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Love of the Game: Former CME member starting over


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Love of the Game: Former CME member starting over

  #21 (permalink)
 
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 SMCJB 
Houston TX
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John47 View Post
The seat situation is a big part of what draws me to the ES....42k for an IOM seat is very reasonable.

200ish RTs/month pays for a lease.

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  #22 (permalink)
 John47 
Pittsburgh
 
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SMCJB View Post
200ish RTs/month pays for a lease.


Last I looked...which was prob 8 years ago....a leased IMM seat was 2 or 3k per month and you paid I wanna say $0.53 per side all in....it maaaaaaay have been $0.27 a side. Regardless, as an IMM member I paid $0.105 or $0.11 per side all in. For that you need a seat. I was also a part of the CME's market maker program....I made a market in the ED double butterfly spread and got a few extra rebates.

To get an IMM seat at a 210k price....maybe you could get a bank to finance 75 or 100k at most but other than that its liquid cash you have to put in. That edge was solid gold when it's available but the barriers to entry are huge.

There are plenty of skilled traders doing as well and better in markets that don't require such fees.

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  #23 (permalink)
 John47 
Pittsburgh
 
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John47 View Post
Nuts volatility in the Euro after the FOMC. I've never touched the currencies so this is new to me. Now that Euro has broken through that ~.12327 ish range I think there's a high probability we trade to around 1.2283.






Are you kidding. To the damn tick. This is probably one of the most aggravating things for me about the Euro and why I don't bother to research in the evening....it plays out overnight and I have to do it again in the AM anyway.

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  #24 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
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John47 View Post
Last I looked...which was prob 8 years ago....a leased IMM seat was 2 or 3k per month and you paid I wanna say $0.53 per side all in....it maaaaaaay have been $0.27 a side. Regardless, as an IMM member I paid $0.105 or $0.11 per side all in. For that you need a seat. I was also a part of the CME's market maker program....I made a market in the ED double butterfly spread and got a few extra rebates.

To get an IMM seat at a 210k price....maybe you could get a bank to finance 75 or 100k at most but other than that its liquid cash you have to put in. That edge was solid gold when it's available but the barriers to entry are huge.

There are plenty of skilled traders doing as well and better in markets that don't require such fees.

IOM and IMM are very different. You mentioned IOM above which is index futures and options. IOM leases are $300 month, but leases do not not get the full discount ownership does, it does still save you 70c/side. When seats no longer had floor trading rights/when floor trading rights became worthless, seat leases and prices crashed.

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  #25 (permalink)
 John47 
Pittsburgh
 
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SMCJB View Post
IOM and IMM are very different. You mentioned IOM above which is index futures and options. IOM leases are $300 month, but leases do not not get the full discount ownership does, it does still save you 70c/side. When seats no longer had floor trading rights/when floor trading rights became worthless, seat leases and prices crashed.

I think I misread what you were trying to say.


Seat prices have been pretty volatile ever since I've been aware of them...15 or 20 years I guess at this point. Alot of things contribute to the volatility....probably most notably the fact that is a market where an often 6 figure asset is traded, usually with only 1 or 2 buyers or sellers posting a market. 50 or 100k swings in the last traded price were nothing unusual in CME or IMM.

They had a big run up around 2000 when the CME went public....certain (and I don't know which) seatholders got something like 16,000 shares of CME stock on the IPO.

I believe the price really got pressured down when there was some kind of a rule change allowing 'self clearing firms' I think they were called. Don't quote me here but I think it was something to the effect that a group (prop shop, firm, whatever) could own I believe 6 or 9 seats, and create a 'self clearing firm'....which gives that firm member rates for every trader. Which of course may or may not have been exactly the rate that trader paid the firm. Regardless...it changed things. When the floor was the game, the normal progression was clerk, runner, then hopefully get backed by somebody and trade well enough for a few years to buy a seat and become independent.

I think barely any new traders make CME membership a career goal. I suppose for many it doesn't make sense. Even for me, trading an edge and style where it did make sense....it still became not worth it....I was making great money...but not enough to justify having 500k of my net worth tied up and swinging 100k or so in a day. As I mentioned I had personal overhead +10k per month, so when making that nut plus enough for me to live well got pressured....and seat prices started to slip....though it was like a dream coming to an end for me....it was definitely the right choice to hit the bid and cash out.

