NYMEX Potato Futures

Here is a 1960s era trading pamphlet on NYMEX potato futures, once the core contract of the exchange.  It was mentioned in The Asylum that the May contract was legendary as the primary deliver month and would have enough volatility that Chicago traders would fly to NYMEX just to trade it for a month. 

Ultimately, the potato contract was delisted w/a default and control of the potato market was wrestled by J.R. Simplot to his Idaho environs. 

As always, click on the photo to enlarge. 

Book Review: The Asylum

I approached The Asylum with a lot of skepticism but finished it quite satisfied with almost all of the near 400 pages.  To get that satisfaction though I had to dismiss a lot of the attention getting tales of lewd floor behavior and focus on all the characters who built and guided NYMEX to what it was, for better or worse.

What most people don't realize is that before NYMEX began trading energy, their dominant contract was Maine Potatoes which closed after a default in 1976.  After the Potato contract was delisted, NYMEX primarily had a platinum contract before diversifying into their energy listings first with heating oil which took a great effort to begin trading.  Once heating oil caught success, the CBOT and NYMEX competed to launch a crude oil contract simultaneously but due to problems of the CBOT's contract, NYMEX emerged the winner. 

The entire concept of listing energy futures at a time of OPEC dominance was really interesting and well explained.  It seemed that OPEC was so unconcerned w/a small entity like NYMEX that they never even tried to get in the way of preventing such a market place being established.  As could be expected, once the exchange gained prominence it also began numerous power struggles to lead the exchange through various market cycles and ultimately into their IPO then eventual purchase by CME. 

The various NYMEX characters were all intriguing, I felt equally for their accomplishments and drive as their faults and in certain cases, amorality.  It's tough for a random observer to keep the names straight as there are quite a few but I was able to follow along after reading news stories throughout the years w/some of the characters involved.  The author was a former WSJ reporter who pieced together interviews over seven years and the best part of the book was it was filled with a wide range of perspectives. 

My main faults with the book were that the perspectives were mostly brokers, those with ties to brokerages, clerks or corporate workers rather than including a lot of those who actually trade as locals.  The book also had a lot of cheap attention grabbers mostly regarding various sexcapades or mistresses sometimes w/names attached or not left to the imagination.  During the intro the author noted that some spoke to her not expected things to be published but they nonetheless made it into the book, hence a warning never to say anything to a reporter unless you can live with it being printed. 

Steve Fossett

Photo is a scan of a card I have from Fossett's firm which was used to keep position count in the pit.

There were a lot of interesting people who worked around the Chicago trading pits but Steve Fossett stood out for his amazing adventures which would always push the envelope of endurance and the human spirit.  Fossett used his earnings from his interests at the Chicago exchanges to fund an amazing lifestyle filled with travel, aviation and sailing pursuits, many of which he set world records in.  His wikipedia article linked here, does a much better job of detailing his exploits so in the interest of brevity I'll just to suggest to visit that to learn more. 


One question I have which I hope someone can answer in the comments is what did he trade and even did he trade? The reason why I ask is that the wikipedia article noted that he worked for a institutional brokerage, operated his own clearing firm and also leased exchange seats but it said nothing about him trading.   I couldn't imagine him not doing a lot of trading, especially as a successful firm was started by some partners of his so it's something likely omitted and it'd be interesting to learn more. 

CBOT Bond Pit in 1995

Here's a photo from 1995 of the 30 year bond pit in the CBOT's old financial room.  Although I never saw the old bond room while the CBOT was in there, in 1999 I did get to stand in the 30 year pit at the CBOT for a brief time w/a broker who executed some biz for the desk I worked on at the request of the Managing Director of the firm so I could see how tight the market was and how it flowed.  Although it was only about 15 minutes I got to stand and observe, it was amazing and something never to be forgotten.  Thinking of how massively large it was and completely packed w/people it's amazing in retrospect that something like it even existed.  In the photo the market is 9 bid at 0 if you were wondering. 

