There [on the exchange floor], 50 or 60 grown men stood leaning in each others' faces shouting as loudly as they could in primordial tones of voice that I had never heard before, except maybe the one time I tried to take a shrimp away from my cat, Paco. Veins bulged in the men's necks. Their eyes seemed ready to leap from their sockets at any moment. They waved their arms threateningly at one another in some incomprehensible code.
It was like a cockfight without the cocks. A crowd this angry couldn't help but come to blows at any moment.... My heart was in my throat. What was going on here?
The men were trading cotton.
Albert Pacelli, 1991
 
A first-time visitor to any major commodity exchange will see a horde of screaming, elbowing traders packed densely into an open space as big as a sports stadium, while a deafening roar painfully presses the eardrums. What is a homely workplace to some would count as Dante’s Seventh Circle of Hell to most. Recently, several books reported for the first time on the strange rituals of exchange floor social and professional life (Tamarkin, 1985; Kleinfield, 1983; Marks, 1988).
Becoming a good option scalper requires several skills and assets. Good options trading is preeminently a numbers game and requires a good numbers sense. An ability to do quick calculations repetitively, sometimes in one’s head, is a distinct advantage. Option traders frequently enjoy playing number games (bridge, chess, go, poker) and are good at them, although few seem interested in gambling outside of work aside from occasional small but popular informal sports pools.
Physical stamina and the reflexes of an athlete may be just as important as good mathematical intelligence, for floor traders work in a harsh physical and personal environment where competition is intense. Self-esteem is also necessary, for new as well as old traders are likely to suffer direct personal insults on a regular basis or discouragements from other traders who would like to minimize competition. Traders are not known for keeping their voices down or using polite language when they are verbally abusing another trader, fines notwithstanding. There is always someone in any crowd who has difficulty mastering maturity, although the worst offender is likely to be different for each person. Trading pit manners are often nasty, brutish and loud. A new trader must have sufficient self-esteem and perseverance to withstand this kind of occasional psychological warfare and not let himself become emotionally involved.
Correspondingly, a strong cooperative style is a plus, because trading involves being on good terms daily with many traders, brokers, and support staff. Many option traders are partners in option partnerