Fahad Khalid is the founder and chief investment officer of JaguarAnalytics, where he professionally trades equities and options.
Khalid holds a master’s degree in finance and accounting, with extensive work experience at firms such as Deloitte, Alvarez and Marsal and OptionMonster. He gave a presentation at the San Francisco MoneyShow in August 2018 entitled, “How to Hunt for Winning Options Trades Using a 3-Pronged Approach,” describing fundamentals, technicals and unusual options activity.
Fundamentals tell us what to buy. Technicals tell us when to buy. Unusual options activity tells us how to buy. According to Fahad, mastering these three steps is the key to success in options trades.
In the following interview, Fahad gives readers great insight and expertise into the world of options trading. His knowledge offers readers a great opportunity to improve an individual’s options portfolio.
1. What is your best advice for an investor starting out?
“The best advice I can give you is to be extremely observant around what you see in the markets. One of the things that I learned along the way is that the best opportunities are always in front of you; you’re just skipping them. Be observant to the clothes you’re wearing, the car you’re driving, the food you’re eating, the places you’re shopping and it’s all there right in front of you. All it takes is that one extra effort to find something that is always there, and just understand it and research it. For example, have you ever gone to Shake Shack for a burger? Did it ever occur to you that you should take the next step and pull up the stock to see what it was doing or what the company was doing? Maybe you’ll find something very interesting. That’s the easiest, smartest and best way to learn more about investing. Just follow your intuition, gut and what you interact with on a day-to-day basis.”
2. What is your favorite options trading strategy? Why do you recommend it?
“Diagonal call spreads. A diagonal call spread is a variation of a covered call. Essentially, instead of buying the stock and selling short-term outside calls against it, you buy a Long Term Equity Anticipation (LEAP) security call, and then sell short-term out-of-money calls against it, thus creating a better yield for the position than what a covered call position would suggest. On a stock that is generally in an upper-trend and rising gradually, a flat to uptrend position like this works absolutely beautifully.”
3. What is your current day-to-day role with options?
“As a chief investment officer, my top priority in the company [JaguarAnalytics] is to make sure that the investment advice that I’m giving to my clients is fully vetted, the entries and the exits, and that portfolios are being managed according to the expectations. The research team, which includes myself, does all the research behind the door, but the ultimate entries and exits, the decisions, are carried out completely by me. That’s my main primary goal on a day-to-day basis.”
4. Do you trade options more than stocks?
“It really depends on the liquidity. Quite often, we’ll find ourselves in a spot where a small-cap or a mid-cap stock doesn’t provide enough liquidity for all of the clients to enter at the same time, so we just go with common stock. But if it’s a large-cap position, with a well-established name and is very liquid, then we’ll choose to go with options. It really depends on the position.”
5. How did you first become involved in options? What was your background that led you to that point?
“I always followed my passion into trading. That landed me a business partnership a long time ago in 2010, when I made a pitch to John and Pete Najarian of OptionMonster. I was with them for six years where I gained a tremendous amount of experience and education providing client services. Ultimately, that company was sold in 2016 to E*Trade. At that point, I transitioned over and started on my own with JaguarAnalytics. It has been a learning experience along the way working with some of the best people in the industry, primarily John and Pete Najarian.”
If readers want more information on Khalid or the projects he is involved in, go to JaguarAnalytics.