The Options & Spreads article that follows has been written by an expert who trades successfully for a living. He also offers a course on trading Options & Spreads. For more info on the course click here.

The following article is very educational, informative and well-written.

OPTIONS & SPREADS: Good News After the Bombardment

Connoisseurs of humor cannot help but notice all the comic definitions of the word "optimist": One who takes a frying pan on a fishing trip. A 90-year-old man who is getting married and wants to buy a home near a school. A fellow who brings his own bottle to a New Year’s Eve party and saves the cork.

Yet one would think that humor-writers never look at the world of trading and investing. They make no mention of the mail room clerk or the dry-cleaning cashier or the stenographer who writes a check to a broker and then reads yachting magazines or browses Lincoln auto showrooms or prices properties in the Hamptons.

Sometimes gags hit close at least symbolically. In the "Wizard" comic strip, a medieval guard clad in chain mail calls out from atop a stone watchtower, "Who goes there?" A voice replies, "A shepherd looking for a lost lamb!" The guard says, "Try the mess hall."

In the realm of financial speculation, where every joy is a sorrow to somebody else and vice-versa, part or all of one’s dollar flock easily becomes the meat on other people’s tables, whether the shepherd likes it or not or has plans to the contrary. The more meadowy over-optimism, the more lost sheep. Plenty got lost.

Not all the time, thankfully. In her letter published in CTCN’s Nov-Dec 1993-2014 issue, Patricia Morgan called futures and options "a charlatanism," a "horse parlor" and a "street-peddling branch of finance." In paragraph one she wrote of my earlier article: "He actually admitted that he had a losing investment. I thought financial advisors reported their gains but never their losses. Perhaps I was wrong to generalize." Then in paragraph four she said with futures and options "everybody goes home with empty wallets." The world’s briefest repentance! She gave up generalizing like people give up smoking three or four times a day.

This "street-peddling" accusation has been thrown around more and more widely in recent years. Many rare coin dealers are putting on Wall Street airs and calling themselves "numismatic investment counselors." Their detractors denounce coin-dealing as "shabby street huckstering." With coins as with gem-speculation, at best there is subjectivity in the estimating of value and often 800 or near-to-it markup between wholesale and retail. Try selling it for what you just paid! At worst there are fake items and fly-by-nights.

With stocks, futures and options, the "trading at" worth is on record and not a matter of opinion. The brokerage commission takes a wing off the turkey but cuts less deep than a 100-percent markup. The government polices these industries far more than it does coins or gems, which can consequently sink more easily to the level of the bucket shop. Still, the "trading at" worth of registered securities can change markedly in 10-minutes, so if there is less "street huckstering" and "bucketing," there persists "the unknown."

The unknown. Just about everybody involved in trading and investing despises it. Yet it is the blood and oxygen of financial life. A stock trades at 90 dollars a share. If everybody knows it will rise to 150, no one would sell at 90. If everybody known it will fall to 40, no one would buy at 90. Worse than that, if everybody knows it will rise to 140, then that and not 90 would be its current price. In a "perfect world" with "no unknowns," you could save plenty of money by buying auto insurance only on the day before you know you will have an accident. But such is not the world in which business and finance exist, or could exist as we know them.

In a hypothetical "perfect world," the only stocks, futures and options existing are (a) 100 percent known and (b) rising to the stratosphere, making every speculator a multimillionaire. Too many traders wish for this or strive for this or figure they cannot succeed unless somehow this exists. They yearn for it instead of training themselves to cope with the unknowns in the real world. It is human to want to know, or try reducing or eliminating the unknowns, but they remain a "must" and so is coping with them.

In the wilderness sit two villages, about a mile apart. The inhabitants of one village always tell the truth and those of the other always lie. You come to a fork in the road at which stands a native.

You do not know which road leads to which village or which of the two the nearby native inhabits. As directions? Sure, but if he is a liar, he will mislead you.

You ask him whether he is a liar or a truth-teller. He replies, "I am a truth-teller." Alas, you know of course that is the answer which both truth-teller and liar would inevitably give. So how do you get reliable directions from him? You solve this by pondering another question: What are the possibilities?

