Floored documentary
- Thread starter manonfire
- Start date
Interesting documentary. I have watched a number of documentaries on the stockmarket but, somehow, have not seen this one till now. Thanks for posting it.
Robert Morse
Sponsor
I was on the Amex Floor from 1982 to 2010. It was not as physical or as cut throat. We also did not have the same leverage in equity options as the future so the P/L swings were not as big. We also had rules that allowed little guys-like me-to be on parity with the big traders. It was still a great place to work where you could make a great living if you could pick up the game. There were also people making more money than they knew what to do with, so gambling and drugs were rampant. Many had come from backgrounds where they just finished High School, maybe. By the 90's, a lot of the traders were educated and had other professional jobs before hitting the trading floor. Many of those were trained by the same 2 to 3 traders that came from the bridge world. They were all smart and well trained. Before that, most were high school grads that knew someone on the floor. These bridge players were a different breed. Very smart. Typically traded for 2 to 4 years then went back to being a Doctor/Lawyer/Accountant.
My first, and only boss, interviewed me in the fall of 1982. I had just graduated from NYU and started NYU grad school at night. He asked me, why do you want to work here if you went to college and are now in Grad school. It was rare at the time. I simply said that I want to learn how to trade options. They had an option brokerage business and needed another wire clerk to cover the phones as they were crazy busy. He never expected me to last more than few months. I took a lot of abuse from the customers, other wire clerks etc. I loved it. I learned fast and by 1985, I started my own trading business by leasing a seat. I was 24 years old. Good times.
Bob
My first, and only boss, interviewed me in the fall of 1982. I had just graduated from NYU and started NYU grad school at night. He asked me, why do you want to work here if you went to college and are now in Grad school. It was rare at the time. I simply said that I want to learn how to trade options. They had an option brokerage business and needed another wire clerk to cover the phones as they were crazy busy. He never expected me to last more than few months. I took a lot of abuse from the customers, other wire clerks etc. I loved it. I learned fast and by 1985, I started my own trading business by leasing a seat. I was 24 years old. Good times.
Bob
I used to go with my father when school was out for the summer, he traded in the hog pits at the CME. Lots of memories with my dad I'll never forget.
prior to 2000 was when the floor was packed. '07 showed some dust
Thanks Bob,
Can you share with us how locals typically traded options on the floor. Was it just a matter of being on the bids and offers and trying to be ahead of commercial flow?
Yes but that was the whole point of the documentary, the decline of the floor and the loss of jobs, and the impact on people's lives as a result.
Robert Morse
Sponsor
There were certainly a large number of traders that let others price the bid/offer spread and just participated with the volume that met their needs. On the Amex, you were on parity with other market makers by either always being on the markets or verbally making a market when the brokers walked in. Later, when executions were more electronic vs brought in by a broker, you could say nothing and just participate on the "wheel", with the market the specialist posted. You did up to a 10 lots when it was your turn. This created an environment where weaker traders could "jump on the coattails" of stronger more verbal traders and specialists that did make markets. Even though I was among the smaller traders, I was very verbal and gave input to pricing in the early years when the specialist allowed me. In the later years when each MM sent out their own quotes and trading became much more competitive, it was harder for one trader to control the prices and more and more traders would match the NBBO when they got a certain "vig" to their own skew. I used Actant Quote and their scripting to determine when and at what price I wanted to play. Then each option trade was auto hedged if the delta was greater than a certain level.
This is the simple reality. Even though volumes were very low by today's standards before 2001 (1998-2001 were great for trading, my best by far), when most symbols were single or dually listed, it was easier to make money as spreads were wider, floor trades had a time advantage and controlled prices. On the flip side, we were the depth and liquidity so if we got stuck with bad positions, we were stuck with them.
Now with 15 option exchanges, the large institutional orders that required price discovery on a trading floor, do their price discovery off floor and the "good" customer orders can be directed to many exchanges and everyone has FIX connections to get that order in a very short time. MM groups are closing their doors and soon equity options will be controlled by a very short list of big brokers. This is not good for customers. There are no locals anymore.