Inspired by Comedians Riding in Cars Getting Coffee, the following posts are old yarns from the glory days.
Episode 1 - The World Bank Debacle
We did a fair amount of business for the World Bank in that they were a LIBOR minus borrower and could ramp up some simple rolls in Eurodollar futures. My boss, a notorious mad man, that made Jordan Balfort look like a piker, had been "missing" from the floor on a multi-week bender, calling in every few days only to sign off with, "You haven't heard from me."
During his absence, the pit configuration "rolled." To explain, as the near by contract got close to expiry, the volume in the second option would over take it and the contracts would change places in the pit. Upon returning to the floor, the right fine gentleman took his spot next to me on the desk and quickly hit the direct to the WB to jaw bone up his attendance. The MD obliged by telling BSS (I will use 2001 Space Odyssey encryption of his acronym out of respect) to sell 650 some odd spreads. Now, in Eurodollars, when you sell a spread you always sell the more forward contract and buy the deferred, regardless of price. Without missing a beat BSS began blasting 100 lots in the front of the pit and grabbing 2nd option - not realizing that while he was over-indulging for 3 weeks the stations had shifted.
I was busy with my usual cumbersome Swaps non-sense but a few "hundy" into the barrage, looked down at his order and banged my hand on the desk and pointed the correct position of the months. From there, all hell broke loose. Rather than just go to the spread market and square up the proper position, he stormed down to the pit and grabbed our filling broker - fortunately a good friend - by the neck and started shouting "Get me out, get me out" in a fashion only Mortimer Duke could appreciate.
Returning to the desk, under the shocked and trying not to laugh faces of all around, he then demanded that the rest of us, "Help him trade our way out of this !" And proceeded to throw every nearby desk object at our heads. Now let's be clear, there was a few thousand dollars down the tube here but a scratch not a flesh wound by execution standards, not for long. A flurry of stupid 50 lots later we were scratching and half-ticking a giant mess. What should have been $2500.00 in damage quickly spiraled to roughly $15,000.0!!
Once the position was flat and the dust had settled, he bolted across the street to our office with a very Trumpian explanation to the Head Honcho of what went down. That is, it was a big mistake by the World Bank trader and us, not him. Another long absent bender followed, eventually leading to his removal from the firm. Good Times.
Tomorrow- The Infamous Skittle Incident