You point down one of the roads and ask him, "Is that the road to your home village?" Now, what are the possibilities? If you happen to point down the road to the village of the truth-tellers and he is a truth-teller, he will say yes. If you point down the road to the village of the truth-tellers and he is a liar, he will still say yes. Either way, a yes indicates the village of the truth-tellers.

If you happen to point down the road to the village of the liars and the native is a truth teller, he will answer the question no. If the road leads to the liars’ village and he is a liar, he will still say no. Either way, a no clearly signals the village of the liars. What trips up most people when they hear this puzzle? They figure that they must "know for certain" whether the man is a liar or a truth-teller. That piece of information is nonessential. So you see that (a) you can deal with and calculate with unknowns, but (b) you must have a pretty good grasp of the possibilities.

In an occasional past article I carped about the sports bar and its patrons, not because I favor Prohibition but because too much misinformation has circulated in these places, always under the pretenses of "hard reality." A hart-hat or a trucker or a longshoreman site on a bar stool and does boast, "The priests and the philosophers live in an ivory tower, but not me. I know the real world." But often not. Myths and fallacies crowd the saloons as much as the ivory towers. Songs and movies make people commit crimes. That race horse is as sure as a savings bond. In a casino you can’t lose if you keep doubling up.

Let us not blame everything on the blue-collar worker. The accountant and the realtor, the insurance agent and the middle manager, pass along comparable amounts of bunkum over shot and beer. On how to make money, collars blue and white often make it sound like all paths in the wilderness leads to a mother-lode.

Supposedly everybody is a truth-teller and beyond every knoll lies the Klondike. Amid this convivial atmosphere many people first hear of futures and options. The share that has paid a dividend every year since the 1790s receives little mention. More frequently the talk turns to the futures contract or the option contract that allegedly can and will turn the money in your checkbook into a vast fortune in time for the quail-hunt or the reunion.

What is it about the foam on lager or stout that causes people to omit mention of such items as risks and mathematical intricacies? Or sophisticated strategies or nearly anything that could be called business-like? Ice in a highball makes a weak foundation for optimism. Herb Prochnow once said, "There are two kinds of fishermen—those who fish for sport and those who catch something." So it is with traders for whom it is more a "sport" than a business. Very many quests for the swordfish just use up expensive bait. It drains the checkbook but what a thrill!

Continually missing the marlin or sailfish, or catching less than pays for the bait, calls for a change in one’s deep-sea fishing technique. Yet foundationless optimism and one or another "I am a truth-teller" marking buoy or guide cause many speculators to do what they did last time and the time before, or even make a career of it.

As for finding the right technique, my discovery of option spreads was, if not Frank Coppola’s first encounter with film, at least Willie Mosconi’s discovery of billiards. The traditional double symbol remains valid: The optioneer is a horse owner at the long end of the spread and a bookmaker at the short end. The bets pay for most of the horse, and the more the better. Thoroughbred-owner and bookmaker both sustain risk, but not nearly as much as the gambler who "has a hot tip" or "plans to get back what he lost."

Those wagerers are the saddlebags filled with gold nuggets, as you will see shortly. In January 1999, I was looking over optionable stocks on which to do a "spread" position, specifically a horizontal calendar spread. "Horizontal" because the options bought and those sold are the same strike price—side by side on the chart. "Calendar" because expiration-date-wise the options sold are of a different month than the ones bought. The options bought are the "long end" of the spread and those sold the "short end." Specific example to follow.

Since it was the latter half of January, just about all the February options had shrunk to scrawniness due to diminished time value. So my attention went to the Marchs and Aprils. Looking only at March and April options that had "meat" on them—more than a couple of points in value—reduced the list still further. IBM, Ascend, Pfizer, Lucent, Microsoft, J.P. Morgan, Intel and others all seemed worth a second look. I avoided stocks prone to overly wide sudden swings in price such as Amazon, Dell and Yahoo!

The final and most crucial list-narrower was the "gap" or "spread," the difference between the bought Aprils and sold Marchs that I would have to pay out of my own capital while other people’s money paid the rest.

