The Man Who Buys Crashessweeps through the market. At that time a trader can sometimes
take advantage of the discrepancy by buying the option contract
and offsetting the risk by selling the underlying instrument.]
A: Yes and now I can also use single stock futures. I’m looking
for those types of things—as low risk as possible. If I can make 2
percent or more per month with no—or very low—risk, then that’s
a heck of a deal.
Q: Where did your interest and education in options come from?
A: I traded options since I was 21. Then sort of moved away from
them, part of it was the bid-ask spreads and the big commissions.
But now the commissions are almost nothing. They’re wonderful,
and the bid-ask spreads have gotten better. Plus sometimes you
get fills that are between the spread. Let’s say the option is 7.40 to
7.80 bid ask. You put an order at 7.60 and you wait 5 or 10 minutes
and very often someone will go out and hit it. I found that if you bid
with very small lots, then the market makers see them as irritants
and will take your bid just to get you out of the way. You put 10
out there and they won’t hit it. But if you put one or two out there,
they’llhititjusttogetridofyou.
Q: Was there any particular books or seminars that you attended
that sharpened your knowledge in options?
A: Yes. I read Larry McMillan’s book and met him at Trader’s
Expo and talked to him. One thing I think is a little bit of a weak-
ness in that book and all option books is they don’t really discuss
what makes money and what doesn’t make money. So I’m doing
some software development to prove a strategy—both so I can
make money off the software and I’m interested in actually pub-
lishing it. Also, I am reading Natenberg now, excellent book. And
Thinkorswim free seminars are wonderful, strongly recommend
them.