I Fought ACME9 and ACME9 Won: Part 10 Making Enough Money to Please Anyone!

Finally left to my own devices, I started 2007 like a bat out of hell. It seemed like I’d make about 15-20,000 almost every single day. In fact, I made over $200,000 dollars on my two million dollars of risk each of the first four months of the year.

By the third month, I was doing so well that Orange invited me over to hang out and help with his group. I wasn’t close enough that I could actually participate in the any of the discussions or jokes, but I was at least close enough that I could be part of the party. So every once in a while I was allowed to look over the positions in his sizable book and make suggestions. He also gave me another million dollars to trade.

Orange had started a satellite group about a year earlier. Personally, I didn’t really see what the purpose of his group was. It looked to me like they were just competing with the core business of the firm. At times, it seemed like Orange’s group was competing so much on the public orders that he was actually forcing the whole firm to take a smaller bite out of its customers than it otherwise could have. Additionally, I didn’t see how Orange’s group added to the diversification of the firm. To me it just seemed like they did the same thing as the core accounts did, which if anything decreased the diversification of the firm.

After about a year, none of this seemed to matter because Orange’s group was making a ton of money. Once a trader from his group tried to help me out during my slump and pointed out that my book didn’t nearly have as much edge in it as his did.

He was right, but just looking at his book made my heart almost stop. They were consistently selling the scariest options on the board. When you do that you’ll either make a ton of money or go broke. So far they’d made a ton of money, and since ACME9 had started expanding at leaps and bounds that’s all that mattered anymore. 

By this point in time the core accounts had lost all of their risk managers. One had quit. Orange had started his satellite group. Blonde had moved on to something else and even Brown had decided to take on a different role. They filled these two slots by promoting Freddie and one of the other senior traders. That’s four experienced risk managers replaced by two inexperienced ones, if you are keeping score at home.

To make things worse, Freddie and a number of others who should have been paying attention to the firm’s portfolio were constantly absorbed with hiring new people, training new people, recruiting new people, filling out paperwork and creating busy work for new people. I’d talk to Freddie about it and mention to him that he never seemed to have much time to trade much less risk manage anything, and he’d just nod his head and agree.

Orange had not only started a new group, he eventually filled it with all new hires, about six more somewhat experienced new traders. That lifted the new trader tally to about 12 with another 15 or so just a month or so away from starting as well.

There were times that it looked to me as if ACME9  had intended to induce so much inter firm competition that they were well on there way to making sure that no one made any money. Not only were they doubling their number of traders, they were letting their old traders start to trade twice as many names. Whereas at one time, the firm would have maybe three people making trades in Intel, it now often had over 15 people trading it. It was almost as if they were doing to themselves what the separate exchanges had done when they began to compete with each other for volume back in 1999 when my career first fell apart.

The whole thing seemed mad to me but I didn’t let it bother me because I was making money, and Orange kept assuring me that there was plenty of money to go around.

For the next three weeks I continued to do really well, after four months I was up over $800,000 for the year, which was as much as I’d made for all 8 months of 2006. It was now the end of April and I’d been trading a segregated account for exactly a year. My return on capital for that period was now up to 100%. At 100% ROC, you could be coming to work naked every day and no one would say a bad word about you.

Finally, the miraculous happened full acceptance from Mr. Orange!

I Fought ACME9 and ACME9 Won: Part 11 Just When I Thought I Was Out They Pull Me Back in!