Ep606: Mark Longo – Don’t Be Afraid to Look That Gift Horse in the Mouth

Andrew Stotz 00:02
Hello, fellow risk takers and welcome to My Worst Investment Ever, stories of loss to keep you winning. In our community, we know that to win in investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And that mission has led me to create the Become a Better Investor community. In the community, you get access to the tools you need to create, grow and protect your wealth, you also get an ability to join our weekly live sessions. And most importantly, you get access to the risk reductions lessons I've learned from more than 600 guests just go to MyWorstInvestmentEver.com right now to claim your spot. Fellow risk takers, this is your worst podcast host Andrew Stotz, from A. Stotz Academy, and I'm here with featured guests, Mark Longo Mark, are you ready to join the mission?

Mark Longo 00:55
I am indeed worst host. I don't know you're selling yourself short there.

Andrew Stotz 01:00
Well, you know, I read this great book called The Blue Ocean Strategy and they said, you know, come up with something that's so, so different that nobody's going to compete. And you know, up until this point, Mark, I haven't had anybody challenged me for the title.

Mark Longo 01:15
There you go. And I've been doing this podcasting for a while so I you I've definitely come across worse hosting. Yeah.

Andrew Stotz 01:21
Yeah, well, I'm improving at least so but it gives me a chance to say that if I make any mistake. Well, after all, I told you I was the worst. There you go. And but my guests aren't the worst. I want to introduce you to the audience. Mark Longo is the founder and CEO of the options insider Media Group, a former member of the Chicago Board Options Exchange, Mark created the first options podcast over 15 years ago. Like that's when we transmitted it by mail, I think

Mark Longo 01:53
I think it was two cans of string ties together. I think a lot of the people who are trading options now were maybe born but all those Wall Street bet kids and the meme stock kids

Andrew Stotz 02:03
Exactly. Well, that single program has since grown into the options insider Radio Network, the world's leading Podcast Network for option traders, known as the voice of options for his pioneering work in digital media. Mark now hosts a variety of long running programs, including options, bootcamp, volatility views, and this week in futures options, among others. Mark, take a moment and tell us about the unique value that you bring to this wonderful world.

Mark Longo 02:33
So interesting question. You know, it's it's funny, because we started this whole options, insider thing, I think the name really conveys it all for what we were trying to do with this approach to options and to trading and to information about the options markets. Like you said, in my introduction, we started this over 15 years ago, coming up on 16, which is kind of scary to say out loud, but it's true. And before that I was a market maker for a number of years. But when we were trying this approach to try to create a media firm around options at the time, there were really a very few people talking about options. And there was a couple, I think the striking Price column was out there, and Barron's and a few others, and B, there was really no one out there talking about options who had any sort of background, and practical background in the options trading world. So coming from a market making background, I wanted to try to convey that to the audience, whether it was a reader of an article on the website, or whether it was someone was listening to what at the time was a very nascent medium of podcasting. And we thought, Is there even an audience? Is there a market for people who want to listen to derivatives audio sounded like a crazy thing. And we went out to our first round of sponsors way back in 2006, and started floating this idea. They said the same thing. They said, What the hell is a podcast. And so we started explaining to them, Well, you know what radio is right. And that's where the name options insider Radio Network came from. It had a stock all these many years later. But from the beginning, our Mo, our value added, if you will, is really been around trying to provide that voice of experience, that voice of knowledge from the options trading world could be market makers, like myself, could be brokers or other exchange people, other people who have some sort of unique insight to bring to bear on the world of options. So that's always been our Mo. We're here 15 plus years laters. I guess we've succeeded at that. But it has been fun. It's been a challenge at times, but we wanted to do something different. We didn't want to just, you know, go out and hire a horde of English majors straight out of school and say, Here you go, sit them on the options, markets, and now you write about options. That's your thing. You want to do something a little bit different, a little bit unique. And so that's kind of been our focus so over all these.

Andrew Stotz 04:33
And, you know, given that our podcast is about reducing risk, and I'm on a mission to help a million people reduce risk in their lives. What I'd like to ask you before we get into the big question is, what out of all the different programs that you have and all that. Think about a beginner or you know, someone that's learning about options interested in options and they're interested obviously, some people are interested in options for the product. is trying to make money and some people in the interests of trying to prevent themselves from losing money. Maybe you could have just a little bit more focused on that, given that we're on this podcast about that. Where would you tell them to go like which one of your programs should be the one that they should listen to begin to understand, you know, what's out there.

