EP: 108 The Growth of Options on Futures

#FuturesRadio

00:00 / 23:56

Guest:

Larry Shover

Co-Founder & CIO of Solutions Funds Group ‖ Senior Advisor to Efficient Capital Management

Record Date: 1/31/17

Dear Traders,

Today I spoke to a man who began his career at the Philly stock exchange working for a premier options trading firm. He then moved to Chicago to work as a prop trader on the floor. He is a Fox News and Fox Business news contributor. His name is Larry Shover, the Co founder & CIO of Solutions Funds Group.

We chatted a bit about why there has been so much growth in options on futures and Larry tells us how he’s successfully traded options on futures and why he thinks that a futures trader mentality can be a great asset when learning how to trade options.

We also discussed managed futures in mutual funds, and why they’re currently a hot topic. We end the conversation talking about an opportunity that Larry sees in the near future with the correlation between some US and Chinese Markets. Larry is a great guy who understands many facets of the trading industry. It’s always great speaking with him about these important topics in the industry.

[bctt tweet=”There’s a substantial growth in futures traders.. The futures trader is quicker to learn the discipline that’s necessary to trade options…” username=”LarryShover1 “]

Biggest Takeaways:

Why there’s so much growth in the futures and options on futures business. How discipline plays a role in the growth of futures trading popularity.
The reason futures traders are jumping over to options and how they make the transition successful.
Using managed futures in mutual funds, and why they’re currently a hot topic.
The growing evolution in correlations between U.S and Chinese markets.

Rapid Fire:

How has your trading evolved over the years?
- I trade a lot smaller, and my timeline has expanded five-fold.
Can you tell me the moment that trading just clicked for you?
- A few months trading British Pound options in the early 80’s. It went one to one with the US Dollar. It was an unbelievable market. I learned that discipline can take you so far.
What’s the number 1 source you spend your time on?
- I look at disparities in options markets to give me a clue to what’s going on in the futures market. You look at the difference in price between an equally distant call and put from at to money to judge what speculators are doing. You look at term structure, which is the implied volatility of a 30-day option vs. a 60-day option.
Favorite Book About Trading:
- Against the Gods: Bernstein
Favorite Movie About Trading:
- Barbarians at the Gate
Best Advice Ever Received About Trading:
- When you’re in doubt, or don’t feel right. Always buy or sell half your position.
Advice to Give to Others About Trading:
- It’s hard to replicate how you’re going to feel emotionally when a position goes against you. It’s important to know exactly your risk to reward target. Take emotions and personality out of the equation. Take what you’re willing to lose and cut it in half, then use only 10% of that in any given trade. The worst thing possible is not to trade tomorrow.

Resources:

Quotes:

“I’ve always been fascinated about prices changing everyday, and why they change…” 1:00
“There’s a substantial growth in futures traders.. The futures trader is quicker to learn the discipline that’s necessary to trade options…” 7:00