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Jon Najarian is one of the most popular options traders on Wall Street. He is a regular anchor on Fast Money and founded the incredibly popular OptionMonster and will be a featured teacher at the upcoming 3 Gurus webinar (click here to learn more).
Jon took the time to chat with me to share how he got started and tips he offers to become a successful trader:
Background
Jon: I began my trading career as a clerk on the Chicago Board of Options Exchange. I had no prior experience because I was only two weeks fresh out of the NFL. In those days you had to learn from a small group of people who employed you. Today is much different with sites like Wall St. Cheat Sheet where investors can get good information.
Damien Hoffman: Jon, how did you and your brother evolve from traders to starting OptionsMonster?
Jon: We started by selling our floor trading operation to Citadel in 2003. Then we developed some proprietary algorithms to collect trading data across all the exchanges so we could comment on it. Once OptionsMonster was rolling, we developed TradeMonster so our users would have a trading platform to make trades in a quick and user-friendly way.
Advice
Damien: Jon, your brother and you have played a large role in bringing options trading information from the exchange members to the investing public. What about options makes them worthy of greater awareness?
Jon: Options are excellent trading instruments because you can keep risk to a minimum. You can also gain leverage without risking your entire account or using margin. They are also used as an insurance policy against open stock positions. All of these benefits helped many investors protect themselves in 2008.
Damien: What two mistakes can options traders avoid to become more successful?
Jon: First, the biggest mistake all traders make is trading without an exit strategy. All traders must have an exit strategy. Whether you are trading options or stocks, you should ask yourself two questions: “What am I going to do if this does not work?” and “What am I going to do if this does work?”
Second, don’t be a pig. For example, if you double your money in an options trade, take half off the table and play with the profits. I’ve seen too many traders watch great gains evaporate very quickly. If you don’t manage your money, you are not addressing the inherent risks and unknowns in the markets.
Damien: I’ve noticed that many great athletes make great traders. As a former NFL player, how did your athletic career help you as a trader?
Jon: If you are trading with a group at a firm, then athletes from team sports know how to excel in that environment. If you are an individual trader, athletes know how to use their discipline to be successful.
Successful athletes got up early in the morning to train and practice no matter how sore they were from the previous day. Great traders have the same work ethic. My days in the NFL have played a huge role in my career as a trader.
Damien: Jon, thanks for taking the time to share how you got started and what you recommend for improving as a trader.
Jon: Anytime, my friend. My pleasure.
To receive additional wisdom from Jon and the other industry leading professionals, learn more about this educational online event or register at http://www.thethreegurus.com/
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Superb and brief interview with Dr. J. He is a trading legend and his wise experience on the floor provides valuable insights for traders reading this article.
Najarian makes reference to his “days in the NFL” as if he actually played in the NFL. But the sad fact is that JN spent a very short term in the pre-season of 1981 with the Chicago Bears (see his book How I Trade Options, p.2). And yet he continues the lie of having played in the NFL and being a former NFL player. This is fantasy and sad because if he would leave behind his own myth making he just might teach us something. But it seems to color everything he says and does and thus makes him suspect. In the interview, once again he harkens back to the fantasy of his days in the NFL see the answer to the question:”As a former NFL player….” The fact is he never was an NFL player and thus he can’t be a former NFL player. It’s a lie he perpetuates and thus he can’t be trusted. His is a sad commentary of those who wish to be something that they can never be. He needs to grow up, after all it is nearly 30 years since his pre-season tryout.ACEMAN