Mark Longo 05:21
For the beginner. That is definitely options bootcamp. And we've seen that over the last couple of years, it hasn't exploded, it was always a very popular show. But as we've seen, you know, 2020, and 2021. And now 2022, and the massive tsunami of new retail options, traders that has hit the market, many of them have gravitated towards that show options bootcamp, we had a guest on the network recently say, we've always wanted new people that come to the options market, we didn't know they're all going to come at once. And that's kind of what's happened. And so it's been fascinating to watch. And so that show has been running for over a decade. I do that with Dan passerelle. He's my co-host on that one. And it's really designed for that very basic, that very beginner, you have some experience, probably with stocks. And now you're looking to take that next step. What are these options, things I want to learn a little bit more. And that covers all basics that could be looking to try to gain capital appreciation could be as you mentioned, trying to hedge with risk. It's been 10 plus years, 200 plus episodes, we've covered the gamut in the world of options. So that's definitely a great starting point. We also have another show call Options Playbook radio, they both err on what we call education Wednesday, so either of those two will be good starting points for you. And then you could of course, branch out to the nearly other dozen other shows that we have going on throughout the week.

Andrew Stotz 06:36
I love the name because I also have I have a course called the valuation masterclass boot camp. And Mark, I always wear something in the boot camp because I tried to get the people in the boot camp my students to know, This Is Hardcore. This is camp, and this is what I wear. For the listeners out there. I'll tell you what I'm putting on my head.

Mark Longo 06:55
Oh, there we go. You know, we tried, we tried to have that gimmick alive in the early episodes of options bootcamp with the drill instructor voices and the whistles and it quickly fell by the wayside. Because magic doing that over a decade, it kind of makes a lot. That's a big commitment to the gimmick. Yeah, for

Andrew Stotz 07:11
the listeners out there. I was putting on what my $1 version that I picked up of a drill instructors hat. And yes, I think after 10 years of using those sounds of yelling at people, I think you may have dwindled your audience down because everybody doesn't like to be yelled at. But bootcamp is awesome. All right. And one last. So just to go and talk about that risk reduction. If you think about person that coming to options only for the sole idea that somebody told me that I could use options to try to reduce my risk, maybe in the equity market or something like that. What would be the most common way that people are using options these days to reduce risk?

Mark Longo 07:53
Well, the basic the obvious the obvious answer to the reduction of risk question and a huge use case for a lot of asset managers and fund managers and long only equity traders out there is of course, buying your traditional put a lot of people it's going to be in the s&p, so it could be SPX, if they're a little bit larger size, it could be spy, if they're a little bit smaller, even though spy isn't that small anymore. So maybe you're gonna get into the micro E Mini options or something like that. But there's a whole array of approaches you can do with that buying your basic putt, people discover that they learn about options, they learn about buying puts, and then they quickly realize, hey, these things are expensive. And then they start realizing what are some ways that I could reduce that cost like Like any good, quote-unquote, insurance policy, right? It's expensive. And so you want to find ways to reduce that. And that's where a lot of our other programs really start to pick it up. He talked about ways to do spreads, other types of approaches to reduce that outlay, because if you just go out and buy, let's say straight up 5% of the money puts in the s&p and you do it on every few months basis, and you roll it, most studies put that at somewhere around eight plus percent a year it's going to cost you and just quick math, you know, most equities are going to move about 7% to the upside a year, right. So you're already in the hole, if you're doing that to start off to begin with. So you need to do a little bit more than just that. It's also challenging if you just buy a put, when do you actually sell it you see the market sell off? And then is your putt moving enough yet there's a lot of dynamics involved in there in terms of more advanced concepts like volatility and skew that we get into on let's say, programs like volatility views that are a little bit more advanced, but they also help with that risk mitigation approach. Because just buying a put and sitting on it, is you have to do more than that. You have to do a little bit more than that. And so it's that's the beginner risk reduction trade, but then it quickly evolves from there as you get a little bit more experienced as your needs develop. Maybe you're not an s&p person, maybe you're a NASDAQ. Maybe you have a single stock exposure that you want to hedge. So there's different ways you could frame it and construct it but it all starts with that basic put purchase.

