Interview: Learning The Ropes With Stan Freifeld by Jayanthi Gopalakrishnan
So Many Options
Stan Freifeld traded options on the floor of the American Stock Exchange for his
own account from 1994–2001. He was a market maker for options on several
popular equities including Dupont, Schering Plough, Walgreen’s, CBS, US
Surgical, and Biovail. He graduated from the State University of New York at
Stony Brook as a double major in pure and applied mathematics. As managing
director of McMillan Analysis Corporate Services Division, he now teaches
option trading and risk management to students ranging from complete novices
to advanced professionals and academics. In his spare time, he plays squash to
relieve stress, competes in road rallies with his Ferrari Cabriolet, and tutors
local students for the SATs. He is a long-time MENSA member.
Stocks & Commodities Editor Jayanthi Gopalakrishnan spoke with Freifeld
on December 6, 2013 about what it was like on the trading floor, what the greek
variables are all about, how implied volatility figures into option trading, and
how he approaches option trading today.
Stan, how did you get interested
in trading and what attracted you
to trading options?
I’ve always been interested in math
and was pretty good at it. I was an actuary
and ended up becoming a principal
of a pension consulting company. I liked
being an actuary, but I was working
long days and sometimes on weekends.
I felt like I was spending too much of
my time working and not enough time
enjoying life and being with my family.
I was fortunate in that we were able to
sell the consulting company to a British
firm that was anxious to get into the US
pension market, so they overpaid us a
little bit. Because of that, I didn’t have
to work right away. I had time to figure
out what I wanted to do next.
I knew very little about trading but I
wondered what it would be like to be a
floor trader. It seemed like being a floor
trader meant that I didn’t have to work
long hours, since the market is only open
from 9:30 am till 4:00 pm. You couldn’t
come in early, and you couldn’t stay late.
You don’t have to work on the weekends
and you are off every holiday. If I traded
with my own money and could make a
living doing it, I wouldn’t even have a boss. I wanted to be a trader!
I had to figure out what kind of
trading I wanted to do. Since I was
a mathematician, the idea of having
the added dimensions of volatility and
time, the different rates of change, and
how the price of an option changes when
one of its defining variables changes really
appealed to me. I decided I wanted
to go into trading options.