This item solidified quite clearly in approximately my most recent year of trading, as detailed in my previous articles: A spread of a point or less is great; 1-1/8 or 1-1/4 points good; 1-3/8 fair; 1-1/2 half avoid. Worse than that avoid like leprosy. The put & call options of IBM and several other otherwise worthy stocks offered gaps or spreads of 1-3/4 points or 2 points or worse.

My attention came to Cisco Systems (stock symbol CSCO; option symbol CYQ), the share price of which moved a few points in either direction of 105. I scrutinized the call options with strike prices of 115 and 120 and the put options with strike prices of 90 and 95. The strike price should be far enough from the stock price so that a slight swing in the share value will not place the option "in the money." Comparing March and April, Cisco’s call options had gaps or spreads of around 1-7/8 points while the put options were narrower.

My standard strategy involves positioning a call spread above a rising stock with a conservative price/earnings ratio, or the reverse, placing a put spread beneath a declining stock with a weak P/E ratio. Cisco looked like it could go either way. Its share price swam a few points below its 52-week-high of 108 and the trend follower in me said it could climb through that. On the minus side, the P/E was decrepitly under one-percent and it existed in a sideways overall market at best. The end-of-January report for Standard & Poor’s 500 listed just under 300 stocks lower for the month and just over 200 higher. Some downward weight.

If I did a put spread with Cisco, what was the worst that could happen? A large rise in the stock’s price, like IBM in the latter months of 1993-2014, would flatten the value of the put options and the gap between them. But IBM enjoyed a stronger P/E and an up-up market.

I had not taken any option position in IBM in late 1993-2014 but if I had, it would have been on the upside or call side. But with Cisco I began pondering the "box theory" put forth by Nicholas Darvas in his books How I Made $2.000,000 in the Stock Market and Wall Street: The Other Las Vegas.

The former professional dancer, without a Wharton degree but armed with pad & pencil practicality, discovered that share prices moved in what he called "boxes." If it moved between 82 and 88, it was said to be "bouncing up and down in a box." If it climbed and began bouncing between, say, 90 and 96, it was said to have "broken out of a box and created a new one."

It could go up or down from that one, hence his trigger-finger use of stop-losses at each base or floor, such as 82 or 90. Darvas would have described IBM’s continual climb as an "ascending pyramid of boxes." He also gave non-bargain-hunting advice ("The stock is at 66 but don’t buy it unless it breaks above 70.") because breaking through ceilings figured so importantly in his calculations.

So drawing upon indicators, experience, readings and instincts, I could not see Cisco scaling an Alp like Big Blue but I could see it climbing into a higher box. I reasoned that this would probably not harm a put spread if the spread had sufficient "cushioning," i.e., meat or thickness in the value of the options.

At an earlier stage in my development as a trader, "sell 2 & a fraction, buy 3 & a fraction" was practically a Mantra. For example, I would sell Septembers at 2-1/4 and buy Octobers at 3-3/4 for a resulting difference or "spread" of 1-1/2. In dollars, I bought 10 October options for $3,750 and sold 10 Septembers for $2,250. The money from the sale of the Septembers paid for most of the Octobers and I paid the difference or "spread" of $1,500 plus brokerage commissions.

That "money from the sale of" meant other people’s money, the gambler’s cash in the bookmaker’s till. Buying the Octobers meant purchasing the race horse and paying for it mostly with dollars from the wagerers. That much remains the same to this day in my dealing but the value of the options does not. No more "sell 2 & a fraction, buy 3 & a fraction."

Both the sell side (short end) and the buy side (long end) of the spread have to be at least a notch higher before I say, "Start drilling." Also, as already mentioned, I want the gap or difference or spread to be less than 1-1/2, and not just a transparent slice less.

On Wednesday, January 27, 1999, Cisco shares traded at 106 a fraction. The put options with the March expiration date and the 95 strike price showed up as bid 3-7/8, ask 4-1/4, last traded at 4. Cisco’s April 95 puts were bid 5-1/8, ask 5-1/2, last traded to 5-3/8. Everything comfortably above the "sell 2 & a fraction, buy 3 & a fraction" level. The difference between the two bids tallied at 1-1/4, same as the two asks, a spread slender enough to be called good. All conditions met for flying the sortie, all systems go.

