Back when I started on the trading floor in 1986, my first job after being a runner was clerking in the Eurodollar Options pit. At the time, a big day for us was around 12,000 contracts per day. How times have changed.
I remember the older traders telling me that options were the future. The problem with options being the future is the rest of the market had to catch up. Options aren’t necessarily about gut feel. They are about math. Options are about statistical probability. It takes some amount of smarts to trade them.
I always tell people I know enough about options to be dangerous…..to my own trading account.
If you pursued it and were lucky on the floor you could find a mentor to teach you how to trade options. That doesn’t exist anymore. At the same time, with the rise of electronic trading, the only to get an edge and hold a position through higher market volatility is the option pit. Many pro traders I know are eschewing a traditional futures spread strategy and doing a similar position in the futures options.
But, how does one learn? I saw a tweet from Dough and they have a new online course that anyone can take for free. This seems straightforward enough. Lots of educational content is free on the web today. Yet, there are still plenty of people out there setting up options academies. The reason is the math aspect.
Dough is also a Chicago based startup. I expect to see a lot of innovation when it comes to trading, finance, and the startup ecosystem of Chicago. We have already seen some pretty interesting companies here with Avant Credit and Ycharts. Typhon Access could revolutionize the way people find and put money to work in commodities. There will be plenty more because of the huge network of people with all kinds of fintech expertise.
Another place to learn is my friend Greg Harmon. He blogs over at Dragonfly Capital. Greg has years of experience trading options. His Stocktwits segment at Stocktoberfest is always well attended. Greg also tosses in the technical analysis and rationale for putting on a position.
If you want to try and trade, learn to trade options from the get go. Trading is often about capital preservation and survival. Options can keep you in the game. Too bad they don’t have that for VC….yet!