Stocks & Commodities V. 26:5 (46-53): Trading Options With Anthony Saliba by Jayanthi Gopalakrishnan & Bruce Faber

Trading Options With Anthony Saliba by Jayanthi Gopalakrishnan & Bruce Faber

Anthony J. Saliba began his career trading equity options as an independent market maker at the Chicago Board Options Exchange (CBOE) in 1979. Over the next decade, he gained extensive experience in trading currencies, equities, and Standard & Poor’s 500 and S&P 100 contracts. In each of these markets, he emerged as a leading and respected presence, and quickly acquired a reputation as one of the top traders. His trading accomplishments, most notably his success during the market correction of 1987, earned him a place in the national bestseller Market Wizards.

Due to his innovative trading ideas, Saliba has become an internationally recognized consultant on the emergence and function of electronic markets and trading systems. He is often quoted in industry publications, including The Wall Street Journal and Financial Times, and is frequently invited to speak at industry forums. He has founded numerous industry-related companies including LiquidPoint, a broker–dealer offering options execution/facilitation for many large Wall Street firms; Saliba Portfolio Management, a portfolio management firm providing state-of-the-art investment enhancement techniques through the use of options; and the International Trading Institute, a derivatives training company. His latest book, Option Strategies For Directionless Markets, is available from Bloomberg Press.

STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan (JG) and Staff Writer Bruce Faber (BF) interviewed Anthony Saliba on March 11, 2008, via a conference call.

Tony, why don’t you tell us about yourself and how you got interested in trading options.

I took a job as a stockbroker right out of college. Since options were the latest thing, they gave it to the new kid to read and learn about. This was in 1977 and options had been around for about three and a half years, but most shops — and this was a small brokerage firm out of Indianapolis — weren’t dealing with options at all. But these were two fairly progressive guys who said, “Hey, kid, you should learn about options. It’s the new thing. You’re right out of school, and it fits what you probably want to do.”

So I read everything I could get my hands on about it, and took a liking to it. There were a bunch of market timer– and daytrader-sort of magazines that were circulating at the time, and I subscribed. It was a way for me to learn more than the average person. It was interesting, and I actually developed a small clientele while I was there.

One day I asked one of the old guys smoking a cigar — back then you could smoke in the offices — “Who makes all the money in this industry?” At that point I was out selling economic development bonds in rural Indiana to farmers. Back then a big day on Wall Street was 11 million shares, and these days we do that in the first 30 or 40 seconds of the open. Anyway, the old guy said, “You’ve got to be down on the floor.” And I said, “I know what that means.” I grew up in Highland Park, which is a northern suburb of Chicago. So I came back to Chicago to be with my roots.