Chicago Mercantile Exchange Eurodollar Locals Dazed and Confused

Point Man · May 20, 2003

With new contract highs across the board in the Eurodollars, there were many stunned pit traders at the end of trading today. Realization has sunk in. 9900-9950 and no business is quickly approaching. Soon they will have to use their brains to make a living. There will be no more gift trades from their order-filling cousin/brother/nephew/uncle. WHAT I AM GOING TO DO? I never had to use my brain before to make a living. THE BIGGER THEY ARE THE HARDER THEY FALL. Get a Game Plan old boy. Do not come to me for help when it is too late, because it will cost you. FEEL LUCKY PUNK

GATrader · May 20, 2003

Pointman kindly explain what you mean by 9900-9950? What transpired today that was not there previously? THanks

Point Man · May 20, 2003

as eurodollars (not euro currency) rally interest rates decline 100 is 0% the players will quit playing and the locals will have huge mortgages they cannot pay

hardrock375 · May 20, 2003

Quote from Point Man:

as eurodollars (not euro currency) rally interest rates decline 100 is 0% the players will quit playing and the locals will have huge mortgages they cannot pay

Would they just be lock-limit up at that point?

If the Eurodollars do hit 100, perhaps that might be the time to get short/buy puts.

OVERtheLINE · May 20, 2003

are set for life, they are not worried a bit because they banked a ton the last couple years (most of them are miserable pricks though)

Point Man · May 20, 2003

Quote from OVERtheLINE:

are set for life, they are not worried a bit because they banked a ton the last couple years (most of them are miserable pricks though)

In these times if you do not have 5 mil in the bank you do not have enough for retirement. I lived through the LIFFE going to the computer. After the paycheck ceases the MRS hits the road with your kids and 1/2 to 3/5 of your equity. THAT MY GOOD FRIEND IS A FACT

Point Man · May 20, 2003

Quote from hardrock375:

Would they just be lock-limit up at that point?
If the Eurodollars do hit 100, perhaps that might be the time to get short/buy puts.

I had a friend that shorted the Euroyen at 9987.5 three years ago. Do not know where he covered (for a loss) but it trades 9992.5 three years later.

Point Man · May 20, 2003

Quote from OVERtheLINE:

are set for life, they are not worried a bit because they banked a ton the last couple years (most of them are miserable pricks though)

As much as you think these boys are set for life, they too have been buying the break in equities with their savings. They too have upped the ante and bought or built a million dollar home with a huge mortgage. I can see them now at their first interview for a job. So Mr order-filler, what do you have to offer. Uhhhhh I can add and subtract really quick.

trader99 · May 20, 2003

Quote from Point Man:

As much as you think these boys are set for life, they too have been buying the break in equities with their savings. They too have upped the ante and bought or built a million dollar home with a huge mortgage. I can see them now at their first interview for a job. So Mr order-filler, what do you have to offer. Uhhhhh I can add and subtract really quick.

PointMan,

You hit the nail on the head! The floor has to go away. And it will. And when it goes away these order fillers who call themselves "traders" will find it hard to get a real job on Wall St.

In fact, Wall Street is working hard to eliminate the exchange trading floor and making it all electronic. They have been hiring and continue to hire very hardcore quants working on stochastic dynamic programming to create automatic market-making, which is basically a real time complex inventory management(something in control theory). Besides, Wall St believes it can create 24HR computer driven markets eventually and it will. Just matter of regulatory hurdles NOT technical barriers.

So, if you are not adding value but just an order taker, you'll be eventually driven out of the marketplace and be replaced with machines. Just the evolution of things.

The more plain vanilla and standardized the product the more it is prone to automation. Stocks and futures will be all electronic eventually. Only exotic derivatives and OTC derivatives where there are no standarized contracts will still need a market maker quoting wide bid-ask and earning the bid-ask premium that way.

Just some things to think about!

trader99

Maverick74 · May 20, 2003

Quote from Point Man:

As much as you think these boys are set for life, they too have been buying the break in equities with their savings. They too have upped the ante and bought or built a million dollar home with a huge mortgage. I can see them now at their first interview for a job. So Mr order-filler, what do you have to offer. Uhhhhh I can add and subtract really quick.

Point Man, excuse my french, but what the f*ck are you talking about? Eurodollar traders don't trade the euro straight up, they trade spreads. They trade one month and one contract against another. They have over 40 contracts to spread against. They don't give a sh*t where rates go. Trust me, of all the locals in all the pits in Chicago, they are by far, and I mean by far in the best shape. And contrary to what you might think most of these guys don't touch the stock market so their savings is not gone. And I'm just going to ignore what you said about the Mrs running off with all their money. How many drinks did you have tonight?