I’m taking some time off on what I’ll call “a well-deserved vacation.” But I wanted to share this blog with you, well, while I’m on vacation.
When I was a kid, my family never really went anywhere. There was one time my grandfather took all the grandkids to Disney World. Other than that, we pretty much stayed home. Once I started trading and earned a little money, I decided the family I planned to have would be well traveled. And, indeed, travel has become our family passion.
The Traveling Trader
One of the first trips Kathleen and I ever took was when she was pregnant with Sam. We went to Phoenix to visit some friends in late fall 1998. (And, yes. There’s a trading point here. Stay with me.)
I was about a year into my career as a market maker at the time. I’d left the trading floor for our trip carrying all my positions with me, instead of whittling them down to flat. (I didn’t want to miss any trades, so I kept trading right up till the day I left.) So that meant I had to wake up nice and early each day of my vacation and call my broker to put in my hedge trades before the open. I’d write them out on a lined, cardboard card and keep the card with me all day. I’d have to take calls or call in myself several times a day to see what was filled and what new hedges needed to be entered as a result and then update my card. Sort of a working vacation, I guess.
A few days into the trip, Kathleen and I decided to drive up to see the Grand Canyon. Being my first time in Arizona when my friend asked me if we wanted to borrow some jackets, I thought he was crazy. It’s the desert, for goodness sakes! Fast forward two hours and we were driving in the scariest white-out snowstorm of my life. We had to pull over and hope to not get rear ended because we couldn’t see two feet in front of us.
After getting north of the storm, we returned to a bit warmer climate. It’s pretty up in Northern Arizona. Very different from Southern AZ. We found ourselves driving through some beautiful but barren landscape. I mean, there was nothin’ there. Mind you, this is 1998 we’re talking about too. That’s the year they rolled out the hot new G3 cellular network. While we were driving through this open country, guess what happened?
Knee Driving and Unhedged Deltas
My broker called me (on my flip phone) to tell me about a fill. Good. I was long gamma and every time one of my hedges got filled, I was locking in a win. Time to put a checkmark next to it on my card and tell the broker to add another hedge at a new price.
So, I had my trade card in my left hand, pen in my right, phone pinched between my ear, and my clavicle bone and my knee on the steering wheel. Good thing there weren’t any other cars for miles! Not a good scene. To boot, it was at that moment, when… You guessed it… The call dropped. Yeah. So that happened.
That ended up being pretty stressful for the remainder of the drive. I had to wait about an hour to get back into a cellphone coverage area, not knowing my positions or what the market was doing. And we were approaching the close. So, if I didn’t get all my deltas flat by the end of the day, I’d start the next day unwillingly long or short deltas. Kind of a big no-no for purist market makers.
I will tell you, that was not fun. Not smart either.
Take a Trading Vacation Too
It was then I realized it doesn’t make sense to have positions on when you’re traveling. Vacations are for recharging. Relaxing. Destressing. The market with all its opportunities will always be there. But it’s good to get away from the market now and then. Clear your mind and create space for new ideas. You end up trading better when you return to it refreshed and ready to take it all on again.
Enjoy your summer. I’ll share some more stories once I’m back in town.