Black or white. Wouldn’t it be nice if the answer to every question had a very clear answer? Then again, if all answers were obvious a lot of “experts” and “advisors” would be out a job. That was the essence of this episode of Truth or Skepticism.


tastytrade has an objective of helping individuals understand that they can manage their own money and then we want to show those investors how. It isn’t easy. Ask us. Individual investors are purposely kept ignorant by financial firms. Perpetuating that ignorance breeds a fear we as investors are not capable of managing our own finances. This is the very foundation of the fee-based system on which financial firms depend.

The NFL is an incredibly successful and profitable organization. Sundays, Monday nights and even Thursday night have become sacred for watching football. Social engagement through avenues such as fantasy football have helped educate and engage countless viewers. The NFL is a dynamic, well engaged entity whose very success is a result of educating viewers. It is the exact opposite of the ignorance needed for a fee based system.

Investors see their choices in black or white terms. Either turn their assets over to someone or actively trade. Like all things in life, including both Tom and Dylan’s hair, actual answers are often gray.

A total package investor, as Tom explained, is someone who sees that passive investing and active trading as a Venn diagram. They understand we can have a passive core portfolio and then use options to improve cost basis. A total investor is product and strategy agnostic; they use whatever product and strategy suit offer the best probability of being profitable. They take advantage of technology and want to learn how to take control of their money.

Dylan believes this year’s presidential election has shown people no longer want power centralized in a few hands. tastytrade is out to create a similar revolution. We want to decentralize the power of financial institutions and place the decision making back in the hands of individuals. Still, the allure is advertised as “This can be you if you invest with us,” perpetuating that centralized fee-based system.   

Over the course of the past two years, after fees, passive investors on average have lost 2%. Tom posed a very fair question when he asked where else a performance like that is acceptable? The question is rhetorical since there is no answer.

Limited profitability in exchange for higher probabilities of success. Want the secret sauce? That’s it. If we’re willing to accept a limit as to how much we can make, we can drastically increase the likelihood of making money. It is why we sell options instead of buying. There is a maximum we can make when selling options as compared to buying, where there may not be a ceiling. However, there is a reason why so many long option positions expire worthless. That same reason is why we sell options.      

Josh Fabian has been trading futures and derivatives for more than 25 years.

For more on this topic see:

Truth or Skepticism with Dylan Ratigan: July 7, 2016