Hello there! My name is Randall Liss and it is my pleasure and privilege to be a new contributor to TraderPlanet.

I have been in the options industry for a very long time. In 1978, I helped found the European Options Exchange (now part of Euronext) in Amsterdam. I was a market-maker on that floor for 25 years, and now I am a full time options educator. I believe in simplifying and demystifying the world of exchange-traded options. The great secret of options that the professionals don’t want you to know is this – It’s really not that complicated! Anyone who can think logically and do basic high-school math can understand options just fine.

My lessons will not have complex formulas. No “autoregressive conditional heteroskedasticity” from me, no sir! Instead I will be teaching a simple and easy to understand options theory and working method.

All my trade ideas will have a solid risk vs reward ratio, and I will never teach a strategy that has an unlimited risk attached. For that matter, I do not believe in trading options outright. Being naked long options make time decay your greatest enemy and naked short options have a capped reward and an unlimited risk. Instead, I teach option spreads – bullish, bearish and direction neutral.

Speaking of strategies, I will not make direct trading recommendations for two reasons. One, the trade won’t be there by the time you read this, and, two, I am not a market prognosticator. I am here to teach a way of thinking about options. To help you translate “your” view on a particular stock or the market as a whole into a responsible and well-defined risk parameter option strategy.

Another important premise that you need to understand when reading what I write is this – I assume a frictionless market. What do I mean by that?

  • I take no account of commissions. I have no idea what your transaction costs are.
  • I assume liquidity. That means that I assume equal ease of entry to a position and ease of exit from a position. Oh, and by the way, ease of exit is far more important than ease of entry. I also assume a narrow bid/ask spread.
  • I do not factor in your cost of money. By that I mean that I assume money may be borrowed and lent at the same rate.
  • I take no account of tax consequences. Obviously I have no idea of your tax bracket.

Of course, in reality, markets are anything but frictionless. Just the same, my assumptions are important to keep in mind.

All right then! I hope you will find my writings to be edifying and perhaps even a bit entertaining now and then.

Until next time …

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If you would like to know more about Randall Liss and The Liss Report, please click here.