Trading Options 101 with NFL Linebacker Turned Wall Street MVP Pete Najarian

13:06Nicole Lapin:So, okay. I want to get into a complete cheat sheet around all the options. So when I was taking the series 65, I remember having like a cheat sheet thing with like buy, sell calls and puts and like which ones are bearish and which ones are bullish. And honestly, like you have to help me because they can get really, really confusing. But it's so important to talk about what those movements are because it tells you so much. So sorry, continue and then we'll double click.

13:37Pete Najarian:Well, you know, it's interesting because when we start to see what we consider to be unusual activity and unusual activity is just when you start seeing huge, massive size. And if that size is not just somebody with 100, 100, 100, 100, and 100, and all of a sudden you've got 1 ,000 options. I'm talking about somebody walks into a trading pit somewhere, or now it's on the internet, and they come in and they buy 5 ,000 of one specific strike in the options world. And that immediately makes me look at it and go, whoa, hey, now I got to pay attention to this one. And it's interesting because as you start to go into the day, it might start off with just, let's just say, gold.

14:22Pete Najarian:But all of a sudden, you start to see a gold miner name starts to pop up and a silver starts to move around. And you start to see all these different things happening. It gives us what we think is an advantage to be able to see, all right, well, there's somebody out there. It doesn't mean they're right, but they're spending a lot of money on what they think is right, which is they think there's going to be movement to the upside. They think that whether it's GLD or SLV or any of the miners or anything within that world of gold and silver and copper.

14:52Nicole Lapin:So in plain English, if somebody is buying a lot of calls, they think that it's going to go up. And on the flip side, puts, they think it's going to go down.

15:01Pete Najarian:Right. Exactly right. Yeah. So if they came in, and we see that a lot too, on stocks that have maybe made a big run to the upside, and they've gone too fast, too quickly, they've made this giant move to the upside, some stock, whatever it might be. It could be IBM, let's just say. And suddenly we see a gigantic amount of puts being bought. There's one of two things going, is the first thing in my head is, number one, they're getting pretty bearish. They think IBM's going to pull back after a huge run that it's made. Or it's somebody who's buying protection. They've been at IBM from 140 and now it's trading 220.

15:38Pete Najarian:And there are somebodies out there and they decide, you know what, I'm going to buy the 200 puts because I want to protect this. It's my way of buying insurance. You buy insurance on your car, your car's only worth 50 grand, right? Or 70 grand, whatever it might be. But your option position or your stock position might be worth millions of dollars. So why wouldn't you protect that by buying the puts that would then protect you? Because if it goes fast to the downside, those puts get start to have a lot more value to them. You might've bought them for$2. Now they're$4. Now they're$8, whatever it might be, because if, if it was to continue to go to the downside, they're going to just move along with that stock or that, that entity.

16:21Nicole Lapin:So like, how do we explain this? If we're just starting professor Najarian in the school of options, what do we need to know? So, so it can be used as protection, can be used as insurance. You have, let's say you bought, you know, 100 shares of Google and you are worried that it's going to go down. So what would you do?

16:40Pete Najarian:You'd buy one because one option, whether it's a call or a put, represents 100 shares. And on the put side, it would be selling shares. And on the call side, it would be buying those shares.

16:52Nicole Lapin:OK, so in my very rudimentary knowledge of options, call up, put down. Right, right.

17:00Pete Najarian:That's how I remember it. That's pretty much the best way to do it. But yeah, if you're buying, if you're buying in both cases, that's exactly the way you do it.

17:07Nicole Lapin:If somebody's options curious, and so you have to start and you have to open an account, you have to get approved. Would you suggest that that is a good first step?

17:18Pete Najarian:It's a great first step. The next step is you got to get educated. I mean, you know, I can't say it enough. Maybe you grab a book, you know, John and I've written four. What we emphasize in those books is a little bit different. Each one has been tweaked a little bit, But it all kind of comes right back to you got to be educated and understand because there are things that really could cost you a lot of money if you didn't understand it properly.

17:42Nicole Lapin:Well, we appreciate you giving us the cliff notes here today. This is the cliff notes. Thank you so much. But top level, you can protect yourself or you can earn money too.

17:51Pete Najarian:The Oracle of Omaha has always said that he thinks that options are, what does he call it? they're the entity of mass destruction or whatever he says. Funniest thing is he's the largest trader in the world. So that makes it sort of interesting that he says how negative it is. And yet he uses options more than anybody, but it's been interesting over the years. And he's very, very smart about how he does it. He will position into stocks through the options first, almost always, because you don't have to report options, but you do have to report stock. When you hit certain levels, you have to report, hey, I own 5 % of Apple or whatever it might be.

