Interview  |  AUG 2004

Interview: George Fontanills Of Optionetics by Jayanthi Gopalakrishnan

Interview: George Fontanills Of Optionetics by Jayanthi Gopalakrishnan You might assume that graduates of Harvard Business School know everything they need to know, but George Fontanills, cofounder of Optionetics, is an active trader and Harvard grad who learned quickly that he had a lot more to learn. Disbanding his real estate business in the 1980s, George Fontanills made a decision: his new business would be trading. After years of study and practice, he developed a new method of making money: delta-neutral options trading. He called his technique optionetics, and now Optionetics is a leading education and publishing firm dedicated to teaching investors how to trade options effectively. What can George Fontanills tell us about successful options trading? STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan spoke with Fontanills on June 2, 2004. Would you start by telling us about how you got interested in trading? When I got started, I had no idea what trading really was. After I graduated from Harvard Business School I basically started my own business, in real estate. That was in the 1980s. But if you look at the 1980s, you’ll see that in about 1986–88, interest rates just got way too high, and being in real estate was not a good idea anymore. Someone in my office traded for himself, and he said: “Hey, I’ve got a great idea. Instead of doing this real estate stuff, why don’t we do some trading?” I didn’t really know what that meant, but he explained it to me, saying, “You buy if you think it’s going up, and you sell if you think it’s going down,” and I thought I could figure that out. Obviously, it was a little tougher than I thought it would be. So when you started, were you doing short-term trading? Yes, primarily short-term trading, trading index options and some commodities. And you began with options? With index options, then commodities. I didn’t know what an option was, just like a lot of people who start from scratch. I didn’t read any books, but I relied on this individual who worked for me to tell me what to do. It didn’t turn out very well after 30 days, so I decided I had to learn how to do it myself. I think that’s how a lot of people learn!

by Jayanthi Gopalakrishnan