I did these calculations at about mid-day and then had a dentist’s appointment. So I called the order into a broker not until about 2:30 in the afternoon, at a public phone around the corner from the dentist’s office.

Since this was just an hour and a half before the close of trading, it was only half a surprise when the post-4:00 p.m. word came back on my order: "Nothing done." I felt guilty of some laxity on my part. It is fine to be an independent trader, with your office in your pockets and your business phone on the street-corner or in a hoagie shop. Yet one must not become too casual about the realities and exigencies of business.

The next day, with listed figures approximately the same, I phoned in an exact repeat of the previous day’s order, but more than an hour before noon. "Buy 10 Cisco put options April 95. Sell 10 Cisco puts March 95. These are both opening transactions and are covered, with the long Aprils covering the short Marchs. These two orders, the buy and the sell, are to go in together, each dependent on the other. This is a debit spread with a debit or difference of 1-1/4 points. There’s money in my brokerage account to cover the spread transaction."

This horizontal calendar spread was also a "debit spread" because it would result in a debit or difference which would come out of my capital. With 10 options bought and 10 sold, that 1-1/4 points limited my expenditure to $1,250 plus commissions. The amount for which the Aprils would be bought and the Marchs sold were open, but the difference between them could be no more than 1-1/4 points or $1,250. The rest of the capital comes from that source which makes spreading a legalized stacked deck: Other people’s money. The specifies of this you will see momentarily.

After the close of trading on Thursday, January 28, 1999, the report came. I had bought 10 Cisco April 95 put options at 5-1/4 and had sold 10 Cisco March 95 puts at 4, with a gap or debit spread between them of 1-¼.

In dollars, I had bought $5,250 worth of Aprils and had sold $4,000 worth of Marchs, the latter being other people’s money which paid for most of the former, except for that gap of $1,250 plus commissions which is my debit or my bill. No, my venture does not classify as risk-free, yet it counts as breeder’s business-risk rather than a horse-gamble. So what is the blooded Arabian in my barn, or my blue chip? It is the fact that I ventured $1,250, not $4,000 or $5,250.

Taking bets. Selling paper that might appreciate or might become worthless, such as I sold those March options. Elements of wagering, yes, but it is possible to milk wagering for businesslike profits, i.e., reasonably consistent profits. But to do so one must recognize the essences of the bookmaker, the horse-breeder, the casino skimmer, and there are plenty of people in the world of finance who would prefer you not see these. When stock shares are first sold to the public, the revenues from these sales provide the corporation with money with which to build its industry. After this, however, stock bought and sold only changes hands between investors.

Thus many claim that these shares are de facto chips in a casino. Yet plenty of people who would sneer at a roulette wheel will buy flimsy stocks. Will the brokers or the Exchange executives discourage them? The hard-sell grab for investors’ cash is too strong.

In the Nov-Dec 1993-2014 issue of CTCN, J.L. from Wimauma wrote of options, "Again (after many years) I thought they would work for me. I can’t get the ‘hang’ of them. I understand the ‘insurance’ function, but buying near enough to the money with enough time value left to protect my futures, costs ‘an arm and a leg’."

Please understand that the so-called "insurance function" is the huckster’s spiel. Put options are supposed to protect stocks and futures contracts on the downside. The trouble is, they are so expensive that they eat up share price appreciation, dividends, futures contract appreciation. Puts are fine if the protected security drops like a rock but otherwise they make winning or breaking even far more difficult, costing more than most gainers gain.

Call options supposedly let you get a hook into rising stocks or futures while "tying up less of your capital." However, over 90% of all out-of-the-money options—both puts & calls—expire worthless. So unless you hook onto a new Resorts International, call options devour far more capital than they free. Thus the alleged "legitimate uses" for options—downside insurance, upside stake-claiming—are sometimes valid but more often are $100 bait for catching $50 fish, or catching nothing. Of course, people and firms who make money from options will not scream any of this in your ear.

Puts & calls make more sense—cynical sense perhaps—if viewed as gambling devices, but Exchanges and brokerage houses do not wish to promote themselves as horse parlors. Of course they are all "truth-tellers" pointing out "the path."

