Jeff Carter has a degree in economics from University of California at Davis and began working in the brokerage industry in 1985. Jeff has been the editor of The Complete Report since 1987.

I really enjoyed my recent conversation with Jeff Carter about how he manages his trading business. This is the second part of that interview.

Optionetics: Are your trading systems geared more toward long-term strategies or short-term strategies?

Jeff:  As I am mainly writing puts to buy stocks, I am definitely long-term geared. Even the options I write have expirations three or four months out, which is an eternity for most options players.

Optionetics: What are some of the key rules or factors that you consider before selecting any potential trading opportunity?

Jeff:  I’m going to continue to focus on put-writing, as it is the strategy I use the most. The first rule is the stock must be a good long-term position. I focus on stocks selling for around $5, so it is key that the odds are it will stay in business! Also I like volatile stocks, because that drives up the option prices. Not only does that mean that I will earn more money from writing puts, but after I buy a stock I begin writing covered calls against it, and higher volatility also enhances the returns from that.

Optionetics: What are your favorite markets that you like to trade and track with your analysis tools?

Jeff: My focus is on cheap stocks in the energy and alternative energy fields.

Optionetics: What is your most memorable trade?

Jeff:  My most memorable trade is actually the worst trade I ever made. Rather than using a stop loss I allowed my emotions to take over and I ended up taking the maximum possible loss as a result. From that point on I have never been shy about cutting losses. It’s the old adage, “He who refuses to take small losses will end up taking big losses.”

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"?

Jeff: I try to keep it very simple. I subscribe to several newsletters that I rely on for fundamental analysis. I track their stock picks and when one falls to a key support level and also has acceptable option premiums available, I look to take a position.

Optionetics: Thanks, Jeff, 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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