Texas hedge

murray t turtle · Feb 6, 2004

Quote from vega:

On the CBOE floor it refers to someone who makes an option trade and screws up his hedge. Example would be buying calls and instead of SELLING futures he buys them, now he has to sell twice as many to get back to neutral.

A classic O'hare trade occured in the IBM pit at the CBOE a few years ago. This one local (known by many to be a liar and piece of Sh$t) traded say a 20 lot of options with a broker, and wrote down 200 on his ticket. Why did he do this ? Because he was shorting an obscene amount of stock against it, and in order for his risk manager not to go crazy, he had to make him think that he had an equal amount of off-setting delta. The local did this all day long with the hopes of IBM selling off, then he would cover his stock and the following morning deal with the outtrades on the options. The problem was that at about 1:00 PM CST the brokers started to figure out what was going on (because at the CBOE there are printed out sheets with outtrades handed out around 1:00 in the afternoon for the mornings trades), and the local abruptly left the floor and literally went to O'hare. His firm then found out and started covering the short stock (at a large loss) and this guy was never heard from again. Here's the real kicker -- the next day IBM gapped down a couple of bucks, and he would've made a killing !!!!!!!!!!!!!!

Vega
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No offence to any Texan;
that nickname ''Texas Hedge'' says lots about size & some Texan patterns about campfire stories.

Don't have much experience with a Texas Hedge;

think its defined in Texas & parts north as '' BUYING or LONG EVERYTHING''

Merlin · Feb 7, 2004

I always believed a Texas hedge was getting long INTC, and just to be safe get long AMD, just in case.

murray t turtle · Feb 12, 2004

Quote from Cutten:

Ok, any of you guys interested in Texas Hedging, I've got the perfect investment opportunity for you:

http://www.texashfa.org/thfa2/

The Texas Hedge Fund Association!

I wonder how often they've been asked what their hedging policy is
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Interesting read in that the Texas Hedge Fund Association admits to being 3rd largest state in assets under management .

If you like Texas size hedge reading;
try
blairhull.com

indahook · Feb 12, 2004

Quote from vega:

On the CBOE floor it refers to someone who makes an option trade and screws up his hedge. Example would be buying calls and instead of SELLING futures he buys them, now he has to sell twice as many to get back to neutral. A classic O'hare trade occured in the IBM pit at the CBOE a few years ago. This one local (known by many to be a liar and piece of Sh$t) traded say a 20 lot of options with a broker, and wrote down 200 on his ticket. Why did he do this ? Because he was shorting an obscene amount of stock against it, and in order for his risk manager not to go crazy, he had to make him think that he had an equal amount of off-setting delta. The local did this all day long with the hopes of IBM selling off, then he would cover his stock and the following morning deal with the outtrades on the options. The problem was that at about 1:00 PM CST the brokers started to figure out what was going on (because at the CBOE there are printed out sheets with outtrades handed out around 1:00 in the afternoon for the mornings trades), and the local abruptly left the floor and literally went to O'hare. His firm then found out and started covering the short stock (at a large loss) and this guy was never heard from again. Here's the real kicker -- the next day IBM gapped down a couple of bucks, and he would've made a killing !!!!!!!!!!!!!!

Vega
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A traders "urban legend" or do you know this as fact? Either or, it is still a fantastic story!

vega · Feb 12, 2004

It's definitely true !!!!!!!! 100% real story. I used to work for another local in the IBM pit that saw it all firsthand. Funny thing is that this guy was somewhat new to that pit, he was basically kicked out of a few other pits (not by the exchange, but by the other locals), seemed he had a tendency to make up stories. One of the funnier ones was that he said he was in the Olympics !!! Yet this guy was about 5'8 and weighed over 220 lbs -- and it wasn't muscle -- he was a fat slob. Not only was he not physically able to compete, but when people tried to research the Olympics he said he was in, there was not one piece of documentation that supported a word of what he said. It's amazing that an otherwise reputable firm actually backed that guy, apparently they didn't do their due diligence.

Vega

indahook · Feb 12, 2004

Amazing...where do you even start with a guy like that. Must have been breastfed untill he was 10 years old.

Keep those stories coming!

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Texas hedge

murray t turtle

Merlin

murray t turtle

indahook

vega

indahook