Batch of CBOE photos

Cleaning up the computer I came across this batch of CBOE photos from either 1997 or 1999 which features the OEX, SPX and AOL pits.  It's 83 photos in all and although I've never done much on the CBOE, figured I'd put these up.  This is the first time I've watermarked anything and it's for a couple reasons, 1) is I'm planning on using these photos for another project and 2) a good buddy who went on to be a massive trader at the Merc spent a brief time in the AOL pit around then and said those guys were the biggest assholes of any trading pit he's seen.  Considering he came to the CBOE from Treasury options at the CBOT and then spent years dealing w/Merc jerks, that says a lot.  The photos are a bit low res and the negatives were scanned at Walgreens but I'll eventually get a professional scan.

   CBOE photos from late 1990s by tradingpithistory

Pit Trading 101 film debut

The film Pit Trading 101 just got released by Jonathan Hoenig and is a wonderful piece of original content which was originally shot at the CME in 1996.  The footage is based upon a class taught by a group of traders that was essentially a one day boot camp on how a trading pit functions.  Captured in this film was how these potential future pit traders would learn the elementary signals, nomenclature, processes and then do a bit of a trading scrimmage in the actual Merc trading pits towards the end of the day.  My favorite part of the documentary however, was the various footage of the S&P pit at it's height before the e-mini contract drew liquidity away from the pit.

Jonathan is actually one of the students in the film and he mentioned that he only recently discovered the footage, which was never released elsewhere, so he took it upon himself to edit it professionally and create the documentary.  Amongst the other faces in the film, I recognized some traders who continued on the floor during my time at the CME, while for many this one day class would be their only exposure to open outcry trading. 

While it's really no longer possible to put these open outcry methods to use, all of you who didn't get the opportunity to work around the trading floors would really appreciate the introductory lessons which were taught in the film.  Imagine learning what's taught and then putting it to use with the maniacs of the S&P pit soon thereafter, it all still seems unreal that such a crazy environment existed and still functions today in a subdued manner.

Here's the trailer for the 22 minute documentary and I highly recommend spending the few bucks it costs to watch the entire video on demand either via Vimeo or Itunes. 

PIT TRADING 101 - full trailer from Jonathan Hoenig on Vimeo.

For those with further interest after watching Pit Trading 101, I also suggest to watch Charlie D.'s 1989 speech which elaborates on "why" to trade in the pit vs. the mechanics of "how" to pit trade which is covered in Pit Trading 101.  Getting an upload with better sound of the Charlie D. speech is something I'll finally get around to doing within a few weeks. 

Women of the Pits

Regardless of how politically incorrect it is, trading floors have always been a male dominated environment although a significant amount of women have not just simply worked in the trading pits but became the dominant traders in certain cases.  Because it's (in general opinion, including my own) an unconventional environment for women to seek to work in, I've always been a little intrigued at the back stories of the women who did end up trading on the floor. 

The 1998 book Women of the Pits by Mara Koppel is based upon interviews with 15 women in the trading industry, with about 2/3rds of the subjects having worked in the trading pits.  Most prominently included are interviews w/the first female members at the CBOT and CME who broke the gender barrier in 1969 and the early 70s respectively. 

While providing an often overlooked perspective, I didn't find the book to provide deep details and was written too over-flattering towards the subjects.  It seems to be have directed towards an audience of younger women with thoughts of pursuing financial careers and in that regard it's great.  For those who maintain just a slight interest in trading pit history, I'm not sure if it's to be fully recommended but it doesn't require a big time investment to read or skim.

Year end

Time to close out 2013 and one of the most appropriate ways to do it is w/via of the biggest memes of the year, here's the Harlem Shake open outcry style:



I don't know who put the vid together but thought it was pretty funny.  The footage was a mix from the movie Floored, some stock footage and also from the PBS movie Open Outcry which, kinda ironically, filmed me learning handsignals in 1999 (I'm on the far left). 

The typical way trading floors closed out the year was tossing up as much paper as they could on the final bell and someone recently uploaded the last 22 minutes of the close from December 31, 1999 in the CBOT bond room.  Was interesting to see how that day was celebrated as I left the prior day to crowd into Times Square to ring in Y2K and wasn't on the floor. 



In the new year I'm planning a couple additional roll outs for the website, in particular a book notes page, but nothing will happen too fast as my primary side project is dropping a new engine into my 79 VW bus.  

Launch

photo credit wikipedia

It's finally time to light this candle, blow the pyrotechnic fasteners and hope that this launch is more Saturn V than Vanguard TV3....the book is finally ready for purchase. 