Andrew Stotz 09:51
And one other question is right now the market that's you know, on fire is the US dollar. Let's say that somebody takes the view The US Dollar is, you know, overvalued and that at some point, it's going to come crashing down. If somebody takes that view, and they have to hold dollar assets to a certain extent, and they're looking for a way of hedging, is that same type of options available? Or what do they do in that case?

Mark Longo 10:21
Yes, yes, they do. You know, fine. We're just talking about this last week or this week in futures Options program. I was joking on that show that the number of times over the last couple of years and I've talked about FX probably kind of on one hand, because it's a very normally quiet, very staid marketplace not a lot of volatility not a lot of action outside of your Swiss franc, you know, black swan moments and things like that. But in the last few months, obviously, we've seen the dollar moving almost a parity with the Euro now with the pound, you know, Bank of Japan making historic moves to try to preserve the yen. So lots of interesting things going on out there. So yes, the answer your question there is there are options markets in the FX space, you can do them on yen, USD, you could do them on you know, USD, Euro, USD pound, whatever your currency exposure of choice is Ozzie USD, you can do all that kind of stuff. With dollar, obviously. And then of course, it'd be a question of putting on puts or calls depending on which way you're leaning on the spread. But those markets, I am happy to say are growing more liquid more growing more more volatile, growing more stable. So there's more there for not just a hedge here, but also a trader, if you're interested in FX, it's traditionally been a place where volatility goes to die. But these days, there's enough action out there and enough volume, that's just about anyone can go look at the FX markets. And if you're well versed, I mean, I wouldn't recommend effects for the novice trader, it's the notion of trying to wrap your head around these currency pairs and how they move in lockstep with each other, or sometimes against each other. It takes a little bit more, I think, advanced exposure to the markets. But if you if you're comfortable with that, and there are deep and liquid options, markets, you can trade around those as well.

Andrew Stotz 11:55
So that's great. So you've given us some background on you know, how to, let's say, try to begin the process of hedging of maybe an index like the s&p as an example, or NASDAQ, you've also given us some idea of thinking about how we could hedge against, let's say, a strong currency versus a weak one. But you've also mentioned something that I think is interesting, which is, I know, in Asia, if people are crazy about forex, I mean, I can't tell you the number of people that come to me, who know nothing about markets, and they tell me, I'm trading in forex, and I just think within six months, you're gonna have lost all your money. And the reason they asked me why do I say that? I'd say because you're betting against Central Banks. And you're betting against commercial banks that have massively deep pockets, and you're betting against politicians and their decisions on what to do and these things are very difficult to win against. would you what would you add to that? That thoughts, those thoughts that I have on it?

Mark Longo 12:58
I definitely agree. Like I said, I facts is not for the neophyte, the nascent, the beginning trader at all. It's the only asset class I've been to many briefings and events from the SEC and the CFTC and big events over the years. That's the only asset class where I've had specific briefings from CFTC commissioners about how just riddled with scams it is. And that wasn't I mean, the the retail FX space in the US has been really clamped down on in the last few years, because it is you're right, it is very much overrun with scam artists, and people don't know what they're getting into. So that now a lot of the FX market has really moved to the overseas space. And I would still give that same caution to people, no matter where they are, I wouldn't leap you hear the headlines. Oh, you know, the pound is about to hit parity with the dollar, I wouldn't just rush in loading up one way or the other on that trade. There's a lot more going on behind it. And yeah, I definitely would not recommend FX as even the most diehard FX people that I know, we're not recommend FX as a starting asset class. So you have to work your way up to that ethic.

Andrew Stotz 13:58
So ladies and gentlemen, we could stop the podcast right there. And you would have valuable information that could help you reduce risk in your life because you probably will be approached by someone telling you that they're trading an FX and they're making lots of money. So after the fact that we're not sending a podcast, we're not stopping there, Mark, sorry, not gonna let you go. Now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it, then tell us your story.

