I attended an Optionetics lecture yesterday, mainly to see how one top-tier marketer is selling the “get-rich” theme to would-be traders in a very tough environment. Optionetics, founded by “super trader George Fontanills,” maintains a high-profile in the seminars world, using infomercials, expo booths, print ads and direct mail to haul in thousands of prospects globally. The 90-minute sales pitch I sat through at the Westin Omni near Denver was conducted by a very intense fellow name Kurt, who, despite mentioning a graduate degree from Princeton, assumed the persona of the successful sweatsuit trader who had paid his dues in the school of hard knocks. The audience, by and large, looked pretty scruffy, and although some were well dressed and neat in appearance, at least half-a-dozen of the attendees looked like they could have arrived with shopping carts in tow, or astride BMX bikes.

Now, I have no idea how many of  the 60,000 students who supposedly have graduated from Optionetics have been making money trading puts and calls. However, I wax skeptical when I hear someone claim, as our lecturer did, that Optionetics can transform into succcessful traders even the Amway and NSA-filter burnouts who for all appearances comprised as much as half of last night’s audience. And I become even more skeptical when the lecturer emphasizes how, using options, one can profit regardless of whether stocks are moving up, down or sideways. That’s true in theory, of course. But as if to refute the point, the speaker homed in on a very atypical example that most of us wouldn’t experience in three or four prayerful years of option trading. It involved Bristol Myers puts that were purchased for 0.75 after the stock ran up from $41 to $49 one day. As chance would have it, the stock collapsed the next day when the FDA shot down a promising BMY drug, sending the puts rocketing to around $5.00.

Only the Blessed

I’ll give Mr. Fontanills the benefit of the doubt and accept his claim that Optionetics students made a killing on that particular trade. But to suggest that this sort of thing happens to anyone other than the blessed seems specious, especially after the speaker had emphasized repeatedly that options can be traded profitably even if stocks are not moving. Of course, he never even mentioned liquidity, which was beyond the scope of the talk. Suffice it to say, with the VIX currently plumbing unprecedented new lows on a regular basis, the options game has gone about as dead as anyone has seen it in the last twenty years.

As someone who has been around stock options for nearly 30 years myself, twelve of them in the trading pits, I am not exactly an ideal candidate for the Optionetics recruiter. But putting aside my professional skepticism, the talk seemed very persuasive -- comparable to the pitch you might hear from a top-producing Kirby vacuum salesman. Despite this, after the talk only a few appeared eager to plunk down the $2,995 registration fee. In fact, during the five or so minutes that I lingered in the hall, only one man did so. Why the lukewarm response? I can’t say. If I didn't know from long experience how extremely tough the options game is, I'd have signed up myself. The money-back guarantee is about as good as they get, and the course materials were as slick and impressive as a Mercedes-Benz brochure. They also offer extensive mentoring and follow-up courses for free. Were there perhaps only a few in the audience with the means to pre-pay such a sum? It's impossible to know. To those who did, I can only say “good luck.” But don’t dare kid yourselves about being the one trader in ten who according to statistical myth will succeed. I’ve seen the real statistics and can tell you that it’s more like one student in a hundred who even makes it to the minor leagues. No kidding.