Interview with Professional Options Trader – Tony Zhang

Tony Zhang is the chief strategist at OptionsPlay, a company that offers an intuitive yet sophisticated options trading platform aimed at removing complexity out of trading options to let users focus on making investment decisions.

He helped build the OptionsPlay platform from the ground up and took it to the market for institutional and retail investors within 18 months. In his current role, he leads the research and development of the OptionsPlay platform, after previously working as a market strategist specializing in equity and foreign exchange (FX) derivatives for GAIN Capital.

Zhang, a derivative specialist and options trading professional, gave a presentation in August 2018 at the San Francisco MoneyShow, a business conference in which audience members are advised by investment professionals. While there, he answered a few questions regarding options.

Question: What is your best advice for an investor starting out in options trading?

Answer: One of the best resources that I’m not sure everyone is familiar with is the Options Industry Council. It’s a free resource available to everyone in the U.S. that can be used to educate on options. It covers all different types of strategies and how to get started with options trading. That’s a good place to start if you’re brand-new.

Also, I encourage users to use a tool such as OptionsPlay. Our goal is to make the experience of learning about options to be accessible for users, but also want to bridge the gap between the educational materials and the actual trading platform. Most of options education is very theoretical and academic. You learn those theories, but once you pull up your option trading platform, you see these huge options chains and a lot of people get lost and struggle with where to start. That’s why we teach education on our actual platform so that not only do you learn the concepts, but once you see how we teach it on our platform, you can immediately log on and start trading.

That’s a gap that a lot of educators don’t help bridge that OptionsPlay does very well.. We price our platform at a reasonable rate of $50 a month so that it is accessible to everyone. Not only do you learn on the platform, but you can actually access it immediately and start trading simple strategies.

Question: What is your favorite options trading strategy? Why do you recommend it? What are the major risks associated with this strategy and how do you minimize those risks?

Answer: My favorite strategy, by far, is trading debit spreads, which is a vertical spread. I like to trade debit spreads because of the risk/reward ratio that comes with debit spreads. You are risking relatively small amounts of capital to try and make double the amount if you are correct on a directional view. I’m a speculator, meaning I like to bet on direction, and debit spreads is one of the most efficient ways to bet on direction using options. Through debit spreads, you really minimize the amount you have at risk, and you also minimize time decay. If you are just buying an outright call or put, then you have time decay that is working against you. In order to minimize that, trading in debit spreads is one of the best ways to do that. Also, I trade a lot of covered calls on the stocks that I own in my account. I sell a lot of puts for stocks that I want to own in my account, and I think that is a very under-utilized strategy that many investors should be looking at as an alternative to just buying the stock outright.

Question: What is your current day-to-day role? What are some of your tasks within this role?

Answer: I am the Chief Strategist at OptionsPlay which means that, for the most part, I create the product from a functionality perspective. I have a technical team that builds our product from my roadmap. Additionally, I do create the education around teaching how to trade options and utilize our platform for various forms of options trading strategies.

Question: How did you first become involved in options? What was your background that led you to that point?

Answer: I started when I was 19 at a company called FOREX.com. I started as a broker selling FOREX currency trading to retail customers. Eventually, I moved my way into the market strategist role, where I was providing clients with market color and strategies for trading. During that process, I learned how to trade futures, and that was my first introduction into derivatives. I spent quite a few years trading very actively S&P Futures and working with all different types of clients. At the time, our firm wanted to start offering securities trading; we wanted to trade stocks, and specifically FX options. I helped design a lot of the education around that FX options product, so that is actually how I got started in options. We were an FX trading shop that wanted to offer an options product to our FX clients. I was then able to start trading equity options on my own through that learning process. Eventually, I had the opportunity to start this company [OptionsPlay] about five-and-a-half years ago to really change the way people look at options. One of the things we identified in the market was that the user experience of option chains hasn’t changed since the late 1980s. Once we started displaying option prices on a computer screen, we’ve been displaying it that same way ever since. User experience has come a long way in all other forms of our lives and we realized that options trading was really stuck in the 1980s. So, we wanted to take a different approach, visually, to options trading and that’s how we started this company, OptionsPlay.

Zhang agreed to offer stockinvestor.com readers a free, 30-day trial to OptionsPlay and a 20% discount on a subscription using the following link: www.optionsplay.com/income. The offer is intended to help new option traders to get started.