Millionaire TradersQ: A married put that would allow you to short the stocks because
you would be synthetically always long. So he sort of taught you
that there were two ways to go in the market—that you could make
money on the short side. So did you sit by his desk, observing him
for a while?
A: No. Once in a while I would watch him, but he was a pretty
private guy. He sat on the floor, but it was always hard to tell what
he did. He just traded a few stocks he liked, looked at the chart,
and if it moved around every day for a few points, it’s probably a
good one that you can get in and out of and trade up and down. So I
picked about four or five names to put conversions on. BroadCom,
Seibel, and Brocade were three of them.
Q: Very familiar names.
A: Yeah. I just started trading like 500 shares of them, up or down.
The first couple weeks were horrible because I was teaching myself.
I probably lost five or ten grand trying to do this.
Q: Prior to this you’re basically building positions. So you’re not
really having too much daily turnover. You’re not doing a hundred
round turns a day, right?
A: No, I wasn’t.
Q: So now you slow down the size. You go down to 500 shares.
Clearly you have to do a lot more turnover to generate revenue.
How many round turns a day were you doing and were commissions
starting to become a much bigger factor on a cost basis at that
point?
A: I was doing 50 round turns. Ballpark.