James Mound is a veteran futures and options trader. He is President and owner of JMTG brokerage, which offers the services of a small custom tailored brokerage outfit with all the benefits of one of the largest providers of introducing brokerage firms in the business.

Being able to get to talk to him was a not only a pleasure but informative as well. This is the first part of that conversation.

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

James: I was six years old and I was sitting in my living room, the wood fire place crackling in the background, watching the old Kung Fu series, starring David Carradine, with my father. My father opened up the Wall Street Journal and sat down with my brother, 4 years my senior, and began showing him how to read stock charts and ticker symbols. Of course, the younger brother jealousy syndrome kicked in and I shoved my brother out of the way, who had little interest to begin with, and I dove right into it.

By 11 years old I was trading stocks and never looked back. From a career choice perspective I always felt as though you have all the choices in the world growing up, why not choose a career path that shows you how to handle your money once you have it - like killing two birds with one stone. Then as I got into the business world I turned my attention to commodities as it provided me the best outlet for my options specialty.

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

James: As an options specialist I focus on options about 90-95% of the time, utilizing futures as necessary for my approaches. I am not married to a particular approach as I believe the markets tell you what strategy to use given a specific market environment. In my book I created a spreadsheet showing what strategies to use given different market climates, specifically analyzing directional bias and volatility forecasting.

As a brokerage owner I believe that most individual speculators are more risk averse than they would like to acknowledge so we offer a lot of defined risk strategies like long strangles, verticals and straight options. However, for myself and my more risk taking clientele I focus on ratio spreads, short strangles, calendars, etc. Right now the volatility is so high I see this as an incredible opportunity to collect premium with naked option selling and calendar spreads.

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

James: The commodity industry is becoming more and more mainstream by the day and even with the current price collapse it will continue to grow as a mainstream investment, both in America and globally. We are years behind the stock market in terms of technology but things are becoming more and more transparent and the industry is offering some real cutting edge trading technology. I personally enjoy the educational aspect of the job. I consider us a critical part of the transition for the industry becoming mainstream and I believe it is done best by educating the public.

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

James: Mound Trade Signals, our subscription based trade recommendation service, provides predetermined entry and exit strategies for every trade to help in removing the emotional aspect of trading - the biggest killer of good traders. The bottom line for me is that options trading provides an avenue for defining trades in ways that futures trading does not, but good trade design accounts for as many of the potential variables that may arise during the life of the trade as possible. This means the trade design itself should remove the variables that cause emotion to factor into your trading. From there we determine allocation as a percentage of a client's risk capital and customize it as a measure of the client's risk aversion.

Optionetics: Thanks, James, 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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