18:32Pete Najarian:He's an interesting guy. And I've met a lot of the people who have worked for him about his positioning and how he does it. But he starts off buying calls. Then eventually he turns those calls into stock. Then he starts to buy a lot more stock then because the stock's already kind of shifting around a little bit. But then he starts selling calls against his stock positions, which is a way where you're actually generating more capital. You're limiting your upside, but if you feel like the stock is going to slowly move to the upside and then you want to sell some calls and worst case, it means that he sold the stock at that level that he's selling those calls at with the premium that comes with that.

19:12Pete Najarian:So it's an interesting strategy. He comes in buying, then he comes out selling and he's got very large positions, a heck of a lot of stocks. So after a while, I've gotten used to seeing him and now he's retired, but used to watch exactly, I'd say to John, I go, that's Buffett doing that. You can tell by the style and what he's doing and how he's doing and how he's positioning into it. And it's, um, it's pretty interesting. And you know, there's so many of the, the, the biggest of the big who are in the options world. And that's who we try to follow when we say unusual option activity or UOA.

19:48Nicole Lapin:For my 25 years covering this crazy, crazy, crazy world. I know that even Buffett, like you have to be careful and sort of decode what they're saying, why they're saying it, like talking their book or not, or like, why do they have this position? And that's why, you know, you often disclose what you have and why you're saying something. And if you're talking something up because you're long or you're short or whatever, there's like usually a reason that somebody is coming out and talking about it that way. Even the Oracle, the goat. There's also some weird risque jargon in options. And I get the lure, you know, it's really, really risky and sometimes risque, like single leg calls, naked positions, straddles, strangles.

20:30Nicole Lapin:Like, what are we doing here?

20:31Pete Najarian:That's fantastic. You just rattled that off. I love that. Well, if you're doing an option naked, it means that there's nothing attached, okay? I mean, I'm not trying to be funny or anything. It's somebody who came in and they just bought, let's just say for a number, 50 ,000 options, 50 ,000 calls. That's naked because they didn't do anything with stock. They didn't do anything with puts. They didn't do anything selling options. But had they came in and they bought 50 ,000 calls at 200 and sold 50 ,000 at 210, now they've got on a$10 spread.

21:05Nicole Lapin:Hedging themselves. Yeah, they're hedging.

21:06Pete Najarian:Yep, exactly right. And they're just sort of capping it off. And they're trying to put in less money to be able to make a pretty substantial amount of money if they put it on correctly. And that's really, I think, a really smart trade oftentimes because it's really difficult to project a stock's going to go up$25. But if you put on a$20 spread like we see all the time in certain names like in Netflix, Apple, whatever it might be, they buy the 250 strike calls and they sell the 270 strike calls. So it's a$20 spread and they buy it for$5. I like that trade a lot. I look at it and I go, well, I like the risk reward.

21:46Pete Najarian:I don't think it's really going to run past$20 in the next couple of weeks. So I kind of liked what this guy's thinking. I'm going to follow him.

21:53Nicole Lapin:Buying an option doesn't mean you're buying the actual underlying asset. And so there are opportunities. I don't know if I was mentioning this earlier when we were catching up, but I started Private Wealth Collective, which is a wealth management offering for our audience with no minimums. And we were having a client call the other day and this family has a huge concentrated position in one very buzzy, buzzy stock. And we suggested a covered call strategy for them.

22:20Pete Najarian:That's the most popular option strategy in the world.

22:24Nicole Lapin:Explain why that is and why it could be a good option, no pun intended.

22:29Pete Najarian:Part of the reason I think that it exists as the number one is it's relatively simplistic. You're buying the stock and so you own the stock, but you're selling a call, usually something that's a little bit further above where the stock price is at that time.

22:45Nicole Lapin:Let's say NVIDIA. Yeah.

22:47Pete Najarian:So if it's NVIDIA and NVIDIA is trading, let's say at 130 or something like that, just as a number, I don't know.

22:53Nicole Lapin:I don't think it's much higher than that. I bought it at 40.

22:58Pete Najarian:So good for you. Thank you so much. Wow. That's a great buy. But, um, So let's say you own NVIDIA and you own the stock at$120. If you sell the$130, so$10 out of the money, you're not expecting it to get up$10 in a fairly short period of time and you sell those for$1. You basically take that dollar and put it in your pocket. Because unless the stock goes flying to the upside and you don't get a chance to buy what you sold back, now that actually is something you have to know where it's going to be able to take away your stock if you don't buy it back as it goes to 130. Yes.

23:36Nicole Lapin:So slower. One more time for the folks in the back. So I own a bunch of NVIDIA.

23:42Pete Najarian:Yeah.

23:43Nicole Lapin:And I want some income because who doesn't?

23:46Pete Najarian:Right.

23:46Nicole Lapin:What do I do?

23:47Pete Najarian:So if you were to sell the options, now you're going to take those. And on a percentage basis, you are creating better than almost any dividend you could ever find anywhere, right? Because let's say you just sold it for a dollar and you did it every two weeks, you'd sell this dollar option because the market is a dollar at a dollar 50. And you're like, well, I already own the stock anyway. So I'll sell these for a dollar. So you sell them for a dollar and the stock doesn't go up all the way up there. So you don't have any worries. You put a dollar in your pocket. So you're creating your own dividend stream as you're doing this.