Rather than wait for everything to be perfect, I wanted to put out the link to the distributor's cart where it can be ordered for $30 plus $4 standard shipping in the US.  Currently we aren't distributing outside the US but we hope to get that worked out later and if you really, really need a copy and live outside the US then email me (tradingpithistory 'at' gmail.com) and I'll see what I can do. 

The printer, iocolor, is also serving as the exclusive distributor so the book can only be purchased here:  iocolor bookstore order link

Also, I should note that the distributor should've already received the books and hopefully today is the day it happens.  No idea why it's taken this long to go from the dock to the facility but it's outta my control.  If you do choose to order the book and have any comments on the ordering process, etc... let me know because iocolor is trying to make the process smoother.

Again, for those who like to read books electronically or live too far away to get a print book, there is an Apple iOS ebook which can be bought in the iTunes store and read on the iBooks app for $8.99:  Apple iTunes order link

We're in the process of doing some website housekeeping as well and hope to do various improvements as it's been years since I've bothered to touchup the main site.  I'm also excited to have recently seen someone else create another trading pit historical project which is a couple weeks from launch but can't share details on it yet.

Book manifesto (such a serious word isn't it?) maybe book statement is better

 (This turned out to be a much longer post than intended)

With the books reaching the dock today, I wanted to elaborate a bit on the process and background of the project to provide additional clarity.

The book is certainly a best effort on behalf of not just myself but the photographer, designer, proofreader, illustrator and printer.  Even for someone with zero interest in the topic, we feel the quality clearly shines through that it is a beautiful book which was created with significant thought and care.  As my first book, there are a couple minor rookie oversights but the strengths far outweigh any weaknesses.  

It was difficult to create because the subject matter was generally previously unrecorded, highly fragmented, at times contradicting and excepting my own personal experience, parts relied upon other's often faulty memories.  I’ve dug deep with unmatched compulsion into the history of trading pit hand signals and approached it seriously to now present an accurate historical record.  The end result in this book is an engaging gallery of over 400+ unique hand signals used across eight primary exchanges, both foreign and domestic, along with a couple chapters describing the history and trading floor functions.

We didn’t bother to approach any publishers with it to maintain complete creative control over the entire process so our vision was realized without diluting it.  For this niche product, we were able to add expensive enhancements like utilizing the high quality printer we wanted, pay $2000 to license a single photo and less for others from Getty Images, etc…. by completely underwriting it myself as it would’ve been uneconomic for a publisher to do the same.

Although I prefer to sip on Lagavulin instead, Pappy Van Winkle had a wonderful quote on his approach to high standards which I shared the same sentiment regarding this book: “We make fine bourbon, at a profit if we can, at a loss if we must, but always fine bourbon.”  

I consume a lot of books myself and realize that the true cost of a book isn’t the price but rather the time it takes to read it.  The worst part in putting this book together was that it kept me from reading other books so I tried to be as mindful whenever possible for the potential reader by keeping the writing efficient and concentrated.  One weakness in retrospect is that I didn’t provide many citations but a quick internet search or look back at the blog will be sufficient in providing any further details.

Something I’ve noticed in reading many book is that there is often an unstated/hidden agenda, predominantly that authors like their story to be the story, accurate or not, and for this book I did my best to not just make it accurate but also account for multiple perspectives.  The majority of trading pit history has been put forth and paid for by the exchanges which has resulted to reflect only positive aspects while neglecting the entire story, so it’s a fresh approach to present this independent viewpoint.  

In my collection of virtually every book regarding the history and function of the trading floors or exchanges, a frequent thing that’s always bugged me is most authors’ agenda (usually as a broker) is to ultimately sell a service or accumulate assets to trade/manage.  I don’t want anything from anyone, trade independently anyways and present the book simply to those who share the captivating interest of trading pit history.  Having tackled this subject on the internet with historical writings on the blog along with operating the advertisement free website gallery for over 5 years reflects my pure interests. 

If anyone disagrees with the presentation then I’m happy to be emailed with where they think I’m wrong and I’ll be happy to cite my reasoning and further sources.  That said, I’ve had people try and tell me something is wrong when I and many of my friends personally utilized the same signals called into question.  My skin is thick like a rhino hide so nothing is taken personal, but I hope if someone is calling me out that they present a strong argument.