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  #26 (permalink)
 
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 wldman 
Chicago Illinois USA
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wldman identifies 100% with this members initial post. This is exactly how it works, has worked, in the best trading city in the world. This experience shared here is the quintessential story of so many from the Chicago pit trading communities.

I encourage every member to follow both the posts and the logic. Learn from the experience. This should be a great and reliable journal thread.

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  #27 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
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Thanks Given: 4,375
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John47 View Post
I think I misread what you were trying to say.


Seat prices have been pretty volatile ever since I've been aware of them...15 or 20 years I guess at this point. Alot of things contribute to the volatility....probably most notably the fact that is a market where an often 6 figure asset is traded, usually with only 1 or 2 buyers or sellers posting a market. 50 or 100k swings in the last traded price were nothing unusual in CME or IMM.

They had a big run up around 2000 when the CME went public....certain (and I don't know which) seatholders got something like 16,000 shares of CME stock on the IPO.

I believe the price really got pressured down when there was some kind of a rule change allowing 'self clearing firms' I think they were called. Don't quote me here but I think it was something to the effect that a group (prop shop, firm, whatever) could own I believe 6 or 9 seats, and create a 'self clearing firm'....which gives that firm member rates for every trader. Which of course may or may not have been exactly the rate that trader paid the firm. Regardless...it changed things. When the floor was the game, the normal progression was clerk, runner, then hopefully get backed by somebody and trade well enough for a few years to buy a seat and become independent.

I think barely any new traders make CME membership a career goal. I suppose for many it doesn't make sense. Even for me, trading an edge and style where it did make sense....it still became not worth it....I was making great money...but not enough to justify having 500k of my net worth tied up and swinging 100k or so in a day. As I mentioned I had personal overhead +10k per month, so when making that nut plus enough for me to live well got pressured....and seat prices started to slip....though it was like a dream coming to an end for me....it was definitely the right choice to hit the bid and cash out.

I remember similar fluctuations in NYMEX seat prices. That was then though, and this is now. Now that seats no longer offer floor trading privileges, the only use for them is reduced fees and they have become a declining asset. Last Sale on an IOM seat was $43k. Current lease price is $300/month. Since it saves you 71c/side in fees, 211 Round Turns/month pays the lease.

CME Membership Pricing

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  #28 (permalink)
 
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 wldman 
Chicago Illinois USA
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Every year end, when we look at the year to come, the taxes and the expenses, we consider seat ownership for its impact on expenses AND as an investment.

I have NEVER gotten this one right, not once.

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  #29 (permalink)
 John47 
Pittsburgh
 
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wldman View Post
wldman identifies 100% with this members initial post. This is exactly how it works, has worked, in the best trading city in the world. This experience shared here is the quintessential story of so many from the Chicago pit trading communities.

I encourage every member to follow both the posts and the logic. Learn from the experience. This should be a great and reliable journal thread.

Thanks for the words man. Did you also spend some time in Chi around the exchanges?

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  #30 (permalink)
 John47 
Pittsburgh
 
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Trading: ES, GE, M6E
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One trade today, one winner +15 ticks.

I had an errand to run for work early in the AM, so my plan was to wake up, do my research, run my errand, then come back to begin trading at the 9:30 EST open.

When checking for news, I saw the ECB mins coming at 12:30, but did not realize the calendar was in EU timezone. So I missed the AM rally, then waited, expecting to get some volatility to trade from the release. I was googling it online and realized my mistake. Foolish, but thats why I'm spending this time focusing on the daily routine and prep. Getting all of that solidified before I risk anything substantial is paramount.

The trade I took was not bad. I was stalking a long when 6E was trading above 1.2335. I wanted to buy a little closer to my lean of 1.2327, and I thought that pullback from the high was just too neat and clean and we'd get a little fake out and I could get long cheaper. Not the case, we rallied. 6E goes 1.2357 bid with no pullback and I hit, anticipating that it was very low probability we break the high of day on that move with no volume. Was able to buy 1.2342. This would have been a really nice trade if I would have sold 2 and scaled at 1.2350 and 1.2340. Getting long is looking interesting again and I'm wondering if we rally into the close. I'm looking for the 6E to rotate back to the highs on the daily chart.




A quick word on the Micros....I have to say I don't think this market is bad. The fees are exorbitant but its a very inexpensive way to trade a legit CME product and practice trading.

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Last Updated on September 9, 2018


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