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Thanks for the update on the trade (RUT November 620/630; 810/820 iron condor.) [see comment to you – your posting “Copycat trading” – Posted by: JB | August 31, 2008 at 09:53 PM “That’s why I would like to see you keep and post a daily running log of your thoughts on the position.”].
For me, at least, these are useful – even just a “We’ll just leave this position as is.”. In fact, I would expect this to be the typical type comment for more than 70% of the time. The position is staying within your comfort zone. As noted before, the times when and why you are making a change, to close or adjust, will be more useful. But the “everything is within comfort zone” is good.
All the best,
If I make a change to the position – even if I seriously contemplate such a change (and don’t make it), I will post that information as quickly as I can.
Perhaps you could tell us a bit the training you received when you first started on the Floor. Did you get mentoring? Did you shadow an experienced trader? Was there some classroom training? etc.
My start as a professional options trader was very unusual.
I was working for Monsanto as a research chemist when the relative of a friend of mine – based on the recommendation of that friend – asked me if I would like to quit my job, move to Chicago and act as the nominee (floor trader) on a CBOE seat he wanted to purchase.
I already had some experience using options because I had been writing covered calls for a year or two (this was 1976).
I agreed. Gave notice. Moved to Chicago.
There was no mentoring as such, but the clearing firm (equivalent to a brokerage house for market makers) provided very knowledgeable people to give lectures, provide answers and offer general guidance. Except for that, I was on my own.
I learned the rules, took the test, and eventually walked onto the trading floor. It was not easy. No trading crowd (the pit where options on 3 or 4 stocks were traded) wanted a newcomer. I had to pick a pit, be prepared for abuse by the regulars, and make markets.
It’s not anything like what you and I do now. In fact, there were no put options – just calls. Today, we get to pick our spots, trade only the specific options we choose to trade – and if we cannot get our price, no trade is made.
As a market maker, I was obligated to make a bid and offer every time any broker (representing customer orders) requested one. Thus, I wound up trading a bunch of options I did not want to buy or sell. But, that’s part of the job. My obligation was to make markets, so make markets is what I did.
At first I was slow – the trade goes to the person who makes the best bid or offer quickest (unless that person wants to divide the trade among the other market makers). But, I learned, got faster, and was fascinated by the business.
I shadowed no traders. I had no mentors. But we did get some classroom type training.
Today, few independent market makers remain. Most work for large trading firms – and those firms manage the risk of each trader’s positions.
How does a regular guy get a job on the floor with a firm these days ? Is it even possible without knowing someone ?
I’ve been away from the floor for eight years and simply have no idea. Knowing someone is obviously best.
Second choice – buy a membership. But the last I looked CBOE seats were priced over $3 million, making that a poor choice.
The old days are gone. Being a clerk or runner is probably not the steppingstone it once was – and with electronic trading, I don’t know if those jobs still exist.
Sorry I cannot provide a better reply.
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