Interview  |  MAY 2010

Jared Woodard of Condor Options by J. Gopalakrishnan and B. Faber

Jared Woodard of Condor Options by J. Gopalakrishnan and B. Faber Knowing how the market moves isn’t particularly important, Jared Woodard, our interview subject of the month, explains. Woodard, the principal of Condor Options, has more than a decade of experience trading options, equities, and futures. He publishes the Condor Options newsletter (specializing in iron condors) and the accompanying blog. Woodard has been quoted in various media outlets including The Wall Street Journal, Bloomberg News, Financial Times Alphaville, and The Chicago Sun-Times, and in 2008 he was profiled as a top option mentor in Sfo magazine. He is also an associate member of the National Futures Association and registered principal of Clinamen Financial Group, a Commodity Trading Advisor. Stocks & Commodities Editor Jayanthi Gopalakrishnan and Staff Writer Bruce Faber interviewed Jared Woodard via telephone on March 10, 2010. Jared, how did you get interested in trading options? It was the ability to define your risks versus the techniques available for stocks or futures. Options give you more opportunity for risk management and control over your capital. A lot of traders come to options more for the leverage than anything else. They see that with the same stock or commodity that they just got a 5% return on, they could have had a larger return on a similar option trade. I can see the attraction there, but it is also a bit dangerous. The risk management features of options are most important. Did you start out trading on your own, or did you trade with a firm before that? I started out on my own. I traded on my own for a while, then I started the Condor Options newsletter, back in 2007. And since 2009 I have been a registered Commodity Trading Advisor (Cta). So when did you start trading on your own? I was in high school or college, around 1997. Like most people, I got interested in stocks first. Then curiosity took me to options pretty quickly. Besides the ability to define risk, are there any other advantages that trading options offer versus, say, trading equities or futures? Sure. If you are trading a future or equity long or short, it is about price. But I like to use the metaphor of different languages. If you are trading just directional price changes, then it’s a relatively rudimentary language. You can only express a couple of different views. Options are — to extend the metaphor — a more complex, more nuanced language because you can express views about price and volatility and time. So you have significantly more different views on an asset that you can express. That makes options a lot more interesting. You also have a blog called “Condor Options.” Is that because you prefer to trade the condor strategies over others? Yes. The newsletter attached to the blog teaches subscribers how to trade iron condors and market-neutral spreads. So that is where the blog’s name comes from. But I do like market-neutral strategies in general. They are my strategy of preference just because I think there is more opportunity there. A lot of people follow price trends, and even though predicting prices is difficult, there is definitely money following those trends. I have nothing against trend-following strategies at all, but there are a lot of opportunities in market-neutral strategies and especially in volatility trading strategies. That is what I really focus on.

by J. Gopalakrishnan and B. Faber