Surfing for Profitsleverage with options, I traded it for those reasons to familiarize
myself with the different product that I’ve never traded.
Q: Were you trading options essentially as proxies for stocks?
In other words were you basically trading delta or were trading
volatility as well? [Authors’ note:delta in options is typically defined
as the amount of percent an option will move in relation to$1move
in the underlying. For example, at-the-money call options usually
have a delta of .5, meaning they will increase by 50 cents if the
stock rises by$1.] Were you doing any kind of complex option
strategies or primarily just using them as directional tools?
A: No, it was basically in one direction. Sometimes we tried to
acquire some stocks and we would sell puts to get into them. If they
didn’t get them, that was fine because they would make money off
selling the put. When you got them, they become stock. So those
were kind of unique things I saw that seemed to work. [Authors’
note:Ashkan refers to an option strategy called put selling. The
seller of the put collects the premium if the stock remains at the
same price or rises. However, if the stock falls sharply, he is ob-
ligated to purchase it at the agreed upon strike price, which can
sometimes be far higher than the actual market price.]
Q: That strategy works great in a bull market—until it doesn’t.
A: Exactly. That was when the market was really running in the
one direction. So it worked in any form, but I personally never
really got into it. I never really made money the way I did trading
stocks. So, even though I like options, it never really caught on
with me.
Q: It’s interesting because the progression was from stocks to
options to foreign exchange, and one of the things that we see is
that there is an enormous amount of similarity between options
and foreign exchange if you just simply trade them on a directional