Condor Options

His name is George Fontanills, and he’s smiling because he increased his net worth by more than 800% in four months. Over the weekend, Barron’s covered the recent acquisition of Fontanills’s company, Optionetics, by the respected options broker optionsXpress. The article concludes with this:

After 10 years of applying his Optionetics strategies, Fontanills’ wealth wasn’t what you might expect. When opening his Fimat account in 2003, he listed his net worth as $4 million. Four months earlier, his sworn financial statement in a Massachusetts divorce court represented his personal net worth as $7,150, plus another $473,500 in a trading business. His annual income, he told the court, was less than $15,000.

“Both financial statements were correct at the time they were made,” Fontanills said in an e-mail last week.

It’s impossible to spend much time in the options industry and not run across Optionetics and similar organizations. Their business model consists primarily of liaising cash-flush, credulous customers with salespersons wearing double-breasted suits and permanent smiles. For a few thousand dollars, they’ll provide information about options that is otherwise freely available on the internet or in any local library. The decision by optionsXpress to purchase Optionetics strikes me as downright cynical, but not necessarily different in kind from thinkorswim’s willingness not too long ago to be acquired by Investools. At the current rate, more overpriced seminar companies will need to be invented so that the remaining options brokers have someone to court.

Anyway, back to Fontanills. If we are really expected to believe that, as he is implicitly claiming, his net worth increased eightfold over the span of a few months, optionsXpress investors should (at the very least) be concerned that the man at the helm of this new acquisition has such a tin ear for the art of persuasion.