Well I just returned home from beautiful Houston, TX where I was speaking of the glory of options to a bunch of curious investor’s. I spoke for 75 minutes and the core of my presentation was about an option strategy, The Collar. A portfolio protection strategy that this audience could appreciate.
The questions they asked during the course of the presentation were all really good. When I spoke of selling out of the money weekly covered calls, someone asked…. “But who would ever take the opposite side of that trade and buy those worthless calls?” One answer was an options trader who sold them at $5 and was now looking to buy them back in for a tidy profit. Smart options traders know the value of closing out a winning trade.
And then how about this one… “If I decide to take up this options stuff…how long until I can make some real money?” Well, based on my experience when I was trading for 6.5 hours/day on the floor of CBOE the 13th month was when the lights in the dark tunnel began emerging. So I asked, "how long would it take me to learn your job, 75 minutes?” I don’t think so but it makes me believe in your commitment that you are here educating yourself on a sunny 75 degree Texas day.
One fellow stood up and told the crowd how excited he was to trade the new SPXpm contract as opposed to SPY and was wondering how many of those contracts were trading a day. Well that would be over 5,000 contracts per day and climbing.
Another inquiry was what is the trading floor like these days? For that you can refer to my blog of last week. “Chinese CEO’s Make a Visit to the CBOE Trading Floor.”
Well the last question flew in just moments before I was done speaking. The question came at me like a demand. “I got to know…what’s the BEST strategy?” That’s easy. Your last winning trade.