I gave a talk in Philadelphia on options strategies to the Wharton School Investment Management Club last Thursday. My daughter Halima, who is an undergraduate student at Bryn Mawr College in suburban Philadelphia, sat in on the the talk as well. In addition to wanting to be a supportive daughter, she was my intern four summers ago, backtesting options strategies for me, so she actually had an understanding of the content. She is minoring in education and has a natural interest in learning and how students react to information.
Halima took it upon herself to take some notes of how she thought the material went over with the students to help me hone these presentations for future college talks and last night she came over to the house to give me her impressions.
It was interesting. While the students were watching my presentation, Halima was watching the students and she picked up on the points that seemed to leave the greatest impression on them. It turns out that what made the greatest impact were points that I was conveying with passion from my own personal experiences–points that in many cases were not all that obvious from the surface material that I was presenting, but had more meaning because they were borne from my actual trading experience.
Here are the points that she thought hit home most with the participants :
— What separates the men from the boys (or the women from the girls!) in options trading, is not so much the initiation of trades, but the skills that are developed over time in adjusting a trade at the right time, for the right reasons, with the right combination of options.
— Options spread trading for income is different from most other forms of trading, because we are starting out with no directional opinion about the stock or index that we are trading and then using our adjustments to react to what the market has done.
— If options spread trading was so easy, everyone in the world would quit their job and become options spread traders. It takes experience and hard work to become proficient and consistently profitable.
–PLEASE don’t run out and start trading options right after this lecture. I can almost guarantee you will lose money if you start trading options without going through a thorough and deliberate process of building up your knowledge, experience and skill set. There are dangers and nuances that you must be aware of before you expose real capital to options spread trading.
–The key to trading options successfully is getting your emotions under control.
— The experience of trading a $5,000 account does not at all prepare you for the experience of trading a $500,000 account. The only way to gain the experience necessary to trade a large options account is to very gradually build your capital level. This builds your “risk tolerance muscle” the right way–very gradually.
Halima felt the largest impact point was in fact the one that was the most personal to me: that I love options trading and I can’t believe that I found a job where I get paid for having fun everyday.
If the club members take one point away from my talk yesterday, I hope that it is this: no matter what career you choose, be determined to pick something that is truly fun to you. If you do, you’ll stick with it, improve and your career will become a fulfilling part of your life–not a necessary evil.
Director, SMB Options Training Program