"I Am A Market Maker"--The Quote

[commiebat]

Quote from xflat2186:

h h you make an excellent point. You'll notice that not only are there far fewer MM's on the equity options floors these days, but the ones that are there are much younger then in times past. Obviously they come at a cheaper price then an experienced MM, then again they’re not asked to manage like a MM used to.

Well, still. They should have planned ahead and managed that risk by being younger so they could compete on price, fewer in number so they could all get jobs, and less skilled so they would be applying their entire skillset.

Because delta and gamma hedging (where the risk is staring you in the face and all you have to do is manage it) is exactly the same thing as stopping an inevitable revolution in your industry (whether or not you see it coming).

Global centralized risk management brought about by better real time communications and electronic access to the markets has helped them cut expenses in the form of staff tremendously. The volumes on the exchanges have continued to rise are a torrid pace so the large MM firms are doing more volume with much smaller edge with lower expenses. Of course payment for order flow in its various forms has also changed the landscape.

The irony is not lost on me that an entire profession of risk managers was effectively rendered obsolete by improvements in risk management technology and increased access to better risk management tools.

I mean, I'm glad the result is tighter markets for us retail guys, but still.

EDIT: Meh, a mod ninja'd me and has clearly had his fill. Delete this post if you want, I guess.

 

[chiguy]

Quote from xflat2186:

Chi,

My apologies for being a pest here. I am not riskfree for the record. We do a lot of business on the CBOE do you know the guys from X-FA ? they fill our paper there.

left floor in 2003...i know some...the ex paine weber and merrill guys and gals...one used to work for me...IMO

sorry about the inference...hard to tell...ip's were close

 

[bellman]

Let's distinguish between real market makers, those who provide a constant bid and ask which requires great skill and some risk, from those who used to really rack up on wallstreet matching orders and skimming the overlap as risk free proffit. Their should be thanks given to the former and disdain towards the latter.

Quote from riskfreetrading:

A typical statement of someone who wants to appear as a great trader (in options market in particular): I am an ex-market maker. Yet their past (present for current MM if they exist) and their fate proves two things:

1. They know something about risk, as otherwise why did they live only on bid-ask spreads?
2. They did/do not provide a function that requires thinking and creativity. The proof that they do not: they have been replaced by computers, and sent to the upper office (if not to the street office).

The next time some MM show up in this forum and pretend they know something about risk and thinking in trading matters, refer them to this thread to answer it. I do not care if these people will not like me. I am here to share about how to make money, not how to make friends.

I am sorry, but readers should suspicious to anything that is written and affixed with something that contains the word "I Am a Market Maker" (particularly an ex-MM).

BTW, I am NOT a MM. And never visited nor do I intend to visit an exchange. But I might buy a seat one day (for investment and decision making reasons).


You can also add: "I Am/Was the Specialist" to the above quote.

 

[xflat2186]

They're nice guys and they do a good job for us. The cost of executions has fallen so much makes me think about all the fat that was in those costs back years ago.

My office is in the Philly Exchange building and I chat it up with some floor brokers when I see them and they all tell me how tight the costs are and how hard it is for them these days. We dont do any business in Philly.

Again sorry bout my posts I just get a kick out of the smugness of anonymous posters, I'll tone it down.

 

[IV_Trader]

Quote from chiguy:

i should not get involved but i was a m/m and floor broker on the cboe in the oex for years...

i was able to learn a lot...i worked for firms and was independent for years...

what i did learn was humility and people like riskfree here are whiny little pricks...i should be above name calling but i can't help it...

dear riskfree and your buddy or alter ego xflat...i can't confirm as xflat has a dynamic ip adress...please jump off a bridge or go back home to mom...

you are wasting eveyones time here...

you are on the verge of being deleted...

your friendly moderator chiguy...

Chi , xflat is defiantly legit…
I personally find this thread interesting ( some new info for retail trader like me) , but if you must…

 

[chiguy]

Quote from IV_Trader:

Chi , xflat is defiantly legit…
I personally find this thread interesting ( some new info for retail trader like me) , but if you must…

thread is fine...just not the constant posturing from "those who must not be named"...

 

[ChiBondKing]

Quote from riskfreetrading:

I have other analogies and stories for the readers. I would deliver them in due time. Some titles (before I forget) are:

1. The champ who delivered a (risk free) trade to his ex-champ opponent that a whole TV nation swore never took place-- until 30 years later! The flattenedd opponent insisted that he never received the trade, even after tech proved it! But he felt the trade he received which knocked him out.

2. The men who walk with rocks in their shoes, and blame others.

3. The rotten fruits that blame the (knowledge) tree shaker for falling to the ground, and feeling hurt. (Remember: Good fruit don't fall).

4. The King of Bs, His Holly Grail, & His R.H. You TheTrader.

5. The Blind Premium Writers---They Wrote Off New ET Members (naked) Till The Black Swan Hit Them!

6. The Men Who Shackled Their Minds, And How to Free Them.

7. The Cowboys in Long Boots That They Never Wash--Would You Sit Next to Them?

The Author is RFT. He does not copy others, so all rights reserved!

May come soon on ET... Check you nearest computer connection!

8. The douchebag on ET.

 

[DerivativesG]

Quote from ChiBondKing:

8. The douchebag on ET.

LOL. Have you ever thought about installing a "douche bag filter" for the search function? That way we'll only get the threads where quality stuff is being discussed. I know there is a stereotype that women blabber a LOT but likewise some men on this board can also type pages of stuff which is just plain baloney. Sorry, it's just annoying to see some troll jumping on a thread and talking BS for like 15 pages. Sometimes I am in the middle of a really interesting thread which is raped by some retard, and I don't feel like reading the rest anymore.

 

[eusdaiki]

9. jak hersshey

[i know... i spelled it wrong... I just don't want him to come in here and post 18 pages on how he's the best of the best]

 

[kickboxers]

the market makers today are a computer program software.

Quote from xflat2186:

h h you make an excellent point. You'll notice that not only are there far fewer MM's on the equity options floors these days, but the ones that are there are much younger then in times past. Obviously they come at a cheaper price then an experienced MM, then again they’re not asked to manage like a MM used to.

Take a firm like Susquehanna who once populated the floors with vast numbers of market makers. They’ve adapted and paired their staff down to a fraction of what it once was on the floors. Global centralized risk management brought about by better real time communications and electronic access to the markets has helped them cut expenses in the form of staff tremendously. The volumes on the exchanges have continued to rise are a torrid pace so the large MM firms are doing more volume with much smaller edge with lower expenses. Of course payment for order flow in its various forms has also changed the landscape. Either way all the big firms have been forced to change their business model, the art and science of trading is continually evolving. My grandfather was an NYSE … oh never mind, I don’t want my dead grandfather insulted here … for 50 years he retired 35 years ago he’d be shocked if he were alive to see what the NYSE looks like these days.