24:23Pete Najarian:And, you know, there are so many expiration cycles now, it's absolutely crazy because it used to be quarterly. There was an expiration cycle of, there were quarterly options. Then it became, okay, well, there's monthlies. Well, then all of a sudden it became, well, forget the monthlies, let's just do it every Friday. Okay. And now we're starting to see where there's even more throughout the week expiring options. But if you were to do this every two weeks and you took in a dollar and at the end of the year, You never had to worry about it because when you sold the options, you were able to buy them back for nothing, kind of 10 cents or something like that just to protect yourself.

25:04Pete Najarian:But let's say you put a dollar in your pocket and you were able to do that once a month every month of the year. It's not such a bad return. Yeah. And you've created that by just selling something that other people were buying for the hopes that maybe that stock could come running up and go through there. So it's a lot more simple than most every other trade that you put on out there because it's very limited risk. The risk that you have is the stock goes shooting up to the upside and then you unfortunately got stuck selling it at 130 and now it's trading 140.

25:39Nicole Lapin:But there are risks. It could shoot up. You could have limited upside, but you're not losing all your money.

25:46Pete Najarian:Which is why it's so popular. for just creating your own like sort of passive income stream for lots of folks.

25:53Nicole Lapin:I would love to give you my phone, which I'm kind of scared to do and see what you do with my options account, which is on public right now. I have never traded options before personally.

26:11Pete Najarian:You should always do paper first.

26:13Nicole Lapin:Okay. So explain that. That's like when you were in grade school and they did the fake accounts.

26:19Pete Najarian:And actually, you know, when John and I had a brokerage company called Trade Monster, it was the number one brokerage for a very long period of time. I don't know what our run was, but let's just say it was five years or something like that, six years. And eventually it went to E-Trade, who then it went to Morgan Stanley and whatever. We had a whole setup in there where it was just a paper trade. So a paper trade meeting a fake trade. So you go in and you say, okay.

26:41Nicole Lapin:That's not as fun.

26:43Pete Najarian:Well, there's less risk though.

26:45Nicole Lapin:Well, I want to take some risk. Okay. So here's my call. Tell me what you see.

26:52Pete Najarian:So I'm looking at this.

26:54Nicole Lapin:Can you do something like very vanilla, like a VOO or NVIDIA?

27:00Pete Najarian:Tell you what, the one that intrigues me probably most is your Microsoft trades.

27:04Nicole Lapin:So tell me why. The stock itself is trading around 404, but you're going all the way up to the 625.

27:13Pete Najarian:So that's like a really long ways up there. But it is going out to January. So you get a lot of time. So just so everybody understands a little bit more about the options, one of the factors of going into price and option is what we call theta, which theta stands for time. So that's how much time does it have? Because is this a two-day trade or is this like it actually is a nine-month trade? Because you're going all the way to January of 2027. So that does, because there's that much time, that puts a lot more premium into the options that you're going to trade.

27:47Nicole Lapin:Well, remember in the tariff situation, there was a one-day options trade that seemed suspicious.

27:54Pete Najarian:Yes.

27:55Nicole Lapin:I think it was suspicious. Was it insidery?

27:57Pete Najarian:Well, it sure feels that way. And, you know, John always tells the story. It's not a pleasant story, but it's a real story, which was we saw an incredible amount of unusual options in the airline companies, American being one of them, right ahead of 9-11. So it just shows you that, you know, there's good and bad things that can happen in the market. And unfortunately, that was something where that was used in a bad way because they were buying puts, expecting the stocks to go down like they did. Yeah, there's insider trade because they were doing terrible things. So there's so many different factors that go into these things.

28:38Pete Najarian:Who's making the trades? I mean, you've probably seen all these notes about all these politicians that are suddenly worth millions and millions of dollars. It's like, well, how did you do that as a senator? How are you now worth$40 or$50 million? That seems a little bit ridiculous because you didn't have that money when you started.

28:58Nicole Lapin:And there are all these apps that you can follow the trades, although there's a delay where they report and then it shows up much later than they actually put the trade in. And so it probably already happened. How do they not get in trouble? If you're looking at this crazy options activity, the 9-11 breaks my heart even thinking about it. But, you know, or, you know, more innocuous situation of the tariffs. Like, how is somebody who's doing a one day option, which is not. Can you explain that? That's not a normal.

29:29Pete Najarian:It's not normal, although it's becoming getting closer to being normal. But it wasn't normal, especially, you know, if you go back to Liberation Day a year ago, it was not normal. And now all of a sudden it's becoming that way because the options world is getting that much more interesting and people are getting more educated and they're getting now more involved. And the one nice thing for some of these people, I think, if they're doing a one or a two-day trade and it's not dirty, they are doing it because it costs less. They think the stock's going to hop up because of the fact of whatever the fact is.