Mark Longo 14:29
All right, this is gonna be a little bit different, I think than most of the guests you've had on because as I mentioned earlier, my background is a little bit different. I didn't come to this as you know, a fund manager or an analyst or someone who's really trying to focus on a singular trade and analyze it for weeks or months and then manage it and put it on and execute it. I was a market maker. So the very different engagement with the market. I often say it's kind of the raw machinery of capitalism was down there on the trading floors there you were engaging with hundreds if not 1000s of trades in a given day and they were flying fast and free. Korea so that was the environment in which in which my tail will unfold here and I was thinking about there's a lot of different trades I engaged with down there that resonate to me that have a lot of interesting learning lessons, my time when I was out in Intel. And then Intel was the first name to pre announce bad earnings during the.com bubble and it was just a madhouse, and half the floor was gathered around Arpit to watch, you know, that's gonna be a crazy day when all the rest of the traders are gathering around to watch you like a zoo animal saying this is going to be crazy like that. We could talk about that. We talked about other things, but the one that continues to resonate with me is a little bit different. It's a trade that I almost did. And I was very close to doing and I did not and it has, thank goodness I did not and as resonated with me, to this day when we set the scene a little bit I was a new trader kind of right out of college. I got recruited to come out to Chicago, which at the time was the Mecca still really very much is the the mecca for options, trading options market making, we had three big derivatives exchange here, the Chicago Board Options Exchange, which was the options Mecca, it's in the name of the Chicago Mercantile Exchange and the Chicago Board of Trade, you probably have seen the Board of Trade on TV back in the day when they used to have the bond pits were very activist to trade from there, you know, CME had all sorts of Euro dollars and everything else. But I was focused on the equity options, I went into the CBOE. And after my time, you know, Assistant trading and learning you've spent about a year a firm will commit capital to us, okay, you're ready after all your training, you are ready to go in and get on a badge, take the test, and actually start committing capital. So I did that. And my reward was, I got to break into the SPX pin, which was the biggest pit really down there at the time. And this was a time you know, this was probably getting into 9899. Now, so the.com bubble, in full swing full session, stocks only went up. You didn't care what a stock did, as long as it did something involving tech that's all solid cared about. And so I got to break into this pitfall of hundreds of people, young kid pretty much right out of college. And it was environment, obviously, where there's there's an obviously a mental aspect to trading. But in the trading floor, there was a physical component as well. This was the time when firms were going out and recruiting massive D one linemen and sticking them in spots to hold a physical presence in this pit because there was so much money to be made there. And obviously, no one's going to mess with them. So they get to, they weren't the best traders, but they can hold the physical spot. And physical presence was the thing. So I had to break into literally the back of this crowd of hundreds of men who did not want me there. They don't want to share the money with you, so that you're already persona non grata. And then on top of that, and other firm had decided my spot I was trying to break into they wanted it to, so they sent a literal hockey goon, a former professional hockey goon to come try to take that spot from me. So it was in this environment, all these things are going on, you're literally pushing back and forth with another human being in a spot that's probably not even big enough for one person. And in all this environment is happening. I'm trying to learn this new SPX beast, which was still hot new back then it was about 1300. So a little bit different valuation level than we're talking about. Now. It sounds modest by comparison, but that was that was big time back then. And so I'm breaking in new trade are starting to get my feet under me a little bit, still having a lot of, you know, trying to carve out my space in the pit near a broker because the brokers were the source of all the order flow out there, it's I come in to come into the trading floor on one day, I think it was a Wednesday, I have to go back and check the exact date. I think it was a Wednesday and now we're getting into early 1999 starting to get my feet under me starting to learn this trading thing a little bit. I've been doing it for a few months, it's a quiet day, the bell rings. And as often happened, nothing's going on, nothing's happened. And so I'm looking around I know it's it's gonna be a boring day, you know. And so I'm sitting there in the back of my spot you kind of waiting for something to happen. And all sudden the phone rings on the far side of the pic. And a broker picks up just floor brokers in the pit. Let's imagine this pit full of people and there's brokers positioned all throughout the pit and they have phones for customers to call in, they have screens as well for digital orders to come in. But that was still pretty nascent at the time. And so the phone rings and this broker on the far side of the pit gets talks to his customer and he starts calling out a market for some slightly out of the money puts in the s&p so puts right below where the s&p was trade didn't pay much attention to it it was a fire across the pit I couldn't get to them even if I wanted to so it wasn't really concerning me. So I wait a couple of you may or may not pass another phone rings another broker he talks to his customer next thing you know he's barking out an order for very similar puts. That's kind of strange. But you know, it's a slow day maybe someone's just looking for