Options: Calls and Puts

Finally, options! This was my bread and butter. As part of my firm, I was an options market maker, that is, I provided liquidity (competitive bids and offers) in the options market. This role was partially possible given the extensive understanding of options and their risks hammered into us via…

Contract Specifications

Given the nature of my job as a trader, it was of utmost importance to know everything about the product you were trading. As such, the details for the examples provided in this blog post can be a little bit daunting. To further complicate things, there might be some words…

Pricing a Future

There are a lot of variables to consider when we are talking about pricing a forward/future. For now, we'll simplify the problem and focus on the few key variables: the risk-free interest rate, the time until delivery date, and the underlying price. Since in a forward/future contract, we…

Budapest, Hungary

My wife and I spent a few days in Budapest this past month. I wasn't quite sure what to expect from Hungary but by the end Quick History of Hungary Hungarians were nomads from the eastern part of the Ural Mountains (deep in current day Russia) who settled on the…

Forwards and Futures

In the past few months, we've talked about fundamental vocabulary, the idea of trading, making markets, retreating, and the different markets that exist. With the fundamentals of trading out of the way, let's dig into some of the slightly more complicated concepts: forwards and futures. A forward contract (or simply…

Securities Exchanges Regulations

With the recent rise of popularity in investing in cryptocurrency, I wanted to write a post about the dangers the lack of regulations in an exchange. While we are seeing a move by the world governments to start to identify crypto-trading as an investment (thereby demanding folks pay a capital…

In the Pit. On the Screen.

On the exchanges where I traded, there are mainly two types of trading. One takes place on the floor (in the pit, downstairs, open outcry, etc.) and another takes place on the screens (electronic trading, upstairs, etc.). In the Pit Let's start with trading "in the pit" (officially…