Of course one of my primary goals is to collect any further signals which aren’t included in the book currently for inclusion in a potential second print run.  Typically whenever I meet someone who worked on any trading floor, I’ll always ask them for any signals which come to mind.  More often than not, this is the response:

Ex-floor guy: “Oh yeah I know them all”

Ryan: “OK great, I’m trying to collect and record these for historical purposes, can you provide specific examples”

Ex-floor guy: Rattles off the one or two most obvious signals I’ve long had and then can’t remember any more.

Ryan: “OK thanks but if you remember anymore definitely send word.” Never get a followup….

Besides additional signals, some further thought needs to be given on unknown origins of signals within the book.  For instance, I believe the NYMEX month signals were based upon ASL to a certain extent but not enough to change their origin status from unknown in the book on this run.

I’ve thought long and hard why so few who worked on the floor share the same historical interest and have come to realize that hand signals were nothing more than a process which was required to use as part of the job.  To be honest, most of those on the floor wouldn’t differentiate between trading futures or selling plumbing supplies if they could have made the same amount of income.  The funny thing is that it probably cost me a fair bit as my mind would drift on finding the hand signals interesting or psychologically profile others on the floor instead of staying fully focused on the next trade.

The other caveat is if the book is a potential gift, it might not be as well received as imagined because so many ex-floor workers are jaded to the point they might speak higher of their ex-wife than they would of the floor/trading industry.  Part of it is many moved on from the industry, but I heard the best description mentioned by a friend who described his encounters with ex-floor workers and said “when they talk about stories of working on the floor, it's as if life was in color and now that the floor is gone it’s like life is black and white for them.”  I’m just being honest folks and often get the same impression when interacting with others.

A big benefit of self-publishing is not being required to have to sell or market the book, particularly because dealing w/the media (which I’ve never, ever solicited) is often a waste of time.  My thinking is that if people are interested then it’s easy to find and ultimately books are meant to be bought over long periods of time anyways.  For instance the book I’m currently reading was published in 1991 and it’s as fresh as ever.  Long after I’m gone, Trading Pit Hand Signals will be in the Library of Congress for reference and it’s pretty cool to think that someone 50+ years from now could find it useful and interesting.  

The company which handled the printing is going to handle distribution and as of now, we won’t be listing it on Amazon.  I definitely buy a lot of books off of Amazon but the breakdown of getting any return isn’t worth putting this book up there, especially since it’s already priced below cost!  It’s not so much a money thing but the principle of how they operate which really destroys margins for a specialty book to not make it worthwhile.  

In conclusion, presenting the book also serves as a bit of closure for the entire project.  Over the last 5 years, I’ve written and found most of what is out there on trading pit history.  Some history I’ve held back from publicizing for various reasons, mostly because it’s not worth the trouble and hassle that would ensue of bringing it to the surface again.  My interest in capturing further history remains high and will continue but I’m not going to blog about posting minor secondary information as much going forward.  

The distributor’s shopping cart for the book should be working within a handful of days and if you choose to order it ($30 + $4 shipping in US), I hope you enjoy it!  If anyone doesn’t enjoy it then…..I can admit myself that I won’t be giving up trading to become a writer anytime soon.  Next post will be a link to the cart once it’s live….

Comin in on a Hyundai

photo credit: vesseltracker.com

I know it's hard to believe that such a high quality book could arrive on a ship which shares the name of two mediocre car companies but indeed, the Hyundai Mercury is currently somewhere off the Aleutian Islands and will dock at the port of Tacoma in 4-5 days with the books.  After that it should clear customs and get delivered to the distribution center the week after Thanksgiving.  The distributor's online cart isn't working due to a bug in shipping calculations but once it is then I'll throw a link up. 

The print run is only taking up, in my estimate, about 1.5 to 2 cubic meters which is just a portion of a standard 20 ft container which holds 26-28 cubic meters.  Pretty mindblowing to think of the scale of goods which fit on an entire ship but if you've ever been in a Costco then it's no wonder that magnitude is necessary. 

I think it was mentioned previously but the reason we didn't print onshore in the US was the cost would've been around double what it was to print in China including the shipping (roughly $12-15 in China).  Even if every copy was sold, I'd still lock in a monetary loss of around 40-50% due to other production costs on a low print run but hopefully another print run can be had in the future to cut that.  Right now the suggested retail is $30/book which is reasonable and below other comparable books, because I'm a man of simple needs.

It's been an interesting diversion to engage in physical goods for once as trading futures is so frictionless.  Last year in Singapore while meeting a friend who trades physical grain, he was complaining about the logistics of contracts, shipping, settlements, etc... and his boss who joined us for a beer remarked that my friend wanted everything to be as easy as "selling it to the screen."