Options and the Real World

It's a privilege to write this blog for a devoted niche audience, and I truly appreciate every kind word that comes my way.

The frustrating part for me is being unable to have my message heard by a much wider audience of investors.  I consider my job to be the dissemination of information.  Once that is done, then each reader can accept or reject any or all of my suggestions/opinions. Or better yet, readers can voice an opinion by making a comment at the end of any blog post:


Each of you already knows that options can be used to reduce risk, and understand just how useful options can be in serving a dual purpose:

  • Protecting your assets
  • Increasing your chances of having a profitable trade

I've reached the point where I recognize there is no use beating my head against a brick wall.  There is simply no way (that I can see) to reach the millions of investors who can benefit from tearing themselves away from stockbrokers who churn accounts and whose commissions are far too high.

Also beyond my reach are people who depend on financial planners and advisors.  Those are the professionals who, in many (but not all) cases collect fees for investment ideas that are many decades old.  Although the investment ideas are not 'terrible,'  they are far less useful than investors deserve.

I plan to preach far less frequently about my frustrations with all those financial professionals.  I get it.  They earn their living by selling what they know to their clients.  There is zero incentive for them to do any better, learn anything new, or even admit to the possibility that there are risk-reducing investment alternatives that can truly make life better for their clients.  They want their fees first, last and always.  I cannot change that.

The new year (but, please: it's not a new decade) is about to begin and I hope to post articles that both interest and educate an audience of experienced option traders, option rookies, and option traders of the future.

I hope each of you had a wonderful Christmas, Kwanzaa, or Chanukkah.


9 Responses to Options and the Real World

  1. Chartingstock 12/28/2009 at 5:05 AM #

    You make excellent points about how options can be used to reduce risk, protect assets & increase chances of having a profitable trade. Keep up the great work in educating & clearly walking through profitable, risk reducing trades & have a great Holiday season!

  2. Manshu 12/28/2009 at 6:32 AM #

    I follow this blog and I have referred it to a few people too. I notice that the people who are already interested in options like to stick around, but people who are not don’t.
    I was hoping that they will be introduced to options and follow it a bit closely, but so far that has not happened. I personally think a large part of the reason is that options are inherently complex, and one needs to dedicate some time to understand them.
    There is not much an outsider can help with that, either one is interested or one is not.

  3. Mark Wolfinger 12/28/2009 at 8:11 AM #

    It’s definitely true that people believe options are complex investment tools.
    The truth is that options are very uncomplicated and that people use in their daily lives (car insurance policy; rain check at any retail store).
    Learning to use option strategies can be complex – but the option itself is fairly simple.
    I find, as you do, that people who visit ‘personal finance’ blogs tend to be disinterested in options and prefer passive investing. What they fail to recognize is that options and passive investing work nicely together.
    Best regards

  4. davmp 12/28/2009 at 11:48 AM #

    Mark, I just wanted to extend a great, big, THANK YOU for your continued efforts in helping to educate those who ARE interested in options! I recognize that it is no small effort to post to this blog almost everyday as you have been, and that doesn’t even include your efforts on other sites.
    If I understand this post correctly, it sounds like you’re going to change your posting strategy a bit to provide more information to the experienced options trader? I hope to be someone following along and being able to understand those posts!

  5. Mark Wolfinger 12/28/2009 at 11:53 AM #

    The change is that I am going to stop beating up on those financial planners and stockbrokers who fail to do much of anything to help their clients – but who love collecting fees and commissions.
    My dedication to educating the option rookie remains intact. I plan to include a wider variety of discussion that appeals to a wider audience. But the rookie will not be ignored.
    Thanks Dave

  6. Andy 12/28/2009 at 7:26 PM #

    Just wanted to jump in and mention that although I read your blog religiously everyday, my network at work doesn’t allow me to access or post in your comments section (for productivity reasons, probably a good thing).
    You may or may not realize, but I’ve seen your credited posts on places like yahoo finance and other investment websites, and the investor message boards from tradeking and optionsxpress have mentioned your methods on several occasions.
    I appreciate your gifted ability to break down complicated concepts in options investing and make them seem intuitive… I took that simplicity for granted until I began to read and listen to other ‘pros’ who make the same concepts seem technical and vague. Over the weekend I browsed through McMillan’s book, which I believe most refer to as the ‘options bible’. One idea which I couldn’t wrap my head around was the concept that ‘calls make better bull spreads’ and ‘puts make better bear spreads’. He seemed to emphasize close to the money trades and the butterflies listed just made me uncomfortable. I prefer the concept of OTM condors, which I was unable to find a chapter for; perhaps on account of my rushed reading.
    Anyway, I’ve found a lot of confusing and often contradictory information regarding options out there. I’ve been reprehended by pro traders for using the term ‘buying condors’ instead of saying ‘selling condors’, and have listened to many webinars where the presenters stumble over labeling spreads as ‘bullish’ or ‘bearish’, and ‘credit’ or ‘debit’. This takes me back to your post the other day, where you mention the phrase ‘selling a bull put spread’ was redundant. While the terminology may come as second nature to you, I think there are many investors (even experienced ones) who need those extra adjectives to quickly understand what the speaker is saying when such things are mentioned.
    Here’s to an enlightened 2010!

  7. Mark Wolfinger 12/28/2009 at 7:41 PM #

    I appreciate those comments and an update of what it’s like in the world when you can discuss option ideas with others.
    I’m aware of TradeKing because I write those, but had no idea I was mentioned in the OptionsXpress forums.
    I have no reason to believe McMillan is anything but sincere – but keep in mind: When something is simple, no one wants to pay anything for it. We pay plumbers to do what is simple for them, but difficult for us. The more vague and complex that speakers can make ‘options,’ the more easily they can charge big fees to clients.
    I know you understand that call and put spreads are equivalent – but perhaps his idea is that is easier for a trader to think about a bullish spread when it’s made of calls. In other words, it increases in value as the stock goes up. It may be more difficult to think of the equivalent put spread as ‘just as bullish’ when it goes down in value (you did sell it, so that’s good) as the stock moves higher.
    I get your point about the extra adjectives. Maybe it is easier for comprehension. But, I’m a stubborn sort, and prefer to see uniformity in option terminology.
    To enlightenment!

  8. deb 12/29/2009 at 8:54 AM #

    Hi Mark, just want to re-iterate what others have said already. Thank you so much for generously sharing your experience, knowledge and time with those of us (both rookies and more experienced) that want to further our options education. As one of the posters said above, i have seen your name mentioned very favourably on different boards and i recall one was an Australian board (if i come across it again I’ll send you the link) so maybe you are reaching a wider audience than you realize!
    Wishing you and your family a very HAPPY NEW YEAR filled with good health, wealth and joy.

  9. Mark Wolfinger 12/29/2009 at 9:00 AM #

    With a big smile on my face, I say ‘thank you.’
    Best of new years to you as well.