Have you ever watched the tape for the e-mini s&p? There are ones and twos, but also 10âs, 50âs, 100âs + being traded. I think a lot of the volume is coming from the plethora of small to medium sized hedge funds. The pit is losing its business. If not for the reverse arbitrage from the e-mini it would probably shrivel up. Yea, they buy at the bid and turn around and sell at the offer a couple of seconds later and pocket the spread. These guys are heroes. Iâll bet when they go home at night, they put on a blue suit with a big letter S on the chest and they jump up and down on their beds yelling â I am a super-hero! The world is privileged to know me!
Hey Tea, You do know that 90% of the guys on the floor blow out their account right. you do know that right. If you think its that easy, buy a seat and become a millionaire. But for every guy down there that makes a killing doing exactly what you described, there are 9 driving taxis. I'm afraid that the success rate down there is no different then going to work for a prop firm or anywhere else. If you think the floor is the ticket to easy street, go down there put your hands in the air and make a market and see how much you can make. I can assure it's not that easy. Also as far as the size on the mini-screen its a 5 to 1 ratio in contract size so a 100 lot on the mini screen is basically a 20 lot in the pit. I would hardly call that size but like I said, maybe to joe daytrader, that is a lot of size.
Cheeks I agree with you but let me pose a question for you. The day is september 11, 2001. You go into work that morning as local in the spoos pit. Spoos start trading at 7:20am. Your down there making your market. Suddenly a news alert comes out that an airliner just crashed into the WTC. Now here I come as a broker from Goldman sachs with a 10,000 lot to sell. You tell me, where is your market. Make a bid. Where are you bidding. I want to sell, where will you buy. Minutes later a 2nd plane crashes. Now there are 1,000 guys behind me screaming at you asking for a mkt, begging for a mkt. You still haven't given me your bid yet, where is it, I need to sell now. See I guess its not that easy.
Maverick, I am struggling with your example as I know this is not how it works. Pit traders are tough as hell and are out for blood, its one thing for Goldman to demand a market for a spread combination or somthing similar, but to get bullied into showing a bid/offer in the fututres in the face of a event is ridiculas. Im not sure if you know who Jim Keller is (the pimco article) but let me assure you that he is one of a few people who can almost singlehandedly put a major hurting on the exchanges continued existance. I know the CBOT is dead if he / countrywide and a few other key users decide to use swaptions instead of exchange traded hedging vehicles.
I'm certainly not saying it is. You have to have big balls to be in that pit. Your trading against the world, and they have better information. I'm certainly not suggesting that locals do not take alot of risk, they do. I'm not going to argue that electronic markets are a perfect creation. They are not. But look around at the world markets, what direction are they going/gone. The emini, dispute higher commisson cost is exploding in volume. I realize it was marketed towards small retail traders, but it is doing MORE dollar volume than the big pit. There is a reason this is happening. Personally, I do not care what happens. There is more liquidity than I will ever need in the mini. To me this argument is purely academic. You have not said, but are you a local? regards, Cheeks
Over, That was my point. No one is going to make a mkt. I was just responding to cheeks as to why there might not have been any bids during the crash of 87. As far as Jim Keller goes, my question is who cares? I don't care, do you. Are you an active player in the swaptions market? I don't know how this whole topic got moved over into the treasury mkts and such but the comment I made about 20 posts ago was to the practicality of one united exchange in chicago. I could care less about the fixed income markets. Thats not all they trade in Chicago you know. What about the metals, the indexes, the grains, the currencies, the meats. Is Jim Keller and his buddies at Pimco going to rule those mkts too. And if so, You think anyone is going to let you buy and sell those mkts without a spread. What difference does it make if you trade on the screen or the floor, bottom line is no one is going to sell you anything at parity ok. You are going to pay for it one way or the other. I just believe that the city of Chicago is not going to watch their economy go to hell and let one of the biggest tax revenue sources in the city dissipate. I assure it will be 100 degress in december in that city before that happens. Now what role will the exchanges play. Who knows. But I have been hearing this open outcry extinction argument for years. I assure no matter what the future holds, the city of Chicago will play a large role in the derivatives mkts one or the other.
Chicago in my humble opinion is the greatest big city in the world and it will always be a major derivatives player, AGREED but my money is on the screens and when it all shakes out there will be a hurting from administrators/lawyers/clerks/ floor traders/ FCM's downsizing etc. There could be a sharp drop in those beautiful 2 flat homes along fullerton parkway.
In further support of Maverick, were any of you around during the Crash of 87? Because if you were, you'd know that every market maker in New York decided to turn of their Nasdaq screens, take their phone off the hook, and stop making markets. Chicago may not be perfect, but its far better than the screens.
Familiar with efficient markets? Size affects prices in efficient markets. Also, wasn't Soros' broker to blame for screwing up his order?