I never traded on the floor, but interacted with all the floors every day, from 1982 to the days it went electronic. It was a better business then. It was human.
Executing option orders in size was a breeze on the floor. As soon as you show size on the screen, the offers vanish. All day affair now. Flat price better now.
To mortgage yourself with a 570k membership fee (what, probably a mil now), with 9% interest on half, to trade your own money, I'd say the floor edge was astounding for those who knew how to exploit it.
Great Blog Jeff. Brings back memories. The good and bad. I/we were blessed to get through all that and thrive afterwards. I printed it out to occasionally reflect on "the good ol days". Thanks for sharing it. Hope you are good man?! Text me when you're down in Naples, we'll do lunch again...
Craig Pirrong was my derivatives prof at UofC. Excellent teacher, made the material understandable for people like me who found this all a mystery. (If you're reading this, thanks, Professor!)
I know nothing about this world but always admired the brains and balls. I knew you all were down there at the Merc, a few blocks west and a flew blocks south, and I would see you in the early morning in your floor jackets as I trudged from Union Station to my corporate job on Michigan and on Wacker. There was a buzz in the city from what you were doing and I could feel it. And maybe smell it.
Ahh the good old days!!!!!!!!!!!!
Unprecedented competitiveness and unprecedented camaraderie.
Great article thank you
I never traded on the floor, but interacted with all the floors every day, from 1982 to the days it went electronic. It was a better business then. It was human.
debatable. certainly more colorful
Executing option orders in size was a breeze on the floor. As soon as you show size on the screen, the offers vanish. All day affair now. Flat price better now.
To mortgage yourself with a 570k membership fee (what, probably a mil now), with 9% interest on half, to trade your own money, I'd say the floor edge was astounding for those who knew how to exploit it.
there was a very good edge. BUT, 9 out of 10 didn't make it. Hyper competitive
There was a old joke on the cbot
When asking a corn broker in the pits
“Where do the orders come from “
The answer was
Or course every one knows the orders come from the runners !
The point is without the salesman on the floors and upstairs and the quants at the large investment banks you guys would be trading with yourselves
The mechanics of the floor was clients paid for liquidity every time they traded
The advent of electronic trading is to provide deep markets when you dont need it
But in volatile situations the electronic market makers put there hands down
Open outcry provided more liquidity when clients needed it
Big players get totally f ed when they need liquidity
Munger complained to the cftc and nfa to no avail
So the floor provided a function where risk takers were rewarded
And clients got a fair shake
Jack sander was right
The exchange now is a partner with the electronic market makers they both take and never give
Great Blog Jeff. Brings back memories. The good and bad. I/we were blessed to get through all that and thrive afterwards. I printed it out to occasionally reflect on "the good ol days". Thanks for sharing it. Hope you are good man?! Text me when you're down in Naples, we'll do lunch again...
Great piece.
Craig Pirrong was my derivatives prof at UofC. Excellent teacher, made the material understandable for people like me who found this all a mystery. (If you're reading this, thanks, Professor!)
Ahh the good old days!!!!!!!!!!!!
The 3rd best part of my life!
#1. My wife.
#2. My kids.
Way cool Mr Carter!
I know nothing about this world but always admired the brains and balls. I knew you all were down there at the Merc, a few blocks west and a flew blocks south, and I would see you in the early morning in your floor jackets as I trudged from Union Station to my corporate job on Michigan and on Wacker. There was a buzz in the city from what you were doing and I could feel it. And maybe smell it.