I can't believe how quickly time flies…in a couple months, OptionSIZZLE will be celebrating its sixth year anniversary.
It's crazy how much interest there is surrounding unusual options activity…they talk about on twitter, the TV and on a boatload of websites.
It's great to have choices, learning from different people and services.
The more individuals who trade options…the more competitive the market is…allowing for investors to get in and out of trades faster and more efficiently.
When I first started back in 2008, it wasn't like this at all.
In fact, back then there was only one website writing about unusual options activity and how it could be used to generate trading ideas. I understood the power of following the smart money at an early age.
When I was 19, I worked as a runner at the Chicago Mercantile Exchange (NASDAQ:CME).
I'd watch the "locals" follow or copy large institutional trades…they would have a feel of who the smart money was and if their orders had enough impact to push the market in their direction.
It was like a sweet science…but I saw it work…over and over again.
No doubt, it was definitely an exciting time for me…I mean I was making a measly $5.75 an hour…taking a 2-hour train ride (each way) from the suburbs to Chicago and delivering pizza's at night to survive.
However, I had no contacts in the industry… so I was grateful for the opportunity to watch and learn from some of the best.
The natural progression…or so I thought
In an attempt to further advance my career, I studied for the series 7 exam and became a licensed stock broker at the age of 21. The idea of helping people with their investments, while earning income for myself seemed like a perfect fit.
As most things in life, if something is too good to be true…it probably is. I would spend my days making 600 phone calls a day…prospecting for clients. The job was all about getting sales…the more clients you have….the more money you'd make.
It actually had very little to do with financial advising or helping clients build wealth.
Being young and naïve, I felt that I could change that…that you could still make money while helping your clients. So I went back to what I learned while I was on the CME…I started talking to prospects and clients about unusual options activity that I spotted in certain stocks.
Going back to what I knew
While being on the floor of the Merc, I spotted floor traders scalping orders from big firms that would come into the SP 500 futures pit. When I'd call prospects, I'd mention to them insider buying transactions and options activity in Chesapeake Energy (that is what we were putting new clients in at the time.)
Their CEO, Aubrey McClendon, was big into buying shares of his stock at certain times.
That's where I discovered that individual investors had limited knowledge on how options worked and how they could actually be used to generate better returns. Not only that, most of the brokers at my firm rarely touched options…they felt that they were too complicated and it would take away time from the most important thing…getting new clients and earning commissions.
I was fascinated by options, but I knew that being a stock broker was not the right fit. However, I tried to find value from the experience. One of those, is when I had the chance to broker and overseas client who we cleared option trades for.
I started jotting down notes and trying to learn from their success. Unfortunately, my firm was more concerned about me getting on the phones and generating commissions.
I felt that by learning how trading worked…you'd be able to recommend better ideas to clients…hence, keeping them happy and having them stay with you for the long term. To me this was more valuable than learning sales techniques.
Feeling confident of what I had learned so far about options…I was ready to jump in and try it for myself.
It was not as easy as I thought
My first options trade, I lost $2k in one day… on an earning trade. As you know, no industry license exam teaches you how to trade even though that is where I learned the mechanics behind options.
However, this motivated me to learn more… I started reading about technical analysis, option strategies and from other guru types.
I left the brokerage firm and went to another "advisory firm" where I did some Forex with a partner… while still focused on building a book of business. To make a long story short… they screwed us on commissions and ended going down as a Ponzi scheme. I bounced to another firm for a short term…but later went back to the brokerage firm I started with…this time working on their trade desk.
It was a chance to learn
I was running orders on bonds, stocks and option trades for high net-worth individuals. This was another opportunity to see how the smart money was participating in the market. I was getting paid and learning at the same time…another valuable experience in my life.
While still working on the trading desk, I founded StockStar Capital. Running the show, I had the ability to teach clients what I had learned about options trading and how they could use leverage to better enhance their returns.
In the summer of 2008, the stock market started declining…a lot of firms began cutting staff…mine was one of them…and I was out of the job. So I put more of my focus on StockStar Capital…but I didn't have enough assets under management yet, to make it my sole source of income.
I wanted to do things right…and it was going to take some time to build my business.
So I reached out to the only website (at the time) that wrote about unusual options activity and submitted my resume. I was a big fan of their work and thought it would be a great opportunity to enhance what I already knew about options. Well,
I never heard back from them…
…so did what seemed natural…
…I built my own website, OptionSIZZLE.com in October 2008. With only one player in town, I felt there was plenty of room to grow. Not only that, but I am a firm believer that competition breeds innovation and makes everyone work harder.
After all, I knew what they were doing because I had access to time and sales from when I had worked on the trading desk.
"Competition is not only the basis of protection to the consumer, but this the incentive to progress." ~ Herbert Hoover
I felt my experience, knowledge and expertise would bring more opportunity for those looking to learn about options… and an approach that I knew worked…all for a lower price than what they were charging their customers.
I even thought we could (or would) work together at some point in the future.
I didn't take personal that they didn't call me back. Maybe they just didn't have room for me…but I knew this what I wanted to do.
Back then, I was using two different services that helped me identify unusual options activity…I would write about the most interesting orders on my website for free.
Things started to go very smoothly.
After picking up steam and realizing that there was an actual market demand for this type of analysis… I started charging customers through a subscription based service. I was even getting media attention from the likes of Bloomberg Businessweek and the New York Post…several more followed after.