30:01Pete Najarian:And it's not something illegal, but they're just saying, hey, earnings are tomorrow. I think they're going to be great. I think the stock's going to go up. So they buy a one-day option for tomorrow.

30:09Nicole Lapin:I mean, the volume has increased and also the access. The access, not excess. Well, both. Excess is increasing because of access that didn't exist when you and I were just running the halls of the sea boat. OK, wait. So are we putting in a trade or what?

30:26Pete Najarian:I'm so intimidated to do that. I don't really want to do that.

30:30Nicole Lapin:You're like, this is a hot potato. Get it out of my face.

30:33Pete Najarian:I just don't like the responsibility. I appreciate it.

30:37Nicole Lapin:Well, if you give people a sense, though, of what could happen to the upside, What's an example of the biggest return that you've seen from an option trade?

30:48Pete Najarian:Yeah, the craziest ones probably, some of the crazier ones that we've seen of late have been in, and I mentioned those metals earlier. But if you look at silver, I mean, silver itself, just silver, was up like 170 % last year, right? I mean, so in a year. So pretty amazing. Now, it's pulled back significantly from that when it made that huge run. But I think following along and seeing that, that was amazing. And I think that a lot of people for a long time didn't understand that it wasn't being bought for the same reason you buy gold. Because you buy gold because you're looking for an asset that's something more, I guess you'd almost call it reliable or whatever word you want to use.

31:35Pete Najarian:Whereas silver, yeah, it's a precious metal, but that's really not why people buy it. They buy it because it goes in everything. It goes in your phones. It goes in your computers. It goes into EV cars. It goes into, I mean, take your pick where it goes. It's everywhere. So there's a lot of use for that. And you look at all of these various, I mean, when we say that it's in the semiconductors with the chips and all that, just give that a little thought of what are the stocks that we talked the most about over the last two years? Chip stocks, AMD and NVIDIA and all these things. and all these other companies are all making their own chips now even and stuff like that.

32:10Pete Najarian:So the demand is there for silver and it's just absolutely been an incredible run. Now, I think it needs to take pauses now and again and pullbacks now and again, but I don't see a slowdown yet anyway, because AI, everybody was saying, well, it's the biggest bubble ever and this, that and the other. And then all of a sudden it kind of runs back up again, right? And then it pulls back a little bit and then it runs back up again. I think that there's a lot of reasons to be interested in a lot of different parts of the market, whether that means the software stuff that everybody talks about and everything going on with data centers, with AI and those kinds of things.

32:48But it's also energy.

32:50Pete Najarian:I mean, look at what just happened in the last few days based upon what's been going on with some of the military things that have been happening, right? I mean, all of a sudden you see crude oil, which can't get out of its own way, finally starts to springboard back up again in a big way. And I noticed it out here with your cost of your gas, by the way. They must have jumped it up right away as soon as the oil prices jumped because you guys are paying about$5.50, I think, a gallon.

33:17Nicole Lapin:Well, I have a Tesla out here, so I don't know what the price is.

33:21Pete Najarian:Well, when I was riding over here, I did see a lot of$5.50s and$5.25s and stuff like that. And in Minnesota, it's three and a quarter. So I just sit there going, that's pretty interesting, but it's pretty quick. And we were 275 just a couple of days ago.

33:35Nicole Lapin:So do you think we missed, if we didn't jump into buying gold or silver or copper or any of these metals, is it too late?

33:44Pete Najarian:I can tell you that almost on a very consistent basis, we still keep seeing what we call unusual option activity. We still continue to see buyers of options that are indicating to me that they think they're still more upside. Yeah. I'll give you a crazy example of one just a couple of days ago, last Friday, Netflix. They finally made the decisions that they weren't going to make this move, right? From Warner Brothers. Yeah, on Warner Brothers. And so I'm sitting there looking and all of a sudden I see some huge unusual options being bought, right? 50 ,000 of these, 30 ,000 of these, 30 ,000 of these.

34:25Pete Najarian:I mean, just very, very rapidly, bang, bang, bang, bang, bang. And I was looking at that trade and I'm thinking, stock's actually down right now. So why are they buying that? And as I'm thinking about why they're buying it, I got a little bit smarter for myself. And I said, you know, they're buying it because they think that the way it's going to unfold, it actually is much more, it's a better deal for Netflix. So somebody made that sort of decision. Doesn't mean they're right, but that's what they did. And the stock's getting hit, so it doesn't look like that's right. Well, the one thing that I was, as I was sitting there, I was thinking back to my days on the trading floor because I was thinking, wow, when a trade like that comes in, I have to hedge it somehow, right?