Options are the "fire insurance" which the financial industry sells and which, if partaken of for any length of time, usually costs more than the house burning down. You can make money selling overly-expensive insurance just as you can make money manufacturing poker decks and dice.

But you must not buy the sales pitches about put option "downside insurance" or call option "protection against tying up capital." Also you must not feel heart-shattered when you see other people lose money or waste money. This came to mind as I watched Cisco shares move in the opening days of February.

My belief of "50-50--could go either way" shared a room in my head with a picture of the stock climbing into a box a step above the one in which it already bounced up and down. It would not hurt but a severe rise could, though it seemed unlikely.

On the last trading day of January — the day after I opened the position — and the first of February, Cisco shares climbed from a low of 106-7/8 to a high of 117-1/2 before closing on Monday, February 1 at 115. An earnings report showed a moderate improvement over paltry previous quarters, three fins in the kitty over yesterday’s two. Yet it boosted the shares about 10% at the peak.

Where were the put options? At Monday’s ebb the March 95s traded at 2-5/16, so whoever paid $4,000 for the 10 I sold saw them sink in value to about $2,300. The April 95s fell to 3-5/8. Whoever bought 10 of them as I did at 5-1/4 or $5,250 but without spreading was for the moment down over $1,600.

Where was I? Notice the amount of the gap between March and April--1-5/16 points. A hair to the good over my 1-1/4 starting spread. Nobody has the right to call spreading risk-free but its recurring pluses would have to include concrete bunkers and good news after the bombardment. Financial history has seen many, many bombardments.

My fascination with investment folklore from decades and even centuries ago springs in part from antagonism to all the "new and improved" claims. Everybody from the president of this or that Exchange making a statement to the press to the barfly trying to talk his beer buddy into speculating declares that things have "changed so much" and "improved so much" since 1987 or Black Thursday 1929 or the Gold Panic of 1869 or the tulip speculation mania in 17th century Holland. So many safeguards and protections nowadays! Most who claim this have something to sell.

Do not be fooled by the difference between E-mail and a quill pen. Much that was still is: Tremendous multitudes of "millionaires by next week," a number of profit-makers and piles of financially shot-up corpses. Also plenty of hangers-on: Hawkers, middlemen, schemers and tipsters all making money off of would-be financial giants. Great Britain in the year 1711 saw the formation of the South Sea Company, founded for the development of profitable trade in the Pacific and South America. Stock offerings sold to the public began at 128 pound sterling per share and climbed year after year. The royally-chartered company achieved celebrity.

In the summer of 1720, the South Sea shares neared 1,000 and England experienced its first speculative stock boom. Joint stock companies were supposed to have a charter from the king, but this took time and money so many organizers skipped that step.

Companies of all types proliferated and taverns and coffee houses across London became centers where throngs of investors gathered to buy newly-issued shares in fisheries, African trading companies, wool exports and the like.

Stock-ownerships were offered in ridiculous enterprises such as perpetual motion machines and insurance against divorce. Certificate-forging-fly-by-nighters sold equities in nonexistent firms and then disappeared.

A Weekly Journal editorial date March 26, 1720 said that farmers and country gentlemen "are upon the roads from several parts of the Kingdom all expecting no less than to ride down again every man in his coach and six"; i.e., expecting to ride home from London in an elegant coach drawn by six horses.

The editorialist added, "If a friend’s advice is worth anything, let them take care, for though there are some prizes, they may find many more blanks, and they may happen to lose all that in an hour in Exchange Alley, which the industry and care of their ancestors has been scraping together for some ages." Prophetic?

The summer boom ended in September when South Sea stock, its 1,000-point peak a memory, reached 190. Royal Exchange dropped from 250 to 60 and London Assurance from 175 to 30. Shares in many unchartered companies became floor scraps. Old-line banks that had loaned money with stocks as collateral collapsed.

Buying on margin and borrowing cash to invest from all varieties of sources both first became popular in 1720. Both types of investors were massacred. The October 22 issue of Applebee’s Journal said, "Weekly through the streets of London, you may see secondhand coaches; Secondhand gold watches, castoff diamond watches and earrings to be sold; servants already want places . . . ; Long Lane, Monmouth and Regent Fair are full of rich liveries to be sold, nay, and full of rich embroidered petticoats, rich embroidered coats and waistcoats; in a word every place is full of the ruin of Exchange Alley."

