Chicago Options on Futures Firms / Market Makers

Discussion in 'Prop Firms' started by dr_sean, Jun 9, 2008.

  1. dr_sean


    Hey all,

    I am starting my summer at a CBOE market making firm. They don't do the indexes like OEX/SPX, but all stocks, ETFs. No other trading / tried CBOT didn't go for it, futures only as a hedge like SSFs/VIX. Mostly guys on the floor as of this moment.

    Was wondering how the market is for options on futures traders. I know they have more floor activity than the equity options do, and the capabilities for spreads / combined orders are far less significant than what you see on CBOE / ISE / AMEX.

    I'm wondering if maybe there aren't more economies of scale to be utilized over in the futures pits ~ not so much on ag as say the financials, bonds, currencies. Obviously there's got to be some depth in major products e.g. the eurodollars. My searching on ET, as well as my general knowledge of the big Chicago firms, hasn't pointed to who are the big boys in the options on futures pits.

    Any help appreciated. And I'll post all that I find.

  2. AMW


    Stay away from any firm that relies on the floor.
  3. dr_sean


    I think you've misinterpreted I don't think the floor is the key component, even if the options on futures are still done a lot on the floor. BTW the firm I'm working for is ready to move upstairs whenever they just like the environment and why not take the extra volume.

    But back to the idea of options on futures trading, yeh, lots of business done on the floor, which sounds to me like more business to steal by trading electronically.

    I am not so sure as to the #s, like how much SP options volume is done electronically for instance, but I think it's worth looking at.

    ES options obviously done all electronic to my knowledge as so is the underlying. But still wider bid-ask spreads & less spread capability than the SPX.

    Any ideas on this?
  4. dr_sean


    Okay, so looking around on the basic contracts as to what the spreads look like & what the volume is on these options on futures.

    First of all, here is a link if you want to look at quotes from CME for the basic equity e-minis:

    and here is a link directly to the ES options quotes:

    Also, I went up looking on my TOS at ES, ER2, and the corn futures ZC, and I put the chains (9 strikes around per month) into an excel file.

    Interesting that corn & some of the other Ag futures have big wide spreads.

    Definitely looks like you could make some $$$ making markets around here.

    Others thoughts? Still looking for which firms are making markets on futures options.

    edit: also messing around in TOS, and they are not letting me put in spread orders on ER2. Also important to note. If one day they get going on this, you could see a lot more volume pour in.
  5. dr_sean


    hunting around some more and kind of found that a lot of the futurers options market making firms are gonna be the same as those we usually talk about. Here is a link to a CME press release:

    And here is an excerpt, announcing some market makers they've added to the Eurodollar options:

    NEW lead market makers for Eurodollar options:

    -- Chicago Trading Company (CTC)
    -- Knight Financial Products
    -- SKTY Trading.

    NEW "responding" market makers:

    -- Equitec
    -- GETCO
    -- KC-CO II
    -- Ronin Capital
    -- SMW Trading
    -- Sullivan Crouth
    -- W.H. Trading.

    Pretty similar stuff here...

    KC-CO II I am interested to see them their. Nobody on ET talks about them I have a contact there wrote a little threads up on them.

    Of course GETCO, SMW, Equitec, these are all the decent not great shops. And Knight, CTC, the ones everyone wants.

    I bet if you looked at who's already making markets in the ED options you'd find DRW, Wolverine, and SIG.

    Anyways, we'll keep postin the research.
  6. super6


    I find it hard to believe that getco is labeled as a decent prop shop. I always considered them the leader in Chicago compared to everyone else. Am I mistaken when I say that they are the most quantitative high frequency firm?
  7. dr_sean


    Sorry for just jumping to a conclusion about Getco. From what I've read/found/heard I put them as decent in terms of good company structure / hires for salaray and pays a percentage / etc.

    In terms of most quantitative firm, I don't really know the answer, but my guess is the big giants like Citadel, and the banks (GS especially) outsize them.

    Again, not sure there.

    Do you have any good documentation info on Getco? Let's do some research here!

  8. rosy2


    citadel, a quant shop? maybe only in the press. i think getco programmers make more than there traders
  9. dr_sean


    I am not versed on Citadel's specific practices but they are fast, I know that. A lot of floor MMs have gotten pick-pocketed in vol/price pops by big electronic boys...Citadel in particular.

    They make a lot of markets too.

    Maybe not like the crazy quant but yes they're there...

    And progs over traders well ok i guess...dunno how true that is and if it's across the board or not...
  10. HSC.1775


    Your list of market makers is outdated. KFP is now part of Citi.
    #10     Jun 24, 2008