quits. So they he parks out his order and then he kind of is talking to nothing else happens. Then all of a sudden some more phones during this time is at the front of the pit. And all those phones start ringing in the front of the pit. And those brokers pick up their pick up their phones, and they start talking to customers and they turn around and they start calling out orders also or markets they want markets for puts no one wants a call. They all want very, very close to the money or even at the money puts which is a rare thing in and of itself. So now I'm sitting there I'm like well, this is this is kind of strange. But again I was new I didn't know what was strange or what was not yet so I didn't really trust my instincts of that much yet and so and so. And of course this is also in the environment where effectively you're doing a lot of a high stakes, basic math and back then the stocks and of course options were priced in eighths and sixteenths. So in the top of your head as you're tussling with another individual physically for physical space, you're also having to do basic fractional math at very high speed. Because if you got it wrong, you can lose a lot of money and so you'd actually retrain at night when I was training and I'll be trained in my early training sessions here I was a college graduate all ready to go and they were trading like flashcards racing against other clerks doing basic fractional math because that was that was so important back then so all these things are going on in this environment and then the brokers nor brokers are calling on and then the broker near me his phone lights up and so he picks up the phone he talks to his customer next thing you know he barks out and wants a market and he wants puts as well and now I'm like well what this is weird what's going on and so he calls for the similar kind of right around at the money puts which also not that usual listeners usually people want some out of the money they want a little bit of room to hedge this time they're going straight for that money which is not usual calls out of market so he's talking all these brokers are on their phone, they're talking to the customer they've all called out markets very similar puts and now I'm starting to think I'm looking at looking up I'm looking at the ticker you can see the ticker right there in the pit SPX isn't moving, nothing's really going on. I was like, what, this is weird. So I'm listening and watching the brokers, and then all of a sudden, just bam, you know, next thing you know, it's just by him by him lifting offers, not just my broker, but every broker in the pit is lifting offers on these puts. And so let me just that is not normal in and of itself how these trades normally go as a broker, we'll get a call from a customer and he'll call out a market, you'll say whatever your market is, maybe it's $1 at $2 and the broker says, Okay, I want to buy him but I'm a buck 50 bid and it's somewhere in the middle and they work it and it's a song and dance and it takes forever no one ever lifts your offer instrument that you hope for that you wish for that when you first walk on the floor of the trading the trading floor of the exchange, that's where your dream is you go you're gonna buy offers, you're gonna you know, you're gonna buy bids you're gonna sell offers all day and make a ton of money. Unfortunately, that never happens in real life. So the fact that one broker would be doing this was strange, the fact that all of them were doing it simultaneously all around the bid. It was like Christmas had come in July or may whenever month this was so everyone and their mother is now literally trampling each other to get at the brokers to sell these puts sold everyone's yelling sold now, hockey goon I was tussling with, yelled sold, he's trying to get on I turned to the broker I'm about to yell sold. And it's that moment. And I think it was I think, because I was new it kind of helped me because I was just I was like this is this is strange. This does not feel right what is going on. Meanwhile, people are literally trampling each other punching each other to get to the brokers to yell solo, because this is such a rare opportunity to to sell these puts. It's such a juicy level and they had to take advantage of it. So they're trampling each other and getting their yelling sold swearing at each other the brokers like got you I felt, and I just I took that moment, I kind of just stepped back and I pulled my hand down. And that's all it took. And that seconds, and I glanced up. And that's when I saw this the Spoos the s&p futures, just start tumbling. And you know, if market makers they trade Delta neutral, they don't want directional risk. So they're going to hedge your way, that directional risk with the underlying in this case, it's the s&p futures. So if you sell puts, I won't get too into the math, if you sell puts, you need to sell futures to hedge against it. So on the second they said sold to the broker, however many it was probably a couple of 100 if not more, this was a really good trade. They wanted to get as many as they could. That's a big trade and the SPX may turn around to their clerk who was ringing the pit around them up above them on a headset, and he was on a headset to the mark for the hedge for the future. And he would say to them, whatever Sell 20 Sell 50 however many futures they needed to sell. And of course, they had priced up their trade when the s&p was higher. Now they turn around they say sell however many futures to their clerk and it's already too late. The s&p is falling out of bed it's down at least 10 handles which is a lot now is even more back then. And by the time they get their orders into the clerk, they relay them over to the CME to the pit there, they get their futures orders filled they get their fills back, you could just see it as across the pit one way or the other, getting their fill their fills across the pit and you can see their faces turned white. And it was they were it was they were horrible fields. They were selling their futures 1520 handles below what they thought they were which is an enormous, enormous loser. And the

