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.

This is the final installment of my interview with longtime options trader Herm Matos.

Optionetics: How would you characterize your technical approach to the markets?

Herm: Depending on the type of investing or trading you are doing, you must use some kind of technical analysis tools along with the economic calendar. The technical tools will allow you to see the trends and pivots in the prices, and the economic calendar provide the date and time that the markets will react to those reports. So, you are able to watch that process and exploit the opportunities with the proper investment strategy.

Optionetics: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?

Herm: Perhaps that they can learn to trade on their own without knowing nothing about the markets and that any trading system will make you rich overnight. Trading is more of an art than a hard core science. That means it takes time and practice.

Optionetics: What kind of advice would you give a person just beginning to trade the markets?

Herm: Whatever you do, always practice in a demo virtual account before you risk any real money. Visit the CBOE's website and download the free software called the Options Toolbox in their educational center. It's free and will teach you a great deal even if you are a pro. Worth the time to learn how to use.

Optionetics: Can you describe what your average trading and analysis day entails from preparation to execution?

Herm: Not too complex. Look at my QuoteTracker software with my technical indicators. Look at the economic calendar for the week and that trading day to watch as the market reacts to the news release. The price trend and pivots are plotted on the screen and I then enter into the LEAPS spread for the decaying price. That means in an up-trend pivot signal write the LEAPS Puts spreads, in a down-trend pivot signal write the LEAPS Calls spreads. Because the shorter option will decay much faster than the long LEAPS position, the difference is the premium income you get to keep.

Optionetics: What kind of decision-making process do you go through before deciding on a particular trade and a particular sector of the market that would be worthy of putting on a position?

Herm: Basically, does the economic reports make sense why the market are reacting the way they are? Watch the QuoteTracker to determine the momentum in that price movement.

Optionetics: What type of analysis methodology do you employ to find great trading opportunities?

Herm: The old saying, "the trend is your friend" is what comes to mind. The economic calendar provides the script the markets will read and follow each and every month as the same reports are released with updated data. Therefore, why should trading opportunities be such a big surprise? The only thing missing is a charting tool to visually see the movement and pivots.

Optionetics: Thanks, Herm, for sharing your thoughts about how you approach the trading business 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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