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…
The Rock Island Line is a Mighty Fine Line
Many of today’s CBOE employees may not be aware of the fact that our building was once the site of the LaSalle Street Station, an historical railroad station. The station had a long history dating back to 1852 and had been rebuilt a number of times. The most recent building dated to 1903 and was a set for Alfred Hitchcock’s North by Northwest starring Cary Grant and Eva Marie Saint, and for The Sting, starring Paul Newman and Robert Redford.
I joined CBOE in 1980 and teamed up with Phil Slocum to head up a project to plan and build a “trading factory,” on the LaSalle Street Station site. A “minor” obstacle was that we did not own the property. The LaSalle Street Station was owned jointly by two railroad, the Penn Central, which had recently emerged from bankruptcy, and the Rock Island, which was in the midst of bankruptcy. Title to the station hadn’t been examined in 100 years. It was likely that Penn Central could evidence good title but Rock Island could not. Long time competitors, the two railroads were not on speaking terms.
Penn Central wanted to sell its interest while the Rock Island, wanted to lease, but was willing to grant an option to purchase at some future point. In addition, the RTAy had taken over the commuter lines of the Rock Island and needed both a passenger terminal and a way for passengers to walk through to Van Buren Street. Further complicating matters was that Henry Crown led a group of investors, which had bought up Rock Island bonds for pennies on the dollar, betting that the bankruptcy judge would liquidate the railroad. In addition to meeting our needs, any agreement needed to satisfy the bondholders and the RTA, the Penn Central board, the Trustee of the bankrupt Rock Island, the U.S. District Court and the Illinois Commerce Commission.
Many people in the real estate world thought it was a deal that just couldn’t get done. Two exceptions were, Larry Blum, who chaired the CBOE’s Facilities Committee and Bob Wislow, CEO of U.S. Equities, who wanted to build what is now One Financial Place. Wislow had approached CBOE with the idea in the first place and had his own set of needs for the project to work. So, for the first year of the project Phil and I spent our days with architects, engineers, and member committees, and our evenings with Blum, Wislow, and lawyers involved in the property negotiations, who might be politely described as “combative.”
There will be no surprise ending, since you come to work here every day you know that somehow it all got done. U.S. Equities acquired the railroad properties and sold its rights in the station site to CBOE. CBOE granted U.S. Equities and the RTA easement through and along either side of our building. CBOE also sold certain air rights over our building to U.S. Equities, which allowed them to build a taller office tower. U.S. Equities agreed to build and maintain a public plaza to the west of our buildings in exchange for the right to operate a parking garage beneath it. CBOE went on to build the building, and while that has its own set of interesting stories, to me, acquiring the land was one of the most interesting aspect of the whole project.
I don’t recall the date, but President George HW Bush was set to visit the CME and walk the trading floor with all the pomp that was going to require a full media entourage, etc. But guess what? George Wendt (from Cheers!) came to CBOE’s floor that same day – he was in town performing in a play. Jim Brophy, a really nice member, had been a roomie with George Wendt in a private school and they’d remained friends. Jim invited George for the drop-in. It was my privilege to be part of the escort group that walked him around and into the desk area of the OEX for a close-up view. As they so often do, the whole bunch of pit traders in unison had planned something special, and they saluted him with a resounding chorus of “NORM!” I felt we had not been outdone by the Bush floor walk at CME. George Wendt is a Chicago icon and we were honored to have him, plus there were no secret service headaches or worrisome protocols.
ZIP It Up!
In the early ‘90’s I worked for a small firm. With only a handful of employees we all wore different hats. I was on a seat back then, but I also was a phone clerk, runner and trade checker. One day I had taken a market order over the phone, ran out to the OEX pit and “banged it out” which is what we called filling an order really quickly in open outcry, then I ran back to the booth where I reported the trade, keypunched the execution so it would go to trade match and resumed my crossword puzzle. When I came in next day to do the morning reconciliation and trade checking I was horrified to see that this trade, done with a single market maker on the opposite side was an out-trade. When there is only one contra party, there is no additional source to confirm what was actually traded and the error is usually split. It looked like it could be a $50,000 out trade. With my heart in my stomach I waited for the market maker to show up. When I finally found him, dejected and with a big lump in my throat I asked “Do you really know it this way?” When his response was “Your fly is unzipped” I was finally able to properly exhale, I was ecstatic, he was more concerned about my appearance than my out trade which meant he would “go my way” I was so happy I almost left my pants unzipped all day.
D.S. Firm employee from 1981 to 1994, CBOE Employee since 2003
Under a Ducks Wing – You Are in Our Family
I started at the Exchange as a Price Reporter in 1980 and what I remember most is the chemistry of the floor community. As a new employee, I initially felt overwhelmed, but in pretty short order, some fellow CBOE employees that had been here a while took me under their wing. You soon began to realize you were part of a family. I remember the different times of the day on the floor when you could count on the entire floor shouting at once and that was 11:11:11 “Little Sticks”, 1:11:11 “Big Sticks” and 2:22:22 “Ducks”, sometimes you’d hear quacking sounds. I also miss the paper flying in the air, on the floor, and at the end of the trading day on Friday to put an exclamation point to the end of the week.
Party Like It’s 1980
So here I was, 24 years old, and starting my second “real” job after college. I started at CBOE in September of 1979. Two weeks after I started, a massive fire swept through CBOE’s executive offices, stopping just short of the Accounting Department.
Nevertheless, there was black soot on everything that was left exposed. My boss called me over the weekend to tell me that I should report to work on Monday, but to wear jeans. We had a massive cleanup to do. I came to work as directed and wondered what I had gotten myself into. After that, the Accounting Department moved two or three times in four months, like nomads searching for a home. I became very proficient at packing and unpacking my office, and I was tired of smelling like a well-used fireplace.
The Accounting Department was not much different from other departments; everybody had to make big sacrifices. CBOE’s top executives knew what we were going through and early in 1980 CBOE threw a “Fire Party” as a way of saying thank you to staff. The party was held at the Marriott on Michigan Avenue. The Facilities Department had melted phones and typewriters (remember those?) on display as well as a continuous slide show that depicted the destruction. I wonder where those slides are now. They also brought in a full-sized antique fire truck for the party that they somehow managed to get on the 3rd floor of the Marriott hotel. Our CEO, Wally Auch, got up on the fire truck and started singing midway through the evening. It was one of the best parties I ever went to, and that convinced me that my decision to work at CBOE was a good one.
Alan D., employee since 1979
Be sure to visit the CBOE 40 hub daily as new CBOE Memories stories will be added throughout the month.