Andrew Stotz 24:26
simple can I simplify this by saying the original people that started to say they wanted to buy puts were anticipating that the market was going to fall?

Mark Longo 24:36
Yes, there have been, shall we say information leakage.

Andrew Stotz 24:41
So they were anticipating that the Mark was going to fall and so they were saying I'm just gonna buy some puts and all that no big thing and then it starts to become a flood and then eventually what happens is all of the counterparties let's say or the brokers are in there and they're there's a rush to buy these ports. And so they're betting that the markets not going to fall.

Mark Longo 25:05
Is that essentially or at least long enough to get their hedges off? Yes, they want it, they price up an option based on a certain level on the s&p, they want to sell their futures do their underlying hedge at that same level, if you're selling it 20 handfuls below now, you're pretty much gave away those puts below where you would buy them. You want to act fast.

Andrew Stotz 25:23
When you move on, you do Okay,

Mark Longo 25:24
so what turns out what happened that day was it was Robert Rubin suddenly resigned. Now, this was in the middle of the.com boom.com, bubble, Treasury Secretary kind of a big deal. And he just suddenly said, I'm out. That's it, I'm done, shocked the hell out of the markets. And clearly, let's just say a staffer, or two, or many of them are their friends, or some congressmen, or maybe all of the above, all got on the horn and called up the s&p pit and the CBOE and got their orders into buy puts before it hit the market. And by the time I hit the market, everybody knew about it, it was far too late the entire pit had been effectively will be called and the business picked off. That means you're on the other side of a trade where the other side of that trade was kind of informed they knew something you didn't. And so they ran over pretty much everyone in the pit. So everyone was out there always saying, oh, market makers, you know, there's this, there's this great Cabal, they have all this market moving information. They weren't there that day, they didn't see the entire pit pretty much get run over. And people near me lost their jobs, lost their livelihoods, whole groups, they collectively lost many millions of dollars, just a handful of seconds there. And I was fortunate for the for just for my you know, that moment where the hairs on the back of your neck start to stick up. They learned to trust that Oh, and that was maybe one of the Genesis moments for that for me it was because I that little bit of hesitation that it gave me what this is maybe not right? This is maybe too much of a gift horse, maybe I should look this in the mouth. That little bit of second guessing and pulling my hand down probably saved my career because that probably would have put you up with a wiped out our firm and probably would have been, it would have been difficult to get another job as a new trader if I just swept up

Andrew Stotz 27:00
and leave where you are now. Yeah. So what how would you summarize the lessons that you learned from that?

Mark Longo 27:05
Yeah, I think I think a couple of First off, like I said, is when you're looking at a trading, this could be in many different environments, we see this in options all the time, people write to us saying, Oh, look at these puts, I want to sell them, but they're extremely juicy, a lot of volatility in them, I always tell them, there might be a reason there's a lot of volume, those puts, you might want to do a little bit more homework before you just naked, sell them and blast away at them. So I think the first lesson is really, don't be afraid to look that gift horse in the mouth, when it's a trade is coming to you that is just too perfect. It fits all of your conditions and more. It's just it seems like free money, you are missing something, there is another aspect, there's a bit of information that you don't have that someone else has, that could end up being very costly. So when you feel those hairs on the back of your neck start to stand up, it's okay to listen to those, you know, we have charts, we have technical analysis, we look at Greeks, we look at all these different things. But at the end of the day, just your gut sometimes. So that was a good lesson for me. Because in that environment, it's so fast, there is no time to do technical or fundamental analysis, no time to call an analyst, there's no time to check with anyone, it's really make your market to do your analysis. And then do you feel convicted to make that trade. And you can take that rapid level of analysis and apply it to other things where you have more time to do your due diligence. I mean, that was my job there to make that market your it's not your job. As at home trader, you don't have to push that button and make that trade, you can take your time. And so I encourage people, if they start to feel that they see a setup that looks too good to be true. Or they see in our case, in the options world maybe options that are a little bit too, too good, too pricey, you know, then maybe there usually is a reason that there is that volleyball that they are priced at that level. And so, again, that gift horse, looking in the mouth, sometimes don't be afraid to.