35:07Pete Najarian:I'm on the bad side. As a market maker, you sell and you buy based upon whatever the numbers are. So somebody now is extremely short. Well, that's who the professionals are, guys supposedly like me. How am I going to hedge it? I can't get enough stock to hedge it. So I just started looking and I said, well, they're going to have to buy options themselves to kind of get out of this mess that they're in. And lo and behold, all of a sudden, these things were moving all over the place because they needed to hedge this because their bosses at the end of the day on a Friday, especially are not going to be happy if they're short Netflix out the wazoo because they sold all these calls and couldn't find a way to hedge it.

35:53Nicole Lapin:Can't be naked on a Friday night.

35:55Pete Najarian:Yeah, you do not want to go home naked like that. Yeah, that's for sure. That would be bad. But it's really been interesting to watch that one because it was all happening all at once. And I'm just sitting there going, they can't possibly hedge this. They got to either buy the world out of stock, which they don't want to do, or buy other options to kind of cover what they needed to cover. So it was an interesting great Friday afternoon of trading that was going on because, you know, you had the people who were happy to be sellers, but you also had the people who were kind of frowning to be buying to try to hedge what they've

36:32Nicole Lapin:what they've sold they always sneak it in on friday and also bad news and stuff what do you

36:38Pete Najarian:think we're on to you they do that right i mean they really do it's fridays is when they do it

36:42Nicole Lapin:or or it's over the weekend who do you think should be trading options or who shouldn't be

36:49Pete Najarian:oh that's a really good question i i would say this um the people that are curious and interested should definitely dig into it. But I would also say the people who shouldn't are the ones that aren't willing to get a full understanding of how the options work. Because the worst thing that can happen to somebody is they didn't understand that, oh, if I sell the call, then that means that if this thing gets taken out, what if the stock gets, what if it's a biotech stock and they just willy-nilly sell an option, sell a call option. And the stock gets bought out at 50 bucks, but it was trading at 20 bucks and they've cured cancer in blah, blah, blah.

37:32Pete Najarian:And so people are pretty excited about this biotech stock. And now you all of a sudden wake up and you're like, well, wait a minute, I sold those for a dollar and now they're trading at$30 and I sold 10 of them. So, you know, I've just lost a lot of money, right? So it's, you know, you really have to do diligent work to understand it. And if you don't do that, I would say don't trade options. Do you think it's true when people say it's gambling? Yes. That's an easy one for me. It is a gambling.

38:09Nicole Lapin:So it attracts dopamine chasers.

38:11Pete Najarian:It does. To some degree, for sure. You know, it's funny because they hate when you say that. No one ever would ever want to hear me say that. But it's true. There's a lot of truth to it because, you know, you can stack it up however you want and it's never going to be perfect. But you can stack it up, stack it up, stack it up and then say, all right, how much am I willing to lose, you know, on this trade? I hear guys say stuff like that. And, you know, that tells me that it's a bit of a gambling thing. And it is. I mean, it's a gamble to decide because there's a timeframe, obviously, for options that you don't have with stock.

38:48Pete Najarian:With stock, the stock's generally going to be there unless something crazy happens or whatever, whatever, like they get bought or they go bankrupt or whatever. But, you know, if it's options, well, they expire this coming Friday or they expire the following Friday or, you know, however. But there's a timeframe for the options to end. So it's, yeah, I mean, there's a lot of reasons why I do think that there is a bit of a gambling feel for it. And long ago, I thought that we should put in a place in Las Vegas where people could walk in there and they could buy a call on Microsoft or something like that.

39:28Nicole Lapin:I mean, I would go to that table all day long. honestly i i do have a hot take when it comes to this gambling idea because people say trading is like gambling as if it's financial blasphemy the odds are right on the wall show me a blackjack table where the odds are right there on the wall and i will be sitting there day and night like it is just not the same right yeah as going to vegas yeah it could be considered gambling but it's very educated right gambling in terms of what are the risks you have all the information.

40:00Pete Najarian:There is risk and people have to know that. But I think quite frankly, isn't buying a stock risky too, right? I mean, selling a stock is risky. Buying a stock is risky. There's no promise it's going to go up.

40:13Nicole Lapin:Walking outside your door is risky.

40:15Pete Najarian:Yeah. So I know I answered that very quickly and I surprised you with that, but I do think that there is something to be said for it's educated gambling. And it just is, whether somebody likes to agree with it or not or whatever. It is. There is something to it.

40:33Nicole Lapin:Do you have rules that people should put in place to protect themselves? Like, you know, don't put X percent of your portfolio into one trade.

40:45Pete Najarian:That's one. That would definitely be number one. I'll give you this one that John and I have talked about for a long, long, long time. When I pay a dollar for an option, okay, if that option goes to two sometime between, you know, a very short timeframe or whatever, but whatever timeframe it is, suddenly it's trading at$2. I take off half. Let's say I bought 20 of them. I'll take 10 off. I'll sell it at 10 of them. Now I have, I got no risk, right? But I still have some sitting there.

