April marks the 40th anniversary of CBOE and the options industry. As part of our month-long anniversary celebration, we’ve invited the CBOE community to share their memories of CBOE and four decades of options trading. These are their stories…
Good Morning Mr. Hosty
When I first started working on the floor of the CBOE in September of 1977, one of my neighbors from home was a floor broker, Jack Hosty. Every time I was in his crowd, I would say hi to Mr. Hosty. This went on until the end of December, when Mr. Hosty and I were walking off of the floor together, and Mr. Hosty asked me if I had made any News Years Resolutions yet? I told him no, I had not. He said to me that my resolution will be that on Monday morning, I was to begin to call him Jack, as he has received too much grief in the pits from my “Mr. Hosty” greetings. From then on, even if I saw Jack and his wife at church, or any social functions, I would always say hi to Jack….and Mrs. Hosty.
As Good as I Hoped It Would Be
I can recall my first day on the trading floor being filled with excitement, or rather, years of anticipation coming to fruition.
I went to college in Chicago, as a finance major. On my lunch breaks–on almost a daily basis–I’d visit the exchange’s visitors gallery and watch the action of the traders on the floor with a birds-eye view. This, of course, was back in the day when the visitor’s gallery was open to the public. I’d watch the traders shouting out to each other, trying to figure out what they were doing. I’d wonder what the different colored jackets meant. I’d watch with amazement the speed at which floor traders’ minds must work to pounce on trades brought to the pits. I’d watch everything.
When I finally got my opportunity to first step foot on the trading floor, it was probably the most exciting day of my life. I worked as a runner, then a clerk. It wasn’t until four years after that when I made my first trade. Throughout my long career as a floor trader, I’d often look back on these years of wonder as I worked towards fulfilling the goal of being a trader on the floor of the CBOE.
If I had it all to do over again, I wouldn’t change a thing.
-Dan P, former trader and employee
Baskets and Volatility – In the Morning
There are two events that stand out. The first was the introduction in 1983 of cash-settled options on what was known at the time as the “CBOE 100” or OEX. It was the first option on a broad-based index and followed the introduction in 1982 of the futures on the S&P 500 on the CME. The next major index introduction was the original VIX in 1993 (based on S&P 100) and its reconfiguration in 2003 (S&P 500).
The second event was the market crash of 1987. We never thought the market could go down 500 points in one day. it was an eerie event that triggered a number of studies that we were involved in. As an aftermath, SPX settlement moved to the morning while OEX stayed at the close.
-JL, Staff member since 1979
The Paper Chase
One of my most exciting and memorable moments here at CBOE was the Crash of 87. We still had paper orders. It was very busy and stressful, but at the same time, exciting. There were at least 500 traders in the OEX Pit at that time, and I can remember the day after the crash it took hours to open. Days after the crash we worked late, writing up paper orders. Paper orders were a lot of work, and electronic trading made everything much simpler and efficient.
-Mary M., started in 1982
Be sure to visit the CBOE 40 hub daily as new CBOE Memories stories will be added throughout the month.