‘I haven’t traded options before’: How a newcomer took top spot in the Options Game
It may not be surprising news to learn Trading Game winner Jack Golding, of Victoria, has been interested in the happenings of the sharemarket since he was a teenager. Practice, as we’re so often reminded, makes perfect.
It may not be surprising news to learn Trading Game winner Jack Golding, of Victoria, has been interested in the happenings of the sharemarket since he was a teenager.
Practice, as we’re so often reminded, makes perfect.
But what may come as a shock is that until a few weeks ago, Jack had absolutely no experience trading in options, assets he believed required a more active style of portfolio management to effectively utilise.
So hoping to learn a bit more about options and test the knowledge base he’s grown through years of investing in stocks, Jack signed up for the latest ASX Tradefloor Options trading game, and with just three well-considered trades grew his initial investment almost seven-fold.
Jack recently sat down with Reach Markets to discuss his success, how he achieved it, and what advice he would give to other traders.
[RM] When did you start trading? What/who got you into it?
[Jack] I’m a lawyer now, but as an undergraduate I completed a bachelor’s of commerce with majors in economics and finance. Even before then, I did start trading in high school with the ASX sharemarket game, and since then I’ve been trading shares on my own account, but I’m relatively new to options trading.
This is really the first time, I haven’t actually traded options in real life before – this game was really the first time that I’d had a go at it.
There’s probably a bit more to options technically than shares – you really have to get your timing right with options, whereas with shares if you miss-time the market you can hold them until they go in the direction you want.
With options, that’s not possible. It’s a generalisation, but I guess shares require less active portfolio management, and the passive aspect of shares is probably something which appealed to me.
But having a look at the outcome of this game, I’m probably going to start looking at options a bit more!
[RM] What did you think of the Implied Volatility trading platform?
[Jack] I found the platform very intuitive and easy to use, particularly the options cookbook, which made it easy to create trades with varying parameters – it’s sort of difficult to contemplate trading options without that kind of system and transparency that the Implied Volatility platform had.
[RM] Why did you start trading? What do you hope to achieve?
[Jack] My father’s always been invested in the share market, so that’s probably what got me into it in the first place, and it developed from there.
[RM] What are your trading goals? Is there anything you are focused on improving on?
[Jack] The goal of any trader in either shares or options is to maximise profits, so I guess ultimately in time I’d like to be in a position where I have to risk less and less capital on each trade without compromising profitability.
I know that’s not easy, but ultimately you want to be in a position where your risk is decreasing without your return doing the same.
[RM] Are there any books or courses you’ve completed that you would recommend?
[Jack] No books or courses, per se, but if I had to suggest anything I’d say keeping on top of current developments is really important, particularly this year.
There’s a number of podcasts out there that give you a good view in the morning and throughout the day of movements in different markets, and the Australian Financial Review has some good articles too, but no books or courses.
I listen to the NAB Morning Call podcast, which gives a more in-depth analysis of not just shares, but currencies and bonds as well, and a real world-wide view, whereas CommSec – which is another podcast I listen to – just gives you a very concise update on the movements in the Australian and US sharemarkets.
Those two are the principal ones.
I’m sure if Reach Markets did a course that it would be useful, because I found the tutorials in the game were really useful.
[RM] What’s your approach to picking direction and what sort of strategies do you use?
[Jack] This year, in my view, a lot of shares have been oversold – particularly in the energy and financials sectors – so I really just picked one I thought had been hammered, and WPL represented the one I thought had been hammered the most, and also seemed to have the most up-side potential. It was a company with solid fundamentals but which had been dragged down in a general market panic, and the majority of the market seemed to think… I thought it was materially undervalued and the majority of the market seemed to think we wouldn’t need oil again, and so when the oil price lifted, it lifted too.
[RM] What do you think the secret to success is?
I listen to podcasts in the morning at breakfast to give me an idea of what’s happened over night. I try to watch the markets through the day too but overnight developments are very important.
In terms of learning generally, I thought the tutorials that were part of the options game were very useful as well.
Also, control your emotions – this year’s been particularly volatile but you need to be able to keep your nerve if the market is moving against you.
Apart from that, market movements like we’ve seen this year don’t come along often so when they do you need to be in a position to be able to deploy capital quickly and take advantage of those opportunities.
We would like to thank Jack for his participation. If you would like to try trading for yourself you can do so by taking a trial to our Implied Volatility platform.
Past performance is not a reliable indicator of future performance.
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