Andrew Stotz 28:55
So let me summarize a little bit of what I took away. And the first thing is the concept of intuition. And this is a theme on this podcast where what I have learned is that you know you have you have a logical reaction, you have an emotional reaction, and then you also have an intuition reaction to things. And I think a lot of people get confused between intuition and emotion. Intuition is that like momentary, you know, I don't want to call it feeling a momentary presence, that something is not right. And, you know, and or something is very right. But you know, one of the things that I've learned from this podcast is that people who are aware of their intuitions tend to prevent themselves from making major mistakes. So I think a big lesson for everybody listening and viewing is pay attention to the intuitions that you get. The second thing i i want to talk about is, like you were saying how sometimes you know you've got a things going on behind the scenes that you may not know. And you don't have to trade in everything. I remember when I started my career in 1993, in Thailand, we still had, we didn't have chalkboards at the time, but we still had LED boards. And so all the main all the stocks pretty much on the market at the time, and certainly the main ones would flash up, and you would see the price and the bid and the offers. And people would be sitting in the trading room, and older people and younger people that all the trading was done there. Basically, occasionally they did some trades by phone. But most people came down to the trading floor at the broker in their neighborhood, basically, which was fascinating. And neighborhood broker. I like that idea. Yeah, exactly. And, and so you know, occasionally as an institutional analyst, if I walked into that room, they'd be like, Well, what's going on? What do you what can you tell us? Because as I tried to describe it, it was like grandma and grandpa would come in, and they'd bring in their lunch boxes. And they would be basically gambling and trading against each other in that room and seeing who's making money and all of that stuff. And they had, you know, they had a lot of fun, for sure in that time. And it was like a family atmosphere. One time I went to New York, and I met a fund manager, I was a bank analyst, I met a fund manager. And I was telling him that, you know, I think that bank, a bank at this price is not a great buy. And bank of bank was, you know, one of the largest banks in Thailand at the time. And the guy said, No, I still think it's a buy for XYZ reason. And he said, you know, in fact, I said, Well, how do you get your information about Bank and Bank? Here you are in New York? He says, Why just called the chairman. And then you start to realize, oh, yeah, okay. There's amazingly powerful investors around the world that have built relationships with these companies. They've got good information. It's not necessarily although at that time, who knows about inside insider, but I would say just having that communication with the chairman, and the major shareholders and others gave them an edge. And then when I came back, and I saw grandma and grandpa trading in that room, I thought to myself, they're not seeing what's behind that screen. What's behind that screen, is, let's just say 100 Intense men or women who know that companies so well, and are trading millions and millions of dollars on it. And then behind them is another 5000 10,000 that are studying it pretty well. And then you got another million that are playing in it. So I think my lessons from what you say is, you know, remember, there's a lot going on behind a trade. And just because you like it, or if you feel nervous, maybe time to back off. But just be aware that there's a lot going on behind the trade. Anything else you would add to that.

Mark Longo 32:44
I would just say if you want to talk about lack of information advantage, we could do a whole other hour. Many stories of being run over on the trading floor. I will just say this, when I first left the SPX pit and moved out into the individual equities. This was of course, back in you know, the.com boom times I went into Intel was the hottest big name and the.com period actually had asleep over on the floor of the exchange to get the first spot in that pit. That's a story in and of itself. That's how crazy things were. Back then they're grown men sleeping on linoleum floors to race up the escalators to be the first ones in that trading crap. But I remember going out there coming from the SPX. And now I would be out that was up, I was there next to a bunch of, let's say, more seasoned, more experienced traders. And remember, towards the end of the day, they would turn off their machines and fold up their sheets and they will start leaving. And the last time I looked at them, I'd say What were you going this is where some this is where all the good stuff happened. They would say you know, you don't want to be here now kid this is one of the pickoff paper comes in. I thought they were crazy. They were bitter old timers. What did they know? And then sure enough, you know, one by one, the brokers start coming in at that time of day, end of the day after you haven't done anything all day long. And it's a it's a broker from House x, we just won't say what houses because they all did it. And they're representing a customer from that same brokerage house and they want to do whatever buy calls on the name or buy puts and they do it. They buy a ton of them right before the close. And then the next thing you know before the open the next day an analyst from brokerage firm x happens to upgrade or downgrade the stock whatever it is, and that same customer comes in to cash out his winnings. And it happens quite frequently, shall we say? So there are many stories about the lack of information advantage I could share. I won't go on about them. But yeah, the listeners are not alone by any means.

Andrew Stotz 34:24
Yep. So based upon what you learn from this story and what you continue to learn what one action would you recommend our listeners take to avoid suffering the same fate?

