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The Wolf of Wall Street

Do you know Jordan Belfort? He is the author of the book that was the basis of the movie with this title. Friends who recently saw the movie, THE WOLF OF WALL STREET, expressed different opinions of it. Some said that the movie was repulsive, and others said that it was so entertaining that they paid to see it a second time in a short time span! What do you think the underlying basis for this opinion is? I viewed those who were repulsed as non-traders who were freaked out by the viciousness of trading and wild drug/sex behavior. Those who were spell-bound may be folks who don’t mind being in full competition with peers. (And, they may not be offended by wild drug/sex behavior!)

What does each trader need to do to become a successful trader? Other than tolerate wild stories about drugs and sex, I’d say set your trading plan and stick to it day-to-day! I’ve been a Coach for OptionsANIMAL (OA) for more than four years. The basis of the education is the simple six-step process that is explained in Class 1.1. Putting the trade in place does not occur until you get to step #5! Imagine what needs to be done before you enter the position!

What is the annual goal that you are seeking? Are you seeking “wealth”, “income”, or both? I once heard that anyone seeking less than 15% per year should look for a fund manager, yet if you are happy with something over 15% per year, then YOU may be the capital manager in order to achieve the result.

Some spread trades taught at OptionsANIMAL are credit spreads (that I view as “income” trades) and others are debit spreads (that I view as “wealth” producers). In addition to these spread trades, a member of OA can learn to do directional trades that will either produce wealth or drain the portfolio quickly! One of the benefits of trading options is that they require about 10% of the amount of capital that long equities require. This leverage can be appealing but also harmful. If you are choosing small risk tolerance, then long equities would be your choice of trading styles. However, if you are not-too-shy of moderate risk, then options can offer you an easy way to attain adequate portfolio growth.

One of the best strategies that I learned as a student at OA is the Dynamic Collar trade. The three instruments used are long stock (LS), long put (LP) and short call (SC). When you learn about the Greeks of options you find that long stock has a delta of +1.0 per share, Long Puts delta is between 0 and -1 (all negative) and the delta of the Short Call is also between 0 and -1 (all negative). Once you are in more than one instrument, you should track the net position delta (NPD). Your choice of the strike and the expiration period will determine the NPD for the Collar Trade. In the Collar that is a “dynamic” application, there may be times where the LP or SC are not called for. Hold the long stock, but at times let it ride as a solo part of the holding. What would happen if you bought twice as many LPs as were needed to “protect” your long equity? There are choices. You may choose keep the position balanced in terms of the number of options contracts you enter and the number of long equity shares you own, or muddy it up a bit by entering various numbers of contracts to achieve the NPD that you are seeking. Our goal as options educators is to teach the options’ behavior one step at a time. Keep it simple in your application until you have enough experience to approach the complex strategies without full confusion.

What is the most reasonable annual goal? I cannot help but think about it. Am I prepared to squeeze anybody out of my way? Or am I just happy enough with a reasonable portfolio increase for the year?

Emilu Bailes
OptionsANIMAL Instructor

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Emilu Bailes


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