Interview Central: James Cordier, Part II
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March 21, 2008
James Cordier is the founder of Liberty Trading Group/OptionSellers.com, an investment firm specializing in managed option writing portfolios. A registered broker since 1984, Cordier favors selling far-out-of-the-money options on physical commodities such as natural gas, coffee and gold. James’s market comments are published by several international financial publications and worldwide news services, including The Wall Street Journal, Reuters World News, and Barrons. He also appears regularly on Bloomberg Television and CNBC.
I really enjoyed my recent talk with James about how he manages his trading business. This is the second part of that interview.
Optionetics: What are some of the key rules or factors that your trading systems evaluate before selecting any potential trading opportunity?
James: Risk versus reward.
Optionetics: What are your favorite markets that you like to trade and track with your analysis tools?
James: CNBC, Bloomberg and Fox often ask for interviews concerning metals, energies and softs. Thus knowing what the fundamentals are in a given market can certainly give you an edge.
Optionetics: What is your most memorable trade?
James: The most memorable trade has to be long the Coffee market in 1994. We felt it was under priced trading around 80 cents per pound. Not to mention, forecasts called for a very cold winter for the southern growing regions of Brazil. Sure enough, freezing temps invaded coffee fields not once but twice that year and prices tripled in a very short period of time. (Brazil''s coffee region has since migrated north.)
Optionetics: With all the different technical as well as fundamental analysis tools out
there how does a new trader avoid information overload, or "analysis paralysis"?
James: That''s a great question. Technical analysis can include numerous ways to look at the market. Depending on the position you want to justify, a chart pattern, or indicator can actually tell you what you want to hear. We spend many hours reading the technical tea leaves. But always base our position on fundamental knowledge of each separate market.
Optionetics: How would you characterize your technical approach to the markets?
James: The trend''s your friend!
Optionetics: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?
James: When it comes to looking back, trading systems seem to have 20/20 vision!
Optionetics: What kind of advice would you give a person just now beginning in trading the markets?
James: Learn to use options! Preferably on the sell side. Options held to expiration will be worthless about 80% of the time!
Optionetics: Can you describe what your average trading and analysis day entails from preparation to execution?
James: The day is spent waiting for opportunity! With massive amounts of capital moving in and out of the stock and commodity markets, often we will see option prices reach levels that beg to be sold!
Optionetics: What kind of decision-making process do you go through before deciding on a particular trade and a particular sector of the market that would be worthy of putting on a position?
James: All we do is sell options. And when the fundamentals of a market are extremely well known. And strike levels in our opinion simply can''t be reached. We will then take a position, adding it to a portfolio.
Optionetics: What type of analysis methodology do you employ to find great trading opportunities?
James: KNOWING THE FUNDAMENTALS!
Optionetics: Thanks, James, for speaking about your trading approach with our Optionetics reading audience.
To read previous installments of this interview, please click here.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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Listen to Jeff at www.ProfitStrategiesRadio.com
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