David Fry has devoted more than 35 years to the business of trading and portfolio management. His registration as an arbitrator with both the National Association of Securities Dealers [NASD] and the National Futures Association [NFA] attests to his extensive experience and spotless compliance record.

He founded the ETF Digest in 2001 and was among the very first to see the need for a publication that provided individual investors with information and advice on ETF investing. By 2002, ETF Digest trading programs were making triple-digit gains, despite the sharp overall market decline at that time.

David is a frequent commentator on ETFs and other issues important to individual investors, and his perspectives are featured in financial news sources such as The Wall Street Journal, MarketWatch, Investor’s Business Daily, Smart Money, Dow Jones Newswire, National Business Review, MSN Money, Yahoo! Finance, Bankrate.com, Emerging Markets Monitor, IndexUniverse.com, and ETF Investor.

Prior to starting ETF Digest, David owned and operated an NASD broker/dealer, Fry & Co., and an SEC registered investment advisory firm, Asia-Pacific Investment Management Inc. He was also a registered Commodity Pool Operator, Commodity Trading Advisor, and Introducing Broker. 

It was a pleasure to get to speak with such a veteran trader like David Fry. This is the first part of that conversation.

Optionetics: How did you first become interested in trading the markets?        

David: I’ve been in the business for roughly 35 years and entered the business as a municipal bond salesman in the mid-1970s.  I was a young and impressionable lad then and remember reading in the sports section one day Muhammad Ali’s response to a question about how he was investing his money—tax exempt bonds at 8% was his answer. It seemed like a good business to get involved with so I sought out a job in that sector.

Optionetics: Do you ever use options and if so what are your favorite strategies?

David: When I had my own firm we did use them and I was an options principal.  Most of our experience was with buy/write strategies more popular with conservative clients.  We did have some experience with more aggressive strategies; however our business was primarily retail and most option strategies were much too complex for clients to understand.  Further, since most didn’t understand strategies generally, trouble could be the result so I deemphasized using those products.  I didn’t need the problems frankly.

By the way, I have some opinions regarding the emergence of leveraged ETFs versus options that may affect options markets and traders.

The advent of leveraged long/short ProShares ETFs may become more attractive to investors, institutions and retail, as a way to hedge or speculate.  While not containing as much leverage, basic strategies may become more appealing since they don’t contain the complexities (time, strike, choice, expiration, etc.) common to options trading.  The options market has really expanded especially given the advent of so many different strike prices which has expanded volume.  But, these new ETFs are catching on and posed a serious competitive threat to stock index options trading in my opinion. Just thought I’d share that view.

Optionetics: What are the things you like best about the trading business?

David: Winning! 

Optionetics: How do you treat losses and how to go about establishing your risk tolerance before the trade is entered?

David:As a cost of doing business. 

Optionetics: Thanks, David, for sharing your trading approach with our Optionetics reading audience.


Jeff Neal 
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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