Mark Longo 34:34
Again, that's another good one. We could spend some time on that. But like I said, I think going back to earlier, particularly as it pertains to what we talked about on our network, which is options, you know that lesson, people get in trouble and they come in, they see let's say, a puts obviously puts you can buy them to reduce risk and to hedge. You can also sell them they're a great tool as a way to generate income. You can also use them as a way to get into a stock at a lower level and get paid to do so. It's a great tool, if you'd rather rather than than just working a limit, buy order in a stock, you sell a put, now you have an income stream, you're being paid for the risk that you're taking. So it makes a lot of sense. But people can sometimes take it to an extreme, and that's where people get in trouble. And that's where I think the lesson from this can be pertained for a lot of people out there, as you're, again, if you're looking at a putt, let's say, and an XYZ name we've all made and lost fortunes in over the years. And you want to get in at a lower level elected puts you see the puts in there 10% of the money, let's say and they're trading at an astronomical volatility level, you know, two or 300% something absurd, you say I have to get in on this. Or maybe even worse, you don't know the name, you're just running a scanner for high volatility options, and it comes up on your screen. And you say, Oh, this is great. And my scanner says this is this is, you know, two standard deviations above the normal for this, this volatility on this option I have to sell that's when I say wait a minute, back off looked at gift horse in the mouth. You don't have to do the trade, spend some time doing the due diligence, you're not on the floor as a market maker not compelled to trade in microseconds. And so there often is a reason why that volatility level is bid where it is. So it's okay to not make a trade there will be others, you will your lifetime. That's another thing that I learned as a professional that I apply to my trading now, if I miss a trade, so what there won't be many others, there will be many others.

Andrew Stotz 36:23
What is a resource that you'd recommend for our listeners?

Mark Longo 36:26
Well, I don't want to be a complete shill. But I will say our network for the last 15 plus years has done some great content in the world of options are pretty easy to find. Go wherever you wherever you go and find podcasts now, just type in options insider that will be us. And we'll have probably about a dozen different shows I already mentioned options boot camp boot camp Options Playbook radio for the beginners. If you like volatility volatility views if you're more of an active retail trader trading in and around the markets, we have the show called the option block we have for asset managers and financial advisors who want to learn more about how to use options for their clients. We have a show called The advisors options, we talk futures options every week. Every Thursday, this week in futures options, we talk crypto options on the crypto rundown. So we have the entire options space carved up. If that's too much to remember, just go to the options insider.com You'll see all the shows there. You can get our app there and get everything there. And then if you're super hardcore, you want to go above and beyond like exclusive content you want to did that doesn't show is not going to satiate you need more. And then we have our options. insider.com/pro. And that, of course will get you over to we have exclusive shows we bring on great guests like this to do great pro q&a. Everybody in the world of derivatives. exclusive show was live streams giveaways, all kinds of fun. So if you're in the hardcore out there, the options insider.com/pro, or for your cool kids, listen into this slash secret club. We'll make it fun.

Andrew Stotz 37:46
Okay, we'll have links to all that in the show notes. Last question. What's your number one goal for the next 12 months?

Mark Longo 37:54
Next 12 months? Well, for us, obviously, there's been just a tidal wave a tsunami of new options traders coming into the world of options. So for us, this is a great, a great thing. We love more people trading options. But it's also a challenge. You want to get these people away from buying calls on GameStop. And buying calls. And all these means stocks, which it worked out right for q1 of last year. And then that's kind of about it, and they got run over as a result. So taking this huge influx of new traders, and finding ways to migrate them away from those low probability type trades, and get them to trade options and a much more higher probability longer term profitable style. That's what we do on all of our different shows. So it's a great opportunity. It's a great challenge, because there are so many of them now, but we welcome it.

Andrew Stotz 38:42
Great listeners, there you have it another story of loss to keep you winning. If you haven't yet joined the become a better investor community just go to MyWorstInvestmentEver.com right now to claim your spot. As we conclude, Mark, I want to thank you again for joining our mission and on behalf of A. Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Mark Longo 39:06
I would just say, you know, be safe out there. And like you said, if you miss a trade, it's okay. There will be more great advice. And don't be afraid to look that gift horse in the mouth every once in a while.

Andrew Stotz 39:16
There you go. And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate it today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast shows Andrew Stotz saying I'll see you on the outside.