"But that was long ago" is not just a line from Stardust. Many are the brokers of futures, options, stocks, who say that so much today is different now, improvements and protections coming out of the woodwork and all that. Yet their file-drawers sag under the weight of clients no longer active, clients who lost money that took ages to save, or who borrowed to get trading capital and lost it, or whose watches and diamonds are in the pawn shop, or who had to sell their cars like liveries in Regent Fair. Banks have become stronger and Sony Walkmans have replaced powdered wigs. Otherwise, much that was still is.

Trader’s Diary Thursday, Feb 4: After Cisco rose to 117-1/2 and closed at 115 on Monday, I wondered if either of these levels would become a "ceiling" of a new "box." During the next couple of trading days, however, it reached heights of 116-3/4 and then only 112-1/4 respectively, closing at 112-3/8 and then 111-1/8. Moving downward, good news for put options. On the latter day, yesterday, the size of the spread touched 1-1/2 and 1-9/16, or 20 percent to the good over 1-1/4.

Today, Cisco shares dove to 103-3/4 and closed at 105-1/4, down 5-7/8 from yesterday. Back in the old box for now. Today marks one week since I opened the position. How wide the spread now? 1-3/4! My $1,250 venture is worth $1,750 irrespective of commissions. No pawning my George the First waistcoat.

In Georgian England, usurers walked the cobblestones or occupied cubbyhole offices. The modern era has "plastic money" or credit cards. More deserves to be said on borrowing money with which to speculate. Hamlet’s friend Polonius said, "Neither a borrower nor a lender be." Yet loaned funds do appear in paragraph one of many business success stories. Example: "He began the mail-order enterprise/shop chain/two Afghan restaurants with $500/$2,000/$5,000 that he borrowed." However, those who went bust and still had to pay it back rarely appear in written pieces.

With options and futures, borrowing to trade creates a double potential downside: A loss and a debt. One downside is already too much. A far less recent development than speculation with plastic money is buying stocks on margin. It can double the profit but on the downside it can and often has doubled the Sioux and Cheyenne between you and the gold in the Black Hills. Another definition of an optimist: As red men mass for the final attack, Custer turns to his sergeant and says, "Don’t take any prisoners." Financial trading has seen too much of that kind of "optimism."

Trader’s Diary Friday, February 5: Cisco Systems fell in tanden with a general slide in technology shares. It bottomed early at 99-11/16 then spent the rest of the trading day bouncing between 100 and 103 & a fraction, more often near the former. It closed 101-1/4, down 4 from the previous day’s close.

The spread touched 2-1/8 in the afternoon. At the close, the March 95 put options were bid 4-5/8, ask 5, last traded 4-7/8. The April 95s were bid 6-5/8, ask 7, last traded 6-7/8. On all three bases of comparison the spread tallied a 2. If there were an appropriate quotation from Petrarch or Byron, I was too delighted to think of it. If I boast right now, there exists the old adage of unknown authorship: "Say what you want about bragging, but no man who catches a large fish goes home through an alley."

Taking a frying pan on a fishing trip may be rushing things but taking along a book has rewards. Art historian John Addington Symonds writing In the Key of Blue and Other Prose Essays gave environmental evidence as to why the Venetian artists of the Italian Renaissance became preeminent colorists: "The lagoon toward Fusina takes the whole glory of Venetian sunset. The sun sinks down into the Lombard plain, (dying red) the vault of clouds and the vast mirrors of the undulating water floor. Colours which are cold by nature now assume an unexpected warmth. The blue of blouse and sash and trousers passes transfigured into gems or flowers. It is raised to amethyst, irradiated with crimson."

It is as true now as in the past: If trading is the most interesting or exciting thing in a person’s life, it will strain under the additional duty of having to entertain. Turning a profit is chancy enough without the trade having also to serve as a musical show or sporting event. Wanting consciously to make money, to profit like any businessman, while wanting unconsciously to be spellbound, stimulated, kept in suspense—this has to be the ultimate unco-ordination, Caesar and Brutus in the same skull working at cross-purposes. It impairs judgment, knack, decision-making, etc. Having other fascinations is best mental bracer and tonic.

