or less a customer?
A: No, I’m trading more as a customer on Interactive. What I’m
really doing there is, I develop strategies where I’m mainly doing
a lot of stuff like buy-writes. Abuy-writeis a covered call strategy
in the options market where I buy an underlying share and then
sell at-the-money or in-the money calls against the share position.
The most recent ones were in the energy shares. This was in 2004,
2005—Conoco Phillips—I would buy shares, write options against
it and let it get called away.
Q: Companies with big fat dividends?
A: I would do that, but that doesn’t work anymore. I had a great
time with the Canadian oil trusts about two years ago, where you’d
be able to buy the oil trust, write an option that’s in the money,
giving you like 10 or 20 percent downside protection plus a little
bit of time premium, collect the dividends, and write your way to
prosperity. That no longer works because they’ve all appreciated a
lot. Also I don’t know if the open interest is thinner or whatever, but
a lot of times recently, maybe about six months ago, I used to get
exercised right before the dividend date. So you would lose your
share at a very critical time. That was another problem and now
there is a change in the tax laws in Canada which is going to put that
whole thing out of business. It’s not going to work anymore, but
that’s how I’d use Interactive. In the foreign markets, I’m usually
trying to act as market maker, a facilitator of deals.