While on the topic of bonds, here's a 1987 NYT article describing the anticipation of the CBOT's night bonds session which opened up at 6pm each night: Chicago Girds For Night Shift

Hand Signals of the London Trading Pits

Well folks, it's finally finished!  The fourth and final installment of the trading pit handsignal prints is finished w/the completion of Handsignals of the London Trading Pits which are based upon LIFFE handsignals.  The reason why this print took so long is that it was very difficult to get full confirmation of the accurate LIFFE handsignals but eventually these were sourced directly from LIFFE education materials.  As with the other prints, these were illustrated by Chicago based illustrator Mike Nudelman and are printed by Chicago based printer Dan Grzeca.  The price on this print and all others going forward is $200 + shipping and will be available in the shop as soon as some technical maintenance is done.  For anyone who was in contact prior to today about the London print, I'll honor the previous price of $100/print.  The London print is limited to a run of only 250 and all are handsigned and numbered by the illustrator.

Sorry about the price hike but this for it to be worthwhile to all parties, one was necessary and even at this price it's virtually a public service considering what other unique art costs.  

I'm still out of the country and don't have the prints in hand but should shortly.  Foreign buyers or any questions can email: tradingpithistory 'at' gmail.com for further info.

Survivor CME edition

Just had a thought on how much trading volume goes on in the pit now so decided to check from recent days.  As mentioned I haven't traded in the pit for 6 years and only go to the trading floor a couple times a year so I truly had no idea.

I'm pretty unscientific so randomly pulled the daily sheets from the CME and present data from January 27, 2011 which is representative: overall CME Group (including the NYMEX floor) futures volume still has approximately 12% take place in the pit and the options volume is approximately 63% pit traded.  The contract I trade is less than 1% in the pit which is surprising.  If you want the contract breakdowns you'll have to click on the .pdf file linked on the date above. 

Seeking Debrouillard

*update, I found a guy to do what I needed*

I'm riding out the great Chicago blizzard in Paris and as usual everytime I'm here my thoughts turn to one of my favorite books, George Orwell's Down and Out in Paris and London.  In Orwell's book, I first came across the term "debrouillard" and it made such an impression that I named my one man company after it years ago. 

"And yet the PLONGEURS, low as they are, also have a kind of pride. It
is the pride of the drudge--the man who is equal to no matter what
quantity of work. At that level, the mere power to go on working like an ox
is about the only virtue attainable. DEBROUILLARD is what every PLONGEUR
wants to be called. A DEBROUILLARD is a man who, even when he is told to do
the impossible, will SE DEBROUILLER--get it done somehow. One of the
kitchen PLONGEURS at the Hotel X, a German, was well known as a
DEBROUILLARD. One night an English lord came to the hotel, and the waiters
were in despair, for the lord had asked for peaches, and there were none in
stock; it was late at night, and the shops would be shut. 'Leave it to me,'
said the German. He went out, and in ten minutes he was back with four
peaches. He had gone into a neighbouring restaurant and stolen them. That
is what is meant by a DEBROUILLARD. The English lord paid for the peaches
at twenty francs each. "


That said, I've got a surplus of work that I don't seem to get around to doing after each trading day and would like to hire someone for things.  Duties would be to help organize some tradingpithistory stuff, assist getting a book going and then do a couple end of trading day things.  The job is more of a journey on the way up than a destination and right for the ideal person and wrong for everyone else since it's mostly grunt work w/an intellectual pursuit.  Pay wouldn't be much and there aren't benefits as it'd be hiring an independent contractor that'd get a 1099 form.  Requirements are simple: enthusiasm and interest in the project/markets, be based in the US and a "debrouillard."  Anyone interested can email me: tradingpithistory (at) gmail.com  I'm not desperate for someone but just that it could be mutually rewarding for the right person and because it'd initially be a 6-12 month duty working remotely from a computer, it's probably best for a college student or someone just out of school (although I didn't go to college in all honesty).