Trading the SPOOs with Patrick Slevin! Message Board

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Strategies & Market Trends : Trading the SPOOs with Patrick Slevin!

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To: Esteban who wrote (5909)	7/18/2000 8:38:51 AM
From: SE	of 7434

Unstructured...that is a good word for it. Quite frankly after leaving I was surprised that anything actually was ever transacted. Truth is, there is a very good structure in place. Pat can correct me where I am wrong, but as I recall the trading day is broken into 45 min slots, each one getting a letter if I recall correctly. To trade you simply make eye contact with someone else in the pit that is attempting to do the opposite of you and then you hand signal the price back and forth and if you agree you fill out the card with the price and the guy's badge number. These all get filed by the clerks and if the price is not in accord with the market price during that 45 min frame the trade is thrown out. The next morning there is a session prior to the RTH that is held not in the trading pit, but on the floor of the CME I cannot recall if this session has a specific name but it is where all the outtrades are settled prior to the RTH. Outtrades are where the paperwork did not line up on both sides if memory serves. Once RTH arrives, everything is cleared up and the ledgers are balanced. If you get futures magazine, look for the Zap futures ads. At least in the past they had a picture from the floor (or was it Alaron (sp) I cannot recall) with all these guys looking like OJ waving their hands. That is the pit and that is how it looks during the day. Unstructured to you and me, but to the guys in the pit, they know exactly what is going on. Amazing to watch and you walk away with a different appreciation for the fills you receive. You go in at market....the guy trading for you wants to get you the best price one would hope, but perhaps in the end, all he is looking at receiving is a fill and the first guy willing to take the opposite side, the hand signals are accomplished and the trade is done. That quick. It would be very easy for one side of the pit to be transacting at a price that could be quite different from the side of the pit your fill was just received. It is large enough that within the pit I would imagine there are several different prices going on. When I was there I was standing next to a bank of computers where the eminis were traded. The guy I was standing by pointed out a guy in the S&P pit that had a checkered shirt on. He said that is the one guy everyone watches for price. He was "the man." Interesting that that one guy was kinda in charge of where the S&P went....to the extent the floor guys have any control that is. Anyway...I am rambling.....

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