Millionaire TradersQ: Could you share one or two strategies that you thinkdohave
a high probability of making money in the options market?
A: Yes. Things related to selling nearbys that are going to de-
cay much faster and then, if you can get a volatility skew on top
that in your favor, that helps. Also covered calls on lower-priced
stocks with huge volatility. I’m doing that on RMBS now. Diagonal
Bull and Bear spreads have a good chance for a profit. [Authors’
note:These are various option strategies that essentially try to sell
one strike price against another in order to take advantage of the
volatility differences between a set of similar options with different
strike prices.]
Q: Let us wrap this up with a couple of final questions. Where is
the drudgery in trading? Do you find anything boring or annoying,
or is everything about this discipline really interesting to you?
A: Good question. Well I think the worst thing is—maybe it’s
not boring—but the worse thing is losing money [laughter]. And
having to deal with paperwork and the taxes is very boring.
Q: How do you deal with losing money? Have you gotten to the
point where you can shrug it off or does it still simmer and burn
and you become very annoyed?
A: I definitely got used to it. I can lose$5,000 or$10,000 in a day
and not get affected, but if I lose money 17 out of 20 days, then it
still does affect me.
Q: What’s been the longest losing streak you can remember?
Have you ever had a string of 10 to 12 days where it’s just been
nothing but bleeding?
A: Pretty much, yeah. I have. That’s the very worst. If it’s a slow
bleed, it does wear you down. Part of it is that you want to be in
tune with the market. Sometimes I just get so in tune with the