41:21Nicole Lapin:So it's like if you bought a stock and it goes up, you're selling what the spread is and you're keeping your cost basis. You're taking money off the table.

41:30Pete Najarian:I'm taking money off the table and now I still have something on the table, but it's basically free money now.

41:37Nicole Lapin:Yeah, it's house money.

41:38Pete Najarian:I like that. On the negative side, because you always have to have the negative side too, you started off and you bought something for$2 and now all of a sudden it's a dollar, I tend to think that that's time to say, I'm wrong on this trade. I'm going to get out and I'll just try it another time.

41:55Nicole Lapin:It's not a good feeling. This is something I have to learn, you know, because I'm always like, you can do it. It's going to come back.

42:02Pete Najarian:Well, there, you know, and you never know. I'm not saying it's perfect. There's no way that you, I don't think there is a perfect answer, but I think that if you do that strategy, you know, it gives you a really good opportunity to have some success, I think.

42:16Nicole Lapin:So it's easy for you to cut bait.

42:19Pete Najarian:It's not easy.

42:20Nicole Lapin:But you do it.

42:21Pete Najarian:I'm like you or anybody else. I mean, honestly, I paid$3 for an option and now it's trading for a little over a dollar. I got to make a decision about what went wrong and just have to kind of bite your lip a little bit and say, all right, I was just wrong on this one. And the worst thing that happens is you do that and then the stock goes.

42:42Nicole Lapin:I know. I know.

42:44Pete Najarian:Which is a terrible feeling. But, you know, there's every decision has some sort of outcome. Right. And, you know, it's not always perfect.

42:50Nicole Lapin:But there's a sunk cost fallacy. Right. You're like, how do you talk yourself out of that? What goes on in your brain? Tell me, Pete. I know it's a scary place.

42:58Pete Najarian:I think the greatest thing that football taught me was that somebody's going to lose. Right. At the end of the game, somebody loses. It's just the way it is. and you're hopeful that you're fortunate enough to win a lot more of those than lose them. I think I learned in a lot of the discipline that I have in trading really did come from my sports background. I got to come back another day for that one or whatever, you know, whatever it might be. You just have to be disciplined and understand, all right, I turned out to have been wrong on this trade. I got to clean it up and I got to move on and not think about it again.

43:32Pete Najarian:I personally won't even look at the stock again until there's a reason for me to look at it to make another trade in that stock. I won't look at it. And I see people who will stare at it all day long. I have a son-in-law. I love him to death. But when he has a bad trade, he will look at it all. He did everything right. He got out of the trade. And now all of a sudden it went back up. And I'm like, well, how did you know that? Don't look at it.

43:54Nicole Lapin:Take it off your screen. It's like your ex. Delete their photos.

43:58Pete Najarian:Absolutely.

43:58Nicole Lapin:I mean, as an options trader, do you feel like it's more offense or defense? My sports analogy. it was fine. No, it was good. It was a good one. But do you think you're more in like an offensive posture or a defensive posture when you're trading?

44:14Pete Najarian:I think more offensive. I mean, you know, I see what I see, you know, at our market rebellion stuff, that's unusual option activity. I see it. I'll stare at it and think about it and then think, what is a catalyst? What could happen? What does this make sense? And if everything sort of lines up and I do the trade, I'm okay with it. And I think that's more offensive. I think defense is what you play when you were wrong about it, right? And you've got to have that strong defense that says, let's just get out of here and we're done with this one and then move on to the next one.

44:48Nicole Lapin:Okay, last analogy. Who is your investing MVP?

44:52Pete Najarian:You know what? This will sound sappy. It's probably my brother.

44:55Nicole Lapin:I knew you were going to say that.

44:57Pete Najarian:Well, he's my older brother, you know, and he literally, when I got to the trading floor in Chicago, He started in 81 after he was with the Bears. And when I got there, he was considered by a heck of a lot of people on the floor as a big, tough, mean, smart guy who was king of the IBM pit. And so watching him as a guy whose background was in graphic arts have success on the trading floor is absolutely amazing to me, right? Both of you guys. Yeah. And I was, I was pre-med. So I did have a lot more financial type things going on, like, you know, biology and chemistry. There's a lot of, you know, numbers that really do come into play in a lot of that stuff.

45:41Pete Najarian:But, um, it's, it's just interesting that he was so far away from it, you know, being graphic arts guy. I mean, he literally was a guy painting things and stuff.

45:50Nicole Lapin:I love that though.

45:51Pete Najarian:Yeah, I do too. But for him to have the kind of success that he had and has or whatever, but that he had when he stood on the trading floor. He literally just left the trading floor when I got there in 1992. He kind of went upstairs and sort of looked over everything. And I became the guy on the floor who kind of was like the risk manager for the whole firm. But yeah, a lot of fun. A lot of fun. It's fun to work with my brother.

46:17Nicole Lapin:Can I be adopted?

