Leasing a seat on the CBOT or CME

Quote from trader42:



The regulators did help mom & pop traders with the pattern daytrading rules recently ...
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Interesting point. The thrust behind the PDT was that novice traders were going broke due to overtrading. It was the slippage and commissions that were doing them in.

Reducing the tick size of the Emini and subsequent slippage would be in-line with that thought process.

Hopefully it will be the CME that realizes that this needs to be done and not the regulators.

The only thing the tick differential is doing is keeping the pit alive with reverse arbitrage.
 
Quote from cheeks:



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Can you lease a seat for a certain pit? or do you lease a seat for the entire floor and trade where you want?

How much does the seat cost(to buy and lease)?

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I am sure that things have probably changed greatly since I traded on the floor of the CBOE (part of the CBOT). But at that time, you could trade anything, but had to do (if I remember correctly) 90% of your trades at the three posts of your choice.

This was not a problem for true market makers. They were content to stay at their posts and just make markets. The company I worked for was all over the place doing speculative trades. So to comply, we used OEX as one of our posts. That gave us the ability to make a lot of trades in that pit (which was considered a post unto itself). We could do enough "riskless" trades, or hedge trades to satisfy the exchange rules as per the % of trade rules, and also we could satisfy the risk department of First Options (our clearing company) by using OEX options to keep our haircut in line with our speculative positions in the posts we did not designate to be amongst our three. We did the same with XMI on the AMEX. Had to hedge our "speculative" positions to comply with FOC (and the OCC too, but they were a lot looser than FOC, so we never heard from them).

At that time (late 80's early 90's) a lease on CBOE was about $7k per month. I have heard (and it would make perfect sense) that the seats now lease for a small fraction of that. For the obvious reasons.

I have only just recently tried to trade options as a "customer" at a prop firm. I have mentioned this on another thread not long ago. I can't seem to get ANY fills. Which is ok with me. I put in day orders. If they don't want to fill me, I have not lost anything. So far, it seems that the MM's on the CBOE and PHLX have no desire to accommodate my trades. I see a $1 bid/ask spread, and call my trading desk and try and middle the spread. So far I am batting zero on fills. I know that when I was on the floor, every one of those orders would have been filled somehow during the day. Guess no one wants to take on any risk these days. My guess is that decimalization, along with multi exchange listings (and ecn's) have made the whole MM experience one of little edge, and little reason to take on any risk. Don't know how they make a living. Certainly there is not the retail order flow there was back then. Guess that is why the lease of a seat has gone down so dramatically. Must be very dull down there. And I don't miss the weather in Chicago at this time of year at all. Florida has been in a cold weather streak, but still...had dinner al fresco last night. Was pretty nice.

Peace,
:)rs7
 
I was actually reffering to the CME, but thanks for the input. I saw a post from a CBOE market marker not long ago. He was looking for an oppurtunity to leave the floor, for just the reasons you describe. More competition and thin spreads.
 
Quote from PuffyGums:

A surprising number just take directional speculative positions. Yes they call it scalping. But what they really do is lean on support/resistance and extend their trade target beyond what you'd expect out of a scalp. They swing trade from turn to turn.
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Is there really a difference? I sometimes trade MMM and if those trades are not scalps, I don't know what is. If I buy for 126.20 and sell at 126.60 a minute later, I would think that's a scalp. But if you are strict you could say it's an intra day swing trade, because a scalp would be to buy for 126.20 and sell for 126.21.
 
Back to my question about wheat futures. Does anyone know what the avg spread is on wheat futures and also on wheat options? This market seems to be exploding with opportunity but everyone and their brother seem to be happy trading the e-minis and nasdaq minis even though they have no intraday range to speak of. Very Interesting.
 
Maverick,

I have been daytrading grains/beans for the last months, after a stop coincident with marriage and daughter's birth.

If you look at a tick chart of today's action you can see that for most of the day there is 1/4 to 1/2 spread.

I trade with 5perside, for 10$ RT and a 1/4 point move gets me in profit area.

Never traded options until now, though I think a vertical spread could be a nice tool to play directional bets over longer (some days) timeframe.

Please keep in touch should you decide to start trading grains.

Alberto
 
CBOT Soybeans and Wheat, account for about 75% of my trades.

Then some trades on mini DOW, 10yrs Notes and EUREX Bund.

Only now I am starting to follow bean oil/meal.


alberto
 
Quote from rs7:



Certainly there is not the retail order flow there was back then. Guess that is why the lease of a seat has gone down so dramatically. Must be very dull down there. And I don't miss the weather in Chicago at this time of year at all. Florida has been in a cold weather streak, but still...had dinner al fresco last night. Was pretty nice.

Peace,
:)rs7
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Late 80's were relatively good times in the options markets. However even then we realized that competition and changing market conditions would probably lead to quieter times in the near future ...... At the merc it was a daily conversation topic: how do we compete with philly etc. how long before we move on to other markets etc.

I dont miss the weather in Chicago at all ...... I realize that I'm a true southern californian when I complain that a 65 F daytime high is cold. Walking along the beach in the evening sure beats walking along the chicago river in a 30 mph wind at 0 F ....
 
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