January 22, 2010

Stock Options

Hey guys, as some of you know I graduated from college with a degree in management with a concentration in personal financial planning. While I’m not making much use of that right now, its been extremely beneficial as far as investing at an early age and setting myself up well for the future. To be honest, and I’ve touched on this before I’m shocked at how little some poker players invest. It’s great to have nice cars and expensive things but the majority of professional poker players are young and would greatly benefit from putting money away as soon as possible.

Anyways, during my time at school I took quite a few investment courses. In 2 of these we did an investment game, the first time I invested just with stocks and nothing else. I didn’t find it boring, but wasn’t really excited for the project. The next semester, ironically I had the same teacher and we did the same game. Instead of stocks, this time I chose options. I had a ton of fun doing this. While it was much more volatile, the rate of returns can be so much higher and it was just more exciting to me.

It was a tough course and I spent hours over spreadsheets analyzing different companies and did very well in the end. I’m not going to say that I’m a great investor as it was obviously play money and it was the fall of 2008 so I probably just could’ve bought puts on everything and made a lot. However, it was something new a different and very interesting to me. I had a very basic strategy, I didn’t really used any advanced buying techniques as I wasn’t confident enough and I basically had to learn on my own since it wasn’t part of the curriculum and the teach wasn’t much help.

I graduated that fall and started my career as a poker pro. During 2009, I still invested but paid very little attention to the market and current events. My cousin is a financial adviser and I go through him so I’m not trading individual stocks and fortunately I don’t have to follow the market every day. Recently in a meeting with him, we were talking about different career paths and he brought up the idea of trading options. I told him that I was interested and my previous experience with them. He gave me a couple of books he had on them and I’ll get started on those soon. Unfortunately, they’re not the most exciting topics but are obviously worth the read.

Also, I really need to start paying attention to the markets again. In the fall of 08, I was constantly reading, studying, etc and now I’ll go a week at a time before even going on google finance. I’m going to subscribe to the wall street journal and definitely make it a point to get involved again. Unfortunately I don’t have any of the cool software that my school did and that’s how I did the majority of my research and projections.

As far as actually investing. I’m definitely not going to get started for at least 3-6 months. I have to read these books and know what I’m doing in order to put money into it. In addition, options are extremely high variance so I need to put some money aside to invest. However I am very excited to learn about this again. I feel weird not using my degree at all and this would give me a reason to. I’d love to hear anyone’s opinion who has had any experience with this in the past as well as any advice.

“There are two things to aim at in life; first to get what you want, and after that to enjoy it. Only the wisest of mankind has achieved the second.”

- Logan Pearsall Smith

Posted By bosoxx34 at 05:26 AM

16 Comments

16 Comments:

OnTheRail15 posted on January 22, 2010 at 06:54 AM

Ontherail15final

Awesome. All I do is put money in my IRA lol.


DaddyWarbucks posted on January 22, 2010 at 12:59 PM

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As a matter of interest, what books did he recommend?


Bonito posted on January 22, 2010 at 18:30 PM

Untitled

My dad retired because he makes good money trading options.

Except he does it backwards from most people. Like when you are buying the control of 10,000 shares at the price of 1,000. He is the guy that owns the 10,000 shares selling you that control.

I guess he pretty much sells covered calls (Im not 100% sure on terminology). He usually out performs all of the MSNBC "experts" by about 5% each year and the big mutual funds by 7-10%.

But he spent 3 years perfecting it w/ fake money before he started to use real money. I really need to learn what he does though.


Bonito posted on January 22, 2010 at 18:31 PM

Untitled

Oh and good luck to you. Options are not the easiest thing to learn.

But variance is still smaller than poker, then again so is the ROI.


bosoxx34 posted on January 22, 2010 at 18:41 PM

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DaddyWarbucks he gave me two books from his office. They're both pretty old but I gotta imagine they cover the basics. They are Options: Essential concepts and trading strategies by the options instute and Options as a startegic investment by Lawrence G. McMillan


bosoxx34 posted on January 22, 2010 at 18:41 PM

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Bonito, that's awesome and I would definitely try to learn from him


Zuberi posted on January 23, 2010 at 19:37 PM

Tyler_durden

Def something I need to have a closer look at


OnTheCome posted on January 24, 2010 at 00:50 AM

Trip

Are you going for CFA - CFP. Financial Planners really do bank. I am not sure how it is in the US but here nearly every product you advise you get initial commission + trailing commission. Depending on net worth of your clients you can make $10,000 a year in passive income for every SoA you write. Easier then poker :)


bosoxx34 posted on January 24, 2010 at 15:08 PM

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Not going to get certified anytime soon. They do make good money, but if I started up as a financial planner I wouldn't be able to coach baseball which is what I really enjoy.


G586 posted on January 25, 2010 at 20:53 PM

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Couple of links...

http://www.trade2win.com/

http://www.interactivebrokers.co.uk/en/main.php

Worth learning this stuff, lots of parallels with poker.


bosoxx34 posted on January 25, 2010 at 22:08 PM

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Thanks G586 I'll check those out.


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