View from the Top: Michael Schwartz
Five Questions for Michael Schwartz, Chief Options Strategist for Oppenheimer & Co., Inc.
"I decided to specialize in options when I became a broker," Michael Schwartz, Chief Options Strategist for Oppenheimer & Co., Inc., recalls.
"I was no more than 23 years old and the question on my mind was how were sophisticated investors going to listen to me? The answer was to specialize in something they knew nothing about. I gravitated toward options and found myself educating prospects on how they could earn an additional 10%-15% on their portfolios.
"Because of my knowledge about options the investor would conclude that I knew a great deal and would give me an opportunity with the rest of his portfolio."
Eventually Michael moved into management, started options departments at several firms, and became a general partner at LF Rothschild. When the firm closed its doors following the market crash of 1987, he joined Oppenheimer & Co., Inc. In the late 1980's he was instrumental in forming the Committee on Options Proposals, or COOP. "We were concerned about the way options were being portrayed in the press and wanted to improve the quality of the options product for the retail investor.
"The COOP made a number of recommendations which have been implemented successfully over the years. We suggested standardizing education - which ultimately led to the creation of Options Industry Council - and coordination among the exchanges on things such as rule changes, closings and comments on rule filings. We also were involved in marketing and actively reached out to the press."
Given the depth and range of Michael's industry experience, OIC Advisor thought he was an ideal candidate for our five questions:
What is the biggest change you have seen in the options industry since you started?
"Can I choose two? First, watching the business graduate from a fragmented, put and call, broker dealer environment into the structured, standardized CBOE. Second, the development of electronic trading and real competition among exchanges."
What has been your greatest challenge?
"My greatest challenge was in leading the COOP. The changes we advocated were pertinent to the retail investor and have proven to be long lasting."
What has been your personal proudest moment?
"Seeing how the press has improved their coverage of the options industry from blaming us for the 1987 crash to now being covered by every major news service and television network in the country."
"We did it by reaching out to them and making available to members of the press a list of all those people who in the options industry were allowed to speak to the press. We also held breakfasts where they could talk with us, learn more about options and get comments for articles."
"The Dow Jones publications were the first ones to cover us on a broad basis. "Striking Price" was created by Barron's and -- I can't give you the exact year -- Dow Jones hired Steven Sears as their first journalist to cover options. What is interesting is that if you look at the Barron's banner you will see that Mike Santoli covered options, Sandra Ward covered options, Kopin Tan covered options. These journalists, plus the current journalist, Steven Sears have made "Striking Price" probably one of the most popular read article at Barron's."
What has been the impact of financial advisors' growing use of options?
"I think investment advisors are realizing that options are no longer optional. They understand that if they don't learn how to use options to help their clients reach their basic investment goals, they may be negligent in their investment advice."
"There is recognition that options have now become an asset class and must be considered in terms of the overall management of a client's portfolio. More brokers are using options now to reduce risk, not to increase risk."
Where do you see the industry in 2015?
"We're going to have more exchanges but the exchanges may be fragmented in terms of the way they do business. For example there may be exchanges that will specialize in algorithm trading, crossing exchanges, high frequency exchanges, all different type of trading disciplines are possible and exchanges may be created just for those disciplines."
"I also expect that we will see options volume continue to grow as options mature as an asset class. But as it's been said in the past, the number of combinations with options and what can be done with them, is mind boggling."
|Position||Chief Options Strategist for Oppenheimer & Co., Inc.|
|Education||BS - Boston College|
|First Job||Federal Reserve Bank of New York|
|Other Employment||LF Rothschild|
|Achievements||One of the founders and Chairmen for 11 years of the Committee on Options Proposals (COOP)
Served on advisory boards at CBOE, AMEX, Philadelphia, Pacific exchanges and on an OCC nominating committee.
Past Commodore of the Woodmere Bay Yacht Club
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