market crash of 1987
- Thread starter NYSEtrader123
- Start date
I've attached a 30 minute chart of the S&P 500 from Tradestation.
SSB
SSB
Guys - this is eerie : John Mauldin just put out a newsletter that shows an indicator in it that is near the same value as it was in 1986....it's called the greed-fear index....for more info see:
http://www.frontlinethoughts.com/printarticle.asp?id=mwo021006
From the article:
"..The index has only reached this level of greed in September of 1987 and May of 1996"
http://www.frontlinethoughts.com/printarticle.asp?id=mwo021006
From the article:
"..The index has only reached this level of greed in September of 1987 and May of 1996"
I was an options MM at the time.
Some of the rules went out the window. Floor traders who had negative net liq were allowed to continue trading, including opening positions. Prices went far out of whack. I assumed I was wiped out around mid day Monday, but because of the insane volatilities, I actually didn't do too badly. I mean, a lot of calls went up that day!
Tuesday was the lesson in how to manipulate a market. Back then, the XMI futures were a formidible proxy for the Dow. The index contained only 20 stocks. It didn't trade the volume of the spoo, but it was significant.
Mid day Tuesday, the indicies started to fall apart again, and it looked bleak to all. The exchanges then did a brilliant manuever. They shut down trading in stocks that were falling, but left open the ones that were rising. Guess what that means?? - the indices have to start going up!! The word came to the floor from some of the clearing firm types telling traders to put in market buy orders in the stocks that were shut down. We were basically told, either the system is saved and this is the bottom, or everything's gone and it won't matter, so put in your buy orders. At that time a large buy order for XMI futures came in (long rumored to be govt connected) and then one by one they opened up the closed stocks, usually with gaps down, and those with market buy orders in bought the lows for the year in most cases.
Because so many stocks were shut down mid day Tuesday, and that they were all falling stocks, there is no way to know what the real print low for any of the indices were on that day.
Some of the rules went out the window. Floor traders who had negative net liq were allowed to continue trading, including opening positions. Prices went far out of whack. I assumed I was wiped out around mid day Monday, but because of the insane volatilities, I actually didn't do too badly. I mean, a lot of calls went up that day!
Tuesday was the lesson in how to manipulate a market. Back then, the XMI futures were a formidible proxy for the Dow. The index contained only 20 stocks. It didn't trade the volume of the spoo, but it was significant.
Mid day Tuesday, the indicies started to fall apart again, and it looked bleak to all. The exchanges then did a brilliant manuever. They shut down trading in stocks that were falling, but left open the ones that were rising. Guess what that means?? - the indices have to start going up!! The word came to the floor from some of the clearing firm types telling traders to put in market buy orders in the stocks that were shut down. We were basically told, either the system is saved and this is the bottom, or everything's gone and it won't matter, so put in your buy orders. At that time a large buy order for XMI futures came in (long rumored to be govt connected) and then one by one they opened up the closed stocks, usually with gaps down, and those with market buy orders in bought the lows for the year in most cases.
Because so many stocks were shut down mid day Tuesday, and that they were all falling stocks, there is no way to know what the real print low for any of the indices were on that day.
A couple of things about that Soros order. A friend of mine who was a local that day in the Spooz told me the filling broker (it was a Shearson-Lehman house broker) tipped the order to everyone around him. (I think it was 5000 plus cars). He told locals "don't bid me, I've got a chunk to go" ect.
Not only did he fill the order down to the 180's (about 30pts below fair value) but he oversold the order and by CME rules he had to take the worst few hundred contracts for himself as part of the error. The error cost Shearson several million. Borsellino and many arbs bought about 2000 on the lows and the market rallied about 20 points in increments of 2-5 points at a crack. A relative of mine was long 200 coming in and bought 200 at the same levels as Lewis and still made money on the day after being down around 6 million early.