Yo Pit Crazies,

I’ve been trading for a long time. I made my first options trade in 1989, and it’s hard to believe I’m coming up on 40 years as a trader. Thinkorswim keeps charging me a Pro rate for data, so that’s one way to tell. I’ve been a quote operator, floor clerk, floor manager, exchange member on three floors, and finally a general partner in an options trading firm.

Now I’m Director of Education at the best financial publishing firm in the country. How do I know? We make our own trades. The one thing that hasn’t changed in nearly 40 years, or even in 200 years, is information.

When I was a floor trader, the exchange didn’t allow cell phones. They thought we’d be rocking insider information all day every day. In truth, we as market makers were the last to know. The phrase here is “front running.”

Customers would come in buying huge blocks of options, and magically, soon after, the stock would move sharply in that direction. Those were the days where I’d go to Ceres Cafe and Bar in the CBOT building and liquid hedge. Heck, we finally got TV on the floor just so we could see news breaking on CNBC at the same time as everyone else. CNBC had a correspondent, Dan Dorfman, who would break big stories and move markets. We learned later that he sold access to his research before he announced it. Dan sadly lost his job as a legit news reporter. The age of getting “Dorfed,” a real term we used, had passed.

Algo trading started by accident. Now the phrase is “machine readable news.” As soon as a story hits the tape, firms rate it, score it, and execute in a blink. Wednesday’s insta-rally is no exception. In the old days, Dan Dorfman would have broken the Greenland story. Today, the algos bought every offer in sight.

Now the algos pick, read, and trade the news.

But Option Pit can help with Mark and Voz’s new Wiretap trading service.

To Your Trading Success, 

AG