CHICAGO (Reuters) - Tom Sosnoff thinks financial news can be both very funny and very profitable.
A well-known strategist in options trading circles, he has been ramping up an online news channel, mixing comedy with contrarian investing advice — think of a kind of “Daily Show” for investors. His show is a hook designed to attract customers to an online marketplace offering discount deals ranging from brokerage services to financial education products.
Sosnoff certainly knows the space: he earned a fortune selling his online brokerage firm, thinkorswim, to TD Ameritrade Holdings Corp. in 2009, a deal valued at more than $600 million. Founded in 1999, thinkorswim was at the forefront of online options trading.
In his new medium, Sosnoff’s analytical views on puts, calls and spreads share the format with campy bits decoding complex trading terms and lampooning everyone from floor traders to CNBC “Mad Money” host Jim Cramer.
"All that CNBC and Bloomberg and Fox do is create the impression that news is relevant when it's not. It's all fear-based," said Sosnoff, CEO of Tastytrade Inc., which has streamed a free morning newscast at www.tastytrade.com <www.tastytrade.com/> since May. "They all spew the same garbage - meaningless information."
Sosnoff hopes his site will appeal to average investors and financial junkies alike.
“The way real wealth is created is through a logical, intellectual, strategic approach to investing,” said Sosnoff, 54. “The whole problem with investing for most people is they invest too big and start to panic out when they’re wrong by just a little bit - they don’t really understand that they’re going to be right.”
Despite his reputation as a rebel, Sosnoff spared no expense to create a professional newscast. Operating out of a former hip-hop studio in a downtown Chicago brownstone, Tastytrade is backed by $20 million in startup capital.
Sosnoff contributed an undisclosed minority stake; the rest came from private funding the firm is contractually bound to keep confidential. Daily production costs, including salaries for a 15-member staff, comedy writers and freelance acting talent, are estimated at more than $17,000, he said.
“I see what Tastytrade is doing as something that has monster growth potential,” said Nick Fenton, CEO of TickerTank, a provider of trading education and a merchant in the company’s online store. “These guys are explaining some basic and some advanced things, making perfect sense of them, showing people how to utilize their capital.”
“In His Blood”
A native New Yorker with shoulder-length gray hair and a trademark beret, Sosnoff credits influences such as shock jock Howard Stern and sports radio for his style.
“I like doing live shows because you get an adrenaline rush,” said Sosnoff, whose airtime preparation included a decade on the road hosting trading conferences before large audiences.
His co-anchor is Tony Battista, another ex-trader and a former thinkorswim instructor. Their casual banter moves from the likes of market analysis to movies, sports, culinary hot spots and back again.
Pre-recorded skits such as “Date a Trader” and “The Midnight Musings of Ben Bernanke” are interspersed throughout the program, the result of writers plucked from Chicago’s vaunted Second City and the Improv Olympic. There is a call-in component and the hosts bring on regular guests such as local sportscaster Mike North.
“He loves the markets and he loves helping retail investors,” said David Kalt, former cofounder of online trading firm OptionsXpress, now part of brokerage Charles Schwab. “This is in his blood.”
Still Kalt cautioned: “I think it’s a pretty limited audience based on today’s market. But you know when things get crazy like in ‘99 and 2000, people come out of the woodwork.”
While Sosnoff is in fact targeting a broad consumer audience, he conceded that for now viewers are primarily comprised of diehard quantitative types. A recent show took calls from as far away as Mexico City and Zurich.
Tastytrade recently added an afternoon segment available only to subscribers, who pay $45 a year, a fee that covers access to the online marketplace. In December, the firm is introducing a regular spot featuring two women with trading backgrounds who are now suburban moms.
“You have to start with one end of the funnel and broaden it out,” he said. “We don’t dumb anything down so very few people that listen are ready for all the stuff we’re doing.”
The venture counts more than 30 service providers, from brokerages such as TD Ameritrade to Benzinga, a provider of news and market commentary, among its merchants.
“We have an overarching deal - you pay one dollar and you get two dollars of product and services,” said Kristi Ross, Tastytrade president and thinkorswim’s former CFO, who is charged with increasing the client roster. She likens the model to Costco, which gives its members access to a select offering of premium products at a considerable discount.
Sosnoff, who is forecasting profitability by the end of 2012, may get some help from investing trends. According to the Options Industry Council options trading volume set a new annual record in each of the last eight years and is on pace for another banner year, with year-to-date volume at 3.79 billion contracts.
While a deal with a more mainstream media company could help the show reach more viewers, Sosnoff, who said he has been approached by providers of cable and radio news, is for now standing pat.
“I don’t want them to tell me what I can’t say,” he said, contrarian to the core. “If you build a great product, people will find you.”