Between the up-and-down bounces of Cisco shares, is the irrelevancy of 16th century art so off? It is far more wholesome financially than the side-bets and the wagers during the lulls between wagers for which Wall Street is notorious. There is hardly much 9-to-5 gambling among the advertising pros of Madison Avenue or on Jewelers Row or in the Garment District or along Sixth Avenue’s wholesale shops.

Only on Wall Street does business resemble a "gambling fever" brewery with many of its workers intoxicated. Exchange floor participants often labor under the influence of the Street’s bonded goods, no less than amateurs on the home phone or modem computer. Tempestuous music by Rachmaninoff makes a less expensive pulse-quickener. Titian’s frescoes and Boucher’s canvases bind spells less riskily.

The music encyclopedia article "Ballet and Music" by Lincoln Kirstein covered, among other things, the inclusion of ballet or dance numbers in grand opera. Kirstein said of two operas by Giuseppe-Verdi, "The danced chorus in the gambling scene of La Traviata is a curious jumble of Spanish, Italian and Hungarian ballet entrees. There was a strong pseudo-Oriental infiltration in such dances from Aida as the ballet of priests to sung accompaniment, but it was Egypt strained through a thick web of Italian orchestration."

Earlier this century, during the time of large scale immigration to the United States, a social worker in Chicago would visit the Italian families on her case-load and then would write on her note cards, "Still eating spaghetti. Not yet American." Apparently a web, thick or thin, of Italian anything was frowned upon. Do not think this attitude has died out. Oh, social workers have overcome their fears of manicotti and goulash and kabob. Del Monte Sauce has just sold IPO shares and Cinzano Wines are still with us.

Live Pavarotti and taped Pinza sing airs from Aida on TV. And yet . . .

Film actor and National Rifle Association president Charlton Heston spoke on TV recently during an interview by Mike Wallace on 60 Minutes. Heston complained about "the balkanizing of America" caused by Americans "returning to their various ethnic camps." Among the many Right Wing publishings that had already elaborated, on this theme was the article "Confederate Nation" by Noemie Emery in the May l9, 1997 issue of the conservative magazine The Weekly Standard: "The Right now wants a national culture, a common transethnic identity. Liberals, on the other hand, stand for things that divide. The things they back tend to fragment the culture: bilingualism, multiculturalism . . . Conservatives see one Union, composed of free people. Liberals see a loose web of tribal affinities."

God is in the details. The details of the "national culture" and "common transethnic identity" that "the Right now wants" can be checked on your Vintage Movies channel. 1939 and Made For Each Other: Jimmy Stewart as the new daddy gives his baby a bath for the first time. The baby wears a loincloth in the bassinet due to the film censorship ban on infant nudity.

1942 and Holiday lnn: While Bing Crosby milks a cow, the camera shows only Bing’s head and the animal’s upper half because of the rule against showing a cow’s udders. 1949 and The Prince of Foxes: Tyrone Power swordfights villains inside real, on-location Italian palaces and cathedrals. Wall paneling covers the frescoes because the bareness ban extended to red-tressed beauties of the palette. Same with marble deities. More was in jeopardy than just spaghetti.

Many of those reactionary "lovers of heritage" can remember all the way back to the dawn of time, when film censor Will Hays learned to shave. Regarding antiquity, they swear that they are all truth-tellers and there’s the right road. Expect them to show up in an opera house or a Venetian art exhibit on the day Grandma Moses boxes for the heavyweight title.

Now as in the past, I ask traders and investors cast themselves in the role of the old-order tycoon who was also a lover of culture and the fine arts. You do not need a charter from King George or a six-horse gilded coach. This grand country needs more people whose reckonings of tradition and heritage go farther back in time than Mickey Mouse.

Trader’s Diary Monday, Feb. 8: The Dow Jones finished down 13.13. Unlucky? Not with our spread closing at 2-1/4! A princely bag of ducats.

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