First of all, I never said or implied that:
1.) Options floor traders can't sell volatility.
2.) Options floor traders are undercapitalized.
3.) Options floor traders only hold positions for one day.
For some reason Maverick, you have a tremendous fascination with bashing equity-derivative traders at an investment bank, or a market-making firm like Susquehanna or O'Connor. What's wrong, did you not get accepted to an Ivy League school? Were you not able to obtain an MBA? Why all the hate?
Yes, perhaps I should not have used the absolute term, "no one" in a previous post, as in "no one had the (capital) to sell S&P puts near the lows." Of course there were locals on the CBOE that were selling vol. I simply wished to state that a market-maker ( with a quant-background ) on an investment bank's equity-derivatives desk had a TON MORE CAPITAL as well as opportunity to sell puts at the lows in 1987. In fact, I believe that I provided a pretty significant example of a trader on an equity-derivatives desk who had learned the options business at Susquehanna that made the firm $45 million during the Asian currency crisis of 1998.
Maverick, you say that the equity-derivatives desks of investment banks don't breed that kind of a trading "culture"? How else was my friend able to make $45 million in one week had it not been for PROVIDING the opportunity to take on risk and THAT kind of culture that goes with supporting and being committed to such risk?
As for my previous post and my experience on a stock-index futures exchange, I certainly did not see many futures pit locals running over to the options pit selling futures puts in 1987 or 1998 for that matter.
The fact of the matter is that MANY market-makers do in fact go to the big institutional banks that FACILITATE TRADE ( hello, can you say DEUTSCHE BANK? can you say MORGAN STANLEY? ).
They are attracted to these firms because the firms that facilitate trade and (not just agency trades) are the ones that can put a tremendous amount of capital behind someone with great market-making talent, and thus an opportunity at a huge bonus at the end of the year.
As for the IQ of the majority of stock-index futures locals, I'm not even going to go there . . . That's too easy!
1.) Options floor traders can't sell volatility.
2.) Options floor traders are undercapitalized.
3.) Options floor traders only hold positions for one day.
For some reason Maverick, you have a tremendous fascination with bashing equity-derivative traders at an investment bank, or a market-making firm like Susquehanna or O'Connor. What's wrong, did you not get accepted to an Ivy League school? Were you not able to obtain an MBA? Why all the hate?
Yes, perhaps I should not have used the absolute term, "no one" in a previous post, as in "no one had the (capital) to sell S&P puts near the lows." Of course there were locals on the CBOE that were selling vol. I simply wished to state that a market-maker ( with a quant-background ) on an investment bank's equity-derivatives desk had a TON MORE CAPITAL as well as opportunity to sell puts at the lows in 1987. In fact, I believe that I provided a pretty significant example of a trader on an equity-derivatives desk who had learned the options business at Susquehanna that made the firm $45 million during the Asian currency crisis of 1998.
Maverick, you say that the equity-derivatives desks of investment banks don't breed that kind of a trading "culture"? How else was my friend able to make $45 million in one week had it not been for PROVIDING the opportunity to take on risk and THAT kind of culture that goes with supporting and being committed to such risk?
As for my previous post and my experience on a stock-index futures exchange, I certainly did not see many futures pit locals running over to the options pit selling futures puts in 1987 or 1998 for that matter.
The fact of the matter is that MANY market-makers do in fact go to the big institutional banks that FACILITATE TRADE ( hello, can you say DEUTSCHE BANK? can you say MORGAN STANLEY? ).
They are attracted to these firms because the firms that facilitate trade and (not just agency trades) are the ones that can put a tremendous amount of capital behind someone with great market-making talent, and thus an opportunity at a huge bonus at the end of the year.
As for the IQ of the majority of stock-index futures locals, I'm not even going to go there . . . That's too easy!