McMillan "Wall Street Subscriptions" Interview

Larry McMillan was recently interviewed by Wall Street Journal's Wall Street Subscriptions website. Read the interview below:

Lawrence McMillan is best known within trading circles for his Options as a Strategic Investment book, which is one of Amazon’s best-selling titles regarding index and stock strategies. He is also responsible for the MarketWatch Options Trader newsletter which is an essential weekly guide to valuable trading strategies.

We managed to catch up with Lawrence recently for a quick interview where he tells us about how to become an options trader, what the common mistakes are to avoid, as well as a little bit of history about how he became an authority on the options markets.

1. Hi Lawrence, thanks for agreeing to be interviewed on our Wall Street Subscriptions website.  To kick us off could you tell us what characteristics go into making a successful options trader?

In my opinion, a successful options trader is first and foremost someone who understands the relationship between the option and the underlying – especially understanding the “Greeks” and implied volatility.  From there, he must then have the discipline to establish his positions with the “best” option contracts, whether he is trading a hedged position or he is a speculator.  There really is no reason to treat options as a lottery ticket; that attitude is a losing one.

2. Many readers of our website are looking to embark on careers in the financial sector. In today’s world, what qualifications are needed to become a professional options trader and what kind of income could someone expect in that career?

There are so many different aspects to a career in options, that one would have to quantify exactly when he means.  A professional trader, trading for his own account, would necessarily need the discipline to trade positions with positive expected returns (most likely involving selling overpriced options as a primary strategy), while keeping a close rein on risk via either stops or hedges involving the underlying or other options.

Most professional option traders are not primarily speculators.  Hedged positions, over time, can yield returns in the 15% to 25% neighborhood, so one can judge his income by the amount of capital that he has available.  However, the more speculative the trading, the more volatile the returns will be....

Read the entire interview at Wall Street Subscriptions