I’m assigning blame for this job death: 20% on myself, 40% on ungodly bad luck, and 40% on ACME9.
Note: These figures and all that follow are subjectively slanted toward my point of view. I’m known by all to be extremely honest and I believe it to be true to the best of my recall. Then again, I think that I should be with Julia Stiles, so take it with a grain of salt. Names have been changed in some places to protect … me.
I’ve mostly been an equity options trader. It’s like gambling on the stock market. No one in the industry will even deny it. The option gambling market dwarves the Vegas Sport Books, and the people in it are usually just about as attractive personally as the people who hang around sports books. The biggest difference is that since what they do is supposedly legitimate, they are a lot haughtier.
I should have known that this job at ACME9 was too good to be true. You are required at ACME9 to always type the company’s name as ACME9. Once I sent out an email that put a space before the 9 and had some of the letters lowercase and the company’s cofounder, Marsellus, sent me a disapproving email with instructions on the proper way of spelling ACME9 and the hope that it wouldn’t happen again. Marcellus loved to talk about attention to detail. He felt it gave us a competitive advantage.
Attention to detail is important in the options business, but I always took this obsession of his to mean – couldn’t you be doing something more productive this very second.
Anyway, I wasn’t a hot commodity at the time. There were no real options trading opportunities in San Francisco – and it was impossible to get a job anywhere else because I didn’t know anyone anywhere else, and the big firms had decided that hiring experienced traders was a bad idea.
Essentially, what the big firms in equity options trading had done for the previous 15 years or so was to teach a ton of people their business and then lose them when they realized that others would back them and they could multiply their current income by a factor of three minimum just by quitting.
It was very close to the equivalent of what happened to the skill level in poker after Doyle Brunson published Super System. The number of good players was multiplying, which meant it became harder for the old timers to win. Essentially, as I was once indoctrinated, a guy who wound up with the first firm I worked for out of college, O’Connor and Associates, was the first guy to figure out how to trade options. He was the Doyle Brunson of options.
He then taught a group of ten or so others how to do it too and they just made an ungodly amount of money. It was so easy to make money at that time, that there was literally almost no risk involved. The business was like an oil well except that it spewed out money, which is more convenient.
Well, they started O’Connor and Associates and started teaching more and more people their secret. They make a ton of money, but had high trader turnover due to defections. You were told at O’Connor that if you left and went out on your own that they would never take you back again and that was pretty much their only method of keeping people – even though they were paying relatively high salaries.
Soon some ex-O’Connor guys start Susquehanna, which does exactly what O’Connor does and itself makes a ton of money. They teach a lot more people how to trade options and similarly have many defections.
Soon this poker game that was a walk in the park and a license to steal became a really efficient business. Then it got worse. The three options exchanges went from having a monopoly on their issues to open fighting over every single name. For a while markets became absurdly tight as traders from each exchange tried to win all the business, put the others under, and get their monopoly back again.
You want to buy them at 2 – sold. What you said you wanted to sell them at two? That’s ok I’ll buy them from you for 2. It used to be I’ll buy them at 2 but, I’ll sell them at 2.38.
That 38 cents a hundred times used to be worth $3800. You do that once a day for 252 days of the year that’s close to a million dollars in profit, and at times you could easily do that in the first hour of the day. So back in the day, even a moron had a big house and a sports car.
It was bad enough when the markets started becoming a dime wide, but zero wide is like a bookie in Vegas letting you make your bets without the vigorish. Well, at that point being a bookie is no longer a normal occupation.
No vigorish would change Caesar’s Palace’s Sports Book from an efficient money grinder into the biggest degenerate gambler in the world. At that point trading equity options went from being a skill to being nothing but somewhat educated gambling.
Now that’s actually a great thing for the public, but I wasn’t the public.
O’Connor was out of the equity options business by the mid-90s and Susquehanna was essentially in a different business soon afterwards. So eventually there are tons of traders looking for work in a business that now had much less potential for profit. By the way, I majored in economics – increasing supply of and decreasing demand for labor is not a pretty picture for the job seeker.
Some firms prospered, but as I said those firms decided that hiring people with experience was a bad idea.
Why?
1. They were used to making a lot of money.
2. They had probably had already left one firm like theirs to make more money elsewhere.
3. They had probably been used to being their own boss.
4. Being your own boss, while making a lot of money, can make you really lazy
They preferred to hire new people out of college and teach them exactly how they wanted them to trade. It was cheaper, and why should they deal with someone used to making hundreds of thousands of dollars a year or more when they could just teach a college kid how to do it, pay him $35,000 and make him do all their grunt work during 1 year training period.
Actually, they were probably right. Again, sucks for me, but I understand. I could have been the Einstein of option trading for all anyone knew and I couldn’t even get an interview.
I did pretty well working for myself for about 5 years or so, but it eventually became impossible to make money on the floor in San Francisco. At one point, people started showing up at the pit where Microsoft was traded two hours before the opening just to get a spot.
If you weren’t there at least a half hour before the opening – there was literally no chance you would be able to seen by any broker. In fact, if you wanted to participate in trading the public paper, you had a better chance giving orders to a broker and having him phone you up in your office all day. It became brutal.
Let me explain, these traders were forced to show up at 4:30 in the morning and sit there doing absolutely nothing for two hours, just to have a chance to make some money. Things had definitely changed.
So I gave up for a year and thought about doing something else. Sadly, though I was a top notch options guy, I was qualified for basically nothing else.
