Hi Shoppers,
All this hullabaloo around the new SpaceX (SPCX) IPO and listing of the options reminds me of the old days when I chaired the Allocation Committee at the CBOE.
I was on this committee for three years and chaired it for two, 2000-2003.
Our job was to designate the new stock listings to the best trading pit before the options began trading.
We looked for the pits that had the tightest market widths and the deepest markets. Meaning they would guarantee 500 – 1000 contracts on their bid and their offer.
We also expected them to match the better bid or offer, if there was one, on a different exchange.
This was a time of mass competition between the options exchanges for the paper flow and the Cboe wanted to maintain its dominance
Every single trading pit on the floor would petition us to receive the “good ones”. The stocks with all the hype that everyone knew would be big traders; lots of money to be made.
Market makers, including Jon Najarian – yes that guy on TV with the beret, would come to my pit to find me and to personally sell their trading pit for the new listing. Dr J, that is what he was called on the floor, was a trader in the IBM pit.
Of course my committee was very careful, fair and diligent in allocating these new stocks. We had to spread the wealth the best way we could without compromising the Cboe standing.
Once one of the “big” brokers from Morgan Stanley, a very political guy within the machinations of the Cboe actually called me at home demanding we choose a certain pit for this big listing.
Well, my committee and I dug our heels in. We were not a political entity nor were we going to be bullied. We gave the new stock to the best trading pit and it was not what he wanted. It was a pretty big deal and it was AWESOME!!
Good memories!
Thank You For Reading… See You Next Tuesday,
Licia Leslie