Mark Wolfinger began his options career in 1977, when he became a market maker at the Chicago Board Options Exchange (CBOE).  For the past 6 years, he has been educating individual investors, stressing the conservative use of options to enhance returns and reduce market risk. His latest book, Create Your Own Hedge Fund: Increase Profits and Reduce Risk with ETFs & Options (John Wiley & Sons), 2005 outlines those conservative methods.  His earlier book, The Short Book on Options: A Conservative Strategy for the Buy and Hold Investor concentrates on the most basic options concepts for people who are first learning about options. 

Part I : Who is  Mark D. Wolfinger ?

TJ : Please provide a background of yourself ? What were you doing before you become a trader

MW : My degrees are in Chemistry (BS from Brooklyn College; PhD from Northwestern University), and before I became an options trader, I had been a senior research chemist for Monsanto Company (worked there 7 years).   When I was given the opportunity to trade the laboratory for the trading floor of the CBOE, I couldn’t resist.  There are many people with scientific backgrounds (mostly mathematics) who traded at the CBOE, but few had chemistry backgrounds.

TJ : When and how did you get into Options trading ?

MW  :In 1976 a friend, Sanford Naiditch, purchased a CBOE membership.  He didn’t move his family to Chicago immediately, but instead returned to his home (Akron, Ohio) on the weekends.  He was eager to discuss his life as an options trader, and I found it fascinating.  Together we decided (I needed very little encouragement) that becoming a market maker at the Chicago Board Options Exchange would be a worthwhile endeavor.  Sanford even went so far as to find someone who owned a membership but was not interested in becoming a market maker himself.  It was arranged that I would come to Chicago, meet the seat owner and talk about the possibility of my becoming his nominee on the trading floor.   We hit it off and I returned to Akron, gave notice to Monsanto, packed my car and drove to Chicago.  That was in December 1976 and I now had to learn how to become a market maker.
 
TJ : What prompted you to be author and educator ?

MW : As a market maker, I saw many customer orders and I noted that few were sophisticated and that most bought and sold options in a manner that gave them little opportunity to profit.  Years later, when I left the trading floor, I decided that I could put my trading experience to use and transmit part of what I had learned options novice.  My education business is targeted to the person who is first starting with options and to those with a little experience.  I want people to understand what options are and how they work.  I encourage them to begin trading knowing that options are risk-reducing investment tools, and should not be used for gambling. 

TJ : what are you first : trader or educator ?

MW : Educator.  I earn more income, and spend more time, trading, but am more interested in teaching others how to use options conservatively. 

TJ : How do you find time to trade ?

MW : I am not a full time day trader.  I open spread positions as opportunities present themselves, and spend time monitoring my positions, making sure my risk is under control.  I never day trade, so I can always take time away from the markets.  I write when the markets are quiet, or when the markets are closed.

TJ : What is a typical day like ?

MW : Check the pre-market opening news.  Check e-mail.  Reply to readers and seminar clients who have questions.  Once the market opens, I check to see if any adjustments are needed and then I take my morning walk.  I spend most of the day in front of the computer – watching positions, contributing to an options discussion board online, or writing.
 
TJ : What make you want to become a trader ?

MW : It wasn’t that I wanted to become a trader so much as I liked the idea of being able to leave the corporate world, work for myself, have the opportunity to make lots of money and take plenty of vacations.  The idea of being a market maker on the exchange floor was very exciting to me.  Well, it didn’t work out the way I imagined.  In the more than 20 years I spent as a market maker, I went on only one decent vacation.  I made plenty of money, but the truth is that I was careless with my risk control and encountered several serious setbacks.   But I had loads of fun, learned a great deal, made some money, and came away feeling that I made the right choice when I gave up chemistry for trading.

TJ : What was it like when you first started ?

MW : The trading floors are very different that it they are today.  They were much smaller, there was only one options exchange, and traders entered their trades on ‘trading cards’ and reported each trade to the exchange by turning in tear sheets from those trading cards.  Only calls were traded - puts didn’t begin trading until a few years later.  Today, there are few market makers.  Big trading companies own the majority of the exchange seats, most of the trading is electronic and the volume is huge and keeps growing.

TJ : Did you receive any assistance when you started trading ? Where did you go for advice ?

MW : Yes.  The clearing houses (the equivalent of broker for the market makers) provided seminars, but they were pretty unsophisticated compared with educational material available today.  We were made aware of the Black-Scholes model and how to determine a fair price for an option.  Then we were on our own.  I received a good deal of intelligent advice, but ignored the part about carefully avoiding too much risk.