Try getting a job at a bookstore and explaining why someone who had once made $300,000 in a year wanted a job in a bookstore.
Remember that scene in Albert Brooks’ Lost in America?
DAVID
Well, listen, I’ve just started
looking for work and I don’t want
to rule anything out but I think
I probably can find something where
I can use my ability a bit more.
Would you have another kind of
file, like an executive box or
something?
AGENT
What kind of box would that be?
DAVID
You know, a box of higher-paying
jobs.
AGENT
My goodness, I forgot. Sure.
You mean the hundred thousand
Dollar box?
Agent begins to laugh again.
Then the LTCM and Nick Leeson-Barings Bank scandal made the term derivatives trader seem about three places below drug dealer, pornographer, and terrorist on the list of most honorable profession. I didn’t think I’d ever get a trading job again.
Finally, after two more years of fruitlessly looking for a trading job, I see a posting for one at Acme9 (oops ACME9), and get a phone interview. These jobs had gotten so hard to get that the Monster.com ads basically said if we don’t call you, don’t you 600 people trying for these 2 jobs call us. Having been with O’Connor for five years, I had an impeccable resume and before this not a soul in the world had cared.
This guy Mr. Blonde calls me for my phone interview. I was in Cleveland at the time. He says hello. He asks me one question that, I swear to God, I knew the answer to when I was a senior in college, and then immediately tells me to come to Chicago for an interview. I couldn’t believe it.
So I come to Chicago and do really well in the interview. Mr. Blonde interviews me first and says “I would hire you right now, but you have to talk to three other people. They give me a math test, which supposedly no one ever has time to finish. I get a perfect score despite talking for three minutes with Mr. Brown, who I had met a few times when we were both at O’Connor.
Mr. Brown has leveraged what he learned at O’Connor about a million times better than I have. He used to be below me at our firm and now he can buy me like a raffle ticket. I knew I should never have accepted that transfer to San Francisco.
The whole day goes perfectly. A partner named Mr. Orange gives me exactly the salary I ask for and assures me that I’ll be making a ton of money in the next few years. I’m ecstatic. Really, after the previous three years, I would be willing to give a limb to these guys. I was that grateful.
Driving home, I talk to Alabama, from human resources. She asks me what I want for moving expenses. I say whatever you think is fair.
She says how about $2,000. I say sure.
She tells me that I am the easiest person she has ever negotiated with.
I had about a month before I started and they mentioned that they had an online course they wanted me to look at, which would all be really easy for me. I got the impression they didn’t really care if I looked at it and I figured it would be short enough for me to zip through in an hour.
I put this online course off until about three days before I started, which was a bad idea, because the password they gave me didn’t work and I couldn’t get to the course from my computer.
When I start work, I eventually find out that it’s like 16 chapters long, with tests on each chapter that you have to pass. It eventually took me about 9 hours, and I pretty much just took the tests. So I’m already nine hours behind on my first day. Oops.
ACME9 had hired 6 or so new traders and have about seven days of classes prepared for us. Basically, just about every person working at the firm was scheduled to talk to us for at least an hour. ACME9 loves tools and have like 10 of them that we need to learn how to use, as well as how the firm works and what their rules are.
This is obviously necessary, but also unbelievably boring. To make matters worse, they’ve hired this dude name Spivey. Spivey has an accent, stutters, and insists on asking a question every 30 seconds because he thinks he is impressing people with his desire and knowledge.
Given his accent and his stutter – it seriously increases the length of each person’s speech. Each of his questions could take almost a minute and a half to ask. Please let me at this point honestly assure you that I didn’t dislike Spivey for his stutter, I disliked him because he was a pompous ass, and though it may strike me as being someone who discriminates, it really made his pomposity even more annoying.
His usual question sounded like the following being read by someone near the midpoint between Stuttering John and John the Stutter from the Howard Stern show:
Actually (I won’t imitate it here but about every fourth word he said was “actually” – it was like his mantra to get him back on track.), actually, what I’d like to know is whether you have modeled the regression effect of fat tails in your lognormal Black Scholes model, and if so, what would you say has been your relative amount of substantive effect.
All fucking day long!
Dude, I smoke, and every time you ask a question my smoke break in between speeches gets about half as long and another six minutes further away.
After only three hours, I want to strangle this guy. I would again want to strangle this guy on about 17,000 occasions in the next two years.
Day two was a hundred times worse.
On about Spivey’s 40th question (about an hour), my right side starts to hurt.
An hour later, now my right side hurts really badly!
I’m trying to figure out whether appendicitis is the left or the right side. During a break, I try calling my mother to find out.
About an hour later, Elle Driver, from clearing, is giving a speech. Clearing is both really important and really boring. My right side hurts like nothing has ever hurt before and I am sweating like Albert Brooks, but this time in Broadcast News.
Later, Elle Driver told me how bad I had looked until I finally got up and told someone I needed to go to the hospital. I’ve had a few operations and this was literally the worst pain I’d ever felt and because I didn’t want to look bad at my new job, I sat through it for an unbelievably long time. I really didn’t want this to start out badly.
At the hospital it took about two hours before they told me I had kidney stones. Finally, they shot me up with morphine or some other opiate and I was in space. They then give me tons of Vikadin and told me that I should be able to pass it in about two days.
They send me home but I’m back in about seven hours again in agony and they admit me to the hospital for a day and a half.
Wasn’t there an armed forces slogan once sort of like: What a great way, what a great way to start?
