Herm Matos has been writing about investing on the Internet for more than 16 years and counting. He earned his Bachelor of Science degree in Education from City College of New York and Masters of Science degree from Nova Southern University in Florida where he now resides. His area of expertise is covered call writing, LEAPS spreads, delta neutral trading and Forex currency trading. He is an investor and full-time options and Forex trader for his Internet businesses.

It was a real pleasure to get to talk to Herm about how he identifies trading opportunities. This is the second part of that interview.

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

Herm: When we buy the LEAPS one or two years out, that provides a great deal of time to write multiple LEAPS spreads in both price directions. Thus, you can be as aggressive as you wish or take your time and not be so aggressive.  I would have to say it can be both a long-term and short-term strategy depending on how much time you have to devote to the process.

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

Herm: I look at the amount of risk and I then look at the amount of the rewards. The risk has to be such that it does not cause you to lose sleep worrying about the trade outcomes. Also, your trades should not take food off your table. The market has a way to rewarding those that don’t desperately need the money.

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

Herm:  Hands down it would have to be the QQQQs ETF because of the massive daily trading liquidity and open interest with $1.00 incremental strike prices for both calls and puts.  My other love is Forex trading currencies and gold.

Optionetics: What is your most memorable trade?

Herm: With options, it is possible to make some outrageous returns in a short period of time if you are correct in your entry point. Using my tools, I recall the first time I made +$5,000 profit in one day on 25 option contracts swing trading. I was shaking when I pressed the buy limit order for that many contracts and I was ecstatic when everything worked out as I had envisioned it.  I will never forget that rush and the money.

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"?

Herm: For sure, there is a great deal of information out there. I recall when I first purchased Lawrence McMillan’s Options as a Strategic Investment book and starting reading it from cover to cover. I learned over the years that you only have to be astute in one or two strategies to make a great deal of money.  In short, have a specific investing tool shed to implement successfully. The challenge is finding that right niche before you eat up all of your risk capital in the “school of hard knocks.” 

Optionetics: Thanks, Herm, 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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