The % pay out is much higher in trading than in a casino also. In trading the pay out is 100% minus slippage and paid commissions; in a casino a big chunk stays in the house.
The CME S&P pit still can't get that far from the cash price. So, they are fighting the whole stock market when they try to move the price.
I listen to the S&P 500 pit squawkbox every day. The biggest bank in the pit is Merrill Lynch. I heard him buy over 4000 big contracts in half an hour. That day the S&P was breaking out of a Head and shoulders pattern. Merrill bought the 4000 big contracts (that's 20000 mini's) on the open. It took him half an hour. The S&P closed 20 points higher that day. And over 50 points that week! Other big paper is: Goldman Sachs, Morgan Stanley, Deutsche Bank, Man Financial, ChiCorp and Refco. They're the biggest in the S&P pit. So also in the mini's most likely. And it is also definately possible to "move the market". I remember an FOMC meeting last year. They raised rates and all the banks were selling. Except for Merrill Lynch. He was quiet. Locals were pushing down and all banks were selling it a couple hundred big contracts at a time. After 5 minutes we traded 4 points lower and still sellers. Suddenly Merrill came in buying it BIG-TIME from all the paper sellers and locals. He bought it up like 5 points on way over 1000 big contracts. Then it was quiet trading for like 15 minutes. And there he came again buying it. He pushed up the market another 7 or 8 points, but the whole pit was stuck. They were all short and suddenly he triggered some stops and some buyers came in and he sold to them. So he actually moved the market BIG TIME. And of course nobody knows how many he bought in the mini's. There are also a couple of big local players (independant traders) that can move the market. The biggest local in the S&P pit is Lewis Borsellino. (He is banned from the pit currently). Last year when the Fed Minutes were released there were a lot of sellers and the market went down 8 or 10 points and then retraced 5 points. Suddenly there was no action anymore. It was real quiet. And Borsellino started selling it BIG TIME. A single guy putting up a 500+ big contracts position. In a couple of minutes he pushed down the market to the lows. He covered some there (probably also in the mini's) and then started pushing through the lows, as soon as he got in a print under the low, the whole pit started selling and we went down another 5 points at least if I remember correctly and he was covering the whole way. So Yes, the market can definately be moved, also the biggest contracts around, although these guys (especially the locals) run HUGE risks when they do that. So my guess is that they cover a lot in the mini's when they started to push up or down. And of course this is only intraday I think. I think it's very hard to move a market over a couple of days though. But you never know. If you wanna listen the big players trade you can subscribe to the tradersaudio.com squawkbox. -Dave. P.s. Susquehanna is not really active in the S&P pit.
Thanks Dave. It's funny with all you just mentioned you still didn't even touch the aspect of those supposedly "evi"l Program Traders for index arb's or asset allocators.....lol....The market is so enormous!...."I love it" The possibilities are endless.... Before I used to love the weekends..Now I can't stand them..LOL I know i need a girlfriend or a "fun buddy" at least...LOL..But, when that pit open's up I could careless...It's just me, my thoughts and that market... All I do is Trade and then go out afterwards and do pull-ups and ride bike.....It's a hard way to make an easy living but somebody's gotta do it.. Thanks fellas so glad I found this site. Trader's talk beat porn any day..LOL.. I just wonder what took me so long..
Dave - I don't believe a trader with a S&P position can cover with ES. The contracts are not fungible (or what ever that word is ). A S&P position and an opposite ES position is simply a spread. Although most S&P traders will be using the ES to hedge/spread out into. This is one reason for the tick difference i think. Are these large traders and locals really taking on huge risk when they move the market? I don't think so. After all, how much risk does a 200lb gorilla face in a cage full of monkeys? Not much!! I can assure you the monkeys are watching him like a hawk because they don't want to be on the wrong side of him - this kind of helps him sometimes. Great post though - thanks. ST PS. I read somewhere that most Tier 1 banks probably control 10-15% of NYSE volumes EACH! Either through their proprietary operations or their paper. This gives some idea as to what they are doing in the futures if you think about it.
Dave - I don't believe a trader with a S&P position can cover with ES. The contracts are not fungible (or what ever that word is ). --------------------- Yes, they can cover with ES. One big contract is 5 mini contracts. They do it all the time. --------------------- A S&P position and an opposite ES position is simply a spread. Although most S&P traders will be using the ES to hedge/spread out into. This is one reason for the tick difference i think. Are these large traders and locals really taking on huge risk when they move the market? I don't think so. After all, how much risk does a 200lb gorilla face in a cage full of monkeys? Not much!! I can assure you the monkeys are watching him like a hawk because they don't want to be on the wrong side of him - this kind of helps him sometimes. -------------------- They are definately taking HUGE risks. 500 contracts in the pit is 125k per handle. After Fed announcements the S&P can moves a couple points in no time, as you probably know. To push a market lower 5 points, you need to go through a lot of size on the bids. So he´ll sell a hundred here and another two hundred there. And he´ll cover some in the minis. And then starts pushing again. When there are some buyers Ãt´s a big fight to push lower, especially if most of the people are long! So he´s running big risks. And of course a lot of people watch him. But he also lets clerks do some buying and selling for him. So it´s hard to know what he´s up too. I heard from the guy from the squawkbox that sometimes he has a headset on. So he can let a clerk put in orders in the minis. -Dave.