One of the hardest periods in my professional career
But in early 2009…a bomb was dropped on me. I got slapped with a cease and desist at 5:30 pm on a Friday evening… to shut down my website by the following Monday…and get this…it was from the guys who I once admired…who motivated me to start OptionSIZZLE.com.
I was confused, shocked, flat out scared and pissed. I didn't get it…what did I do wrong, I'd ask myself? Were they trying to strong arm me? Was it because I didn't wear my hair in a ponytail?
On my road to getting towards OptionSIZZLE.com I've been kicked around, lied to and verbally abused in this industry, taking it all on the chin…hoping to make a name for myself and become someone.
I knew I had to fight this because I felt I didn't do anything wrong nor did they even allow me a chance to make a change or notify me about their exact concerns….. They just wanted me gone!
Starting out though, I had limited resources and I was going up against a business that had a lot more legal muscle than me. I was frightened and angry…I felt just because they had more money that they could just simply drown me in legal fees and bully me out of business.
Now, in today's business world, we see this type of behavior a lot…the big guy trying to strong arm the little guy out of business.
Catching a small break
Luck was on my side…
…I was able to get connected with a non-profit law firm in Chicago who was interested in my case. After hearing my side of the story and seeing the facts…they introduced me to a law firm that was willing to fight for me.
It's pretty wild…here we had a non-profit law firm interested in my case…granted I was a for profit business. They went out of their way to introduce me to the proper help I needed. Not only that, but I felt that my accusers thought I would pack my bags and fold…but with legal support behind me…I was willing to call their bluff with greater confidence.
Despite this, it was an extremely overwhelming period for me, pushed into court, managing client money through the worst financial crisis since the great depression and running a new website. The stress would get to anyone…and I was still in my mid 20s.
(In 2010, I stopped managing client money to focus solely on OptionSIZZLE. My last year, I was acting more like a shrink than a money manager…that took a toll on me. I learned a lot during that period. I wasn't as successful as I envisioned. I took on more than I realized…but was thankful for that opportunity, I tried my hardest to do the best for my clients.)
Don't believe everything you hear
Now, there has been some things written about me on the lawsuit and my services. The truth is that OptionSIZZLE was never shut down…not even for one single day. Some claimed that I was taking ideas from other websites etc. But that is pure ignorance on their part.
You see, today, you can go on twitter and type $ sign and a stock symbol…you might see 5-10 posts about unusual options activity in a particular stock name.
Why? Because there are more services that offer this information…and more people are aware of it.
During that time when this stuff came out, it hurt… I was just trying to live my dream and passion. I saw an opportunity to create something… and it felt like some were trying to beat me up, which was the case.
However, that's part of the game…by being out there, I've been able to help a lot of people…which trumps negative feedback from people who don't truly understand what you're about.
And you know what else?
Every option trade that hits the exchange floor must be reported to the Options Price Reporting Authority (NASDAQ:OPRA). It's not proprietary information, time and sales is public information. I know a lot of traders and investors who use unusual options activity as their main source of idea generation. They have no interest about tweeting their trades or writing about it…all they care about is making money…they could do without the recognition.
Would you rather be the first person to act on the trade or the first person to announce to the world you spotted the unusual options activity?
Unfortunately, the options education business is driven by monster-sized egos.
However, there was a lot of confusion about this a couple years ago. As investors become more educated on the subject…they can see how silly those claims were.
I'll be honest, I didn't really help my cause…when clients would ask about how I detected unusual options activity…I would tell them that my method was proprietary.
Through age and experience I feel that my wisdom ripened…I've become more open about my process (as evidenced by SIZZLE Method Report) that teaches what software I use and how I go about spotting the best opportunities.
With the experience I have been able to obtain in this industry, working professionally and now a normal investor like you, I really find satisfaction from teaching other investors how they can use options to enhance returns on their portfolio…while still being able to actively trade my personal account.
The future looks bright
Yes, we are approaching our six year anniversary…the road was a bumpy one…but the future looks bright. I'm glad that there are more services out there talking about unusual options activity. As mentioned earlier, competition brings out the best in people.
Over the years, I've learned how to hone my skills in trading, by conducting research… in the form of trades and testing what really works. While I started OptionSIZZLE on trading unusual options activity, I have created an approach to the market that I feel is unique.
I use all aspects of options… from selling premium to buying it…along with using unusual options activity to create better probabilities of success… with the goal of creating above average returns on a consistent basis.
Like dieting, people want the fastest, cheapest and easiest way to get fit. The same could be said about option investing…they want the fastest, cheapest and easiest way to learn and become profitable.
The thing is…if it was so easy…everyone would be doing it…and the rewards would not be nearly as great. My road to getting here wasn't smooth sailing…but the rewards make it all worthwhile.
Being able to look back, I feel that I opened the door for some of the services you see today. I also take pride in the fact that OptionSIZZLE was that much of a threat in its early days… that the only player in town invested a pretty penny to take us out.
I look forward to helping you and others for many years to come in becoming better investor with……. options.
To your wealth, freedom & options,
(While I can't disclose the specifications of the settlement, the case was settled outside court.)
Has there ever been a time in your life where you've felt so overwhelmed that you didn't think there was an end in site? If so, I'd be grateful to hear your story.