46:18Pete Najarian:You can be a younger sister. Thank you so much.

46:21Nicole Lapin:So we have a new game that I'd love to play with you. speaking of games i'll never play football but uh this is a game that i hopefully can play called secure the bag okay so i have this bag of money questions for you okay and answer them i'll answer with you if you want okay oh have you ever hidden a purchase from a partner you can pass on one question i don't need to pass on this no i haven't no i have we don't have to expand on it

46:55Pete Najarian:that could be too dangerous there all right so i'm grabbing another one have you ever cried over

47:02Nicole Lapin:money oh i haven't seen these i've never cried over money i've gotten angry over money i've never cried over i think i've cried over money but not in an investing sense sure like in a more personal sense or what the money represented like you know my house was foreclosed on when i was a

47:23Pete Najarian:kid that type of stuff i think is money that would cause me to cry i always knew there was another day so i didn't you know i i try to be and my wife always has been amazed by my even keel side of me or whatever, because if I have a great day, it's a great day, but it's, it's the end of the day. So, so what, right?

47:43Nicole Lapin:What about happy tears? Uh, no, I try, I try not to go too low.

47:49Pete Najarian:I really, I don't, I don't really go low ever. And I go a little warm, but not too high.

47:56Nicole Lapin:I remember on the floor one day, a guy was so upset, you know, again, this was like 25 years ago, took a bunch of cash and just like threw it out. And it was kind of a weird vibe because I was, you know, 18 at the time. And so I was like, can I grab this? I was going to say, I hope you grabbed it. But also it was kind of taboo. Like, don't pick it up. He's really upset. Is he going to come back and get it? But also that's$100. So hook a sister up. I don't know.

48:26Pete Najarian:That's classic.

48:27Nicole Lapin:But that was what that era was. Yeah. A lot of big emotions, but more on the anger side than the tears side.

48:33Pete Najarian:What's your biggest money fear? fear wow uh that one's hard for me just because i'm not really sure i even understand you don't understand fear pete i don't mean that in a cocky way or whatever i just don't oh give me some of whatever you're taking it is funny i got so used to you know that my background of like where i went to school for junior high and high school definitely turned who i was into who i am and i never even thought about it so i didn't ever really think about fear and that kind of thing and whatever.

49:07Nicole Lapin:Well, I don't know if you want to share any of this. Of course, feel free to pass, but you lost your home in Florida.

49:16Pete Najarian:That made me cry. No, I didn't cry, but it sure made me angry. Yeah, we had two hurricanes back-to-back, came through, took our house that we had just finished. It was the last touches of the house in April and then in October. Custom everything. 20 feet from the Gulf of Mexico. I mean, you know, how do you be? It was great. It was our dream home, my wife and I. And she was the general contractor. She did it all. She made sure the guys were there because she didn't like the way it was getting run, the way it was.

49:50Nicole Lapin:Girl after my heart. Oh, my goodness.

49:52Pete Najarian:I mean, she had to go in and go like, hey, let's get going, guys. But, yeah, that was a tough one. That was brutal. It's still brutal because this is going on. And I think I told you, but August of 2027, I think, is when we're supposed to go to court with the insurance people. This happened two years ago. You know, it's kind of like, well, what in the world? How long can you stretch it out? But, yeah, that one's pretty, that one's, that one bugged me pretty good. Yeah. But more angry than, you know, not, I'm not a big sad guy.

50:25Nicole Lapin:I mean, every other answer is like a bunch of laughing, which I love. Sorry about that. Your amazing infectious cackle, which I love. So thank you. No, it's an experience. So you're not fearful of rebuilding, or maybe, you know, your wife would have a different answer.

50:43Pete Najarian:No, I think she's in the same boat with me. I mean, we basically, we made a decision is we're going to, you know, get this thing taken care of one way or the other, hopefully our way. I mean, that is what insurance is supposed to do. But we, we want to Airbnb. I mean, like, for instance, I'll tell you, I grew up early in life in the Bay Area, California. I still love it up there. I love it down here. I have friends in Manhattan Beach. I'm going to be with them tonight, actually. So I love it there. And I really love Manhattan Beach. So, you know, between those places and Tahoe and different parts of Utah and Arizona and stuff, I would much rather Wyoming and Montana.

51:22Pete Najarian:I literally would love to just do an Airbnb for two months or three months and then go back to Minnesota where we kind of want to always stay with our house that we've got there. But we love it. We really do love it up in Minnesota. It's a great spot. It's not for everybody because the winters are long. But it's a great city. I mean, you know, the Twin Cities are really pretty fun. We've got all the major sports and all that kind of stuff. So it's pretty killer. Yeah, we like it.

51:49Nicole Lapin:And to be clear, because one of the most searched questions about you, you're not twins. You and your brother are not twins.

51:57Pete Najarian:And I don't know which one that's, you know, good or bad for, right? Because he's six years older and I'm six years younger, obviously. But it's like, well, either that's a compliment to him or a slap to me. I don't know. I don't know how to take it.

52:12Nicole Lapin:I think it's that you guys just are, you know, so simpatico.

52:17Pete Najarian:Yeah. And you know, we've never had a fight, never had an argument in our lives. He was kind of a mean guy when he was a kid, but you know, past like 16, he's been pretty good.

52:27Nicole Lapin:I'm so happy that I'm part of the family now. Yeah, you're part of it. Great.

52:31Pete Najarian:You can be a part of it. When you were a kid, did you think you would be rich when you grew up? I never cared. I really, I don't know that I, even to this day, like I'll give you an example. Like if you said, well, what do you mean you don't care? I drive a 2013 F-150 pickup truck with 290 ,000 miles on it. I really don't care. My wife and other people try to get me to buy a new car or whatever. And I'm like, why? This thing's great. So the money part is.

53:03Nicole Lapin:You and Warren.

53:04Pete Najarian:It's just not who I am, I guess.

53:06Nicole Lapin:Rolling around in your old jalopies.

53:09Pete Najarian:How about you? You didn't answer this one.

53:11Nicole Lapin:I definitely didn't think I would be rich when I was young. No way. Absolutely not.

53:16Pete Najarian:What's your biggest money regret?

53:18Nicole Lapin:What's your biggest money regret?

53:21Pete Najarian:I don't know.

53:22Nicole Lapin:There are no regrets? Like not even a, because you move on so quickly from a trade. You have such a, you're such a healthy mindset. Again, you guys need to bottle this.

53:32Pete Najarian:The only money regrets that I probably over time probably have ever thought about was certain houses that when we were looking, we should have maybe bought this one versus that one or whatever. But my wife does a very good job of making a house a home type thing, you know? So it's pretty easy. We could live almost anywhere, really.

53:51Nicole Lapin:Again, woman after my own heart. Oh, my gosh. The show is not long enough for all my money regrets. But the biggest one is, you know, I just I wish I started earlier. I wish I started investing earlier. I don't think anyone. We had like a billboard campaign for a minute that said, I'm glad I didn't invest earlier, said no one ever. Right?

54:09Pete Najarian:Yeah.

54:10Nicole Lapin:And what is next for you? There's a lot of pressure to be in politics. Minnesota, famous. sports turned politico.

54:18Pete Najarian:A lot of people in Minnesota would love for me to explore the whole governor thing. So there's groups of very wealthy people who have reached out to me who asked me to, to potentially think it over at least if nothing else. And I've thought about it a little bit and I've heard from, and I'll say Jesse Ventura because he's a neighbor and a friend and I've known him since he got back from Vietnam and all that type of thing. So he's, he's been a friend forever. Um, and he really would love the idea if I would do that. I, I don't know enough about, I don't think I'm a political guy. It's not really my, my deal.

54:53Nicole Lapin:Would you be a Republican?

54:55Pete Najarian:Yes. Yeah. I would, I would, he was, um, an independent when he won. And so he would prefer that I did something like that, but I, I'm not sure I'm going to take his advice on that.

55:08Nicole Lapin:No, you're out. It's a no for you, dog.

55:10Pete Najarian:Yeah, I don't think I'm, but yeah, that and the football stuff is interesting to me. There's a couple of different things going on that are really, really intriguing to me. And I've got some friends, the financial friends who have bought different franchises and stuff over the years and are always kind of asking me about what would I do? Would I ever consider it? And I definitely have interest in considering it. So we'll see.

55:38Nicole Lapin:Buy a team, be part of a syndicate. I mean, there's so many finance guys that were such nerds growing up that they're buying a team and they're bringing in.

55:45Pete Najarian:Right. Yeah. They need somebody in there. There was more on the football side. And if you look around the NFL, you can see which ones have more success than the others is the owners that actually do bring around the right types of people.

55:58Nicole Lapin:We end all of our episodes by asking our guests for a final tip that listeners can take straight to the bank. Hmm.

56:05Pete Najarian:Find the area in the market that you like best, that you think you know the best, and increase that knowledge and take a shot. I mean, I think a lot of people just willy-nilly sort of, you know, sometimes will put money into something. It's like, give it a lot of thought. Give something that you know about it. Like, I'll give you a crazy one real quick for me. Walmart. Everybody goes, how did you know to buy Walmart? And I'm like, Like, well, you love shopping there. I go there more than anybody. I mean, I go there and I see what's going on. And I see, you know, especially during the pandemic where there was a big change and it's sticking.

56:45Pete Najarian:And the big change was people trading down. They're still there and they're still at TJ Maxx. So those two places, TJX and Walmart, I feel like I know them really, really well. And so I feel like I have a pretty good comfort. But everybody's going to have something different, right? So find that. If you can find what you think you know and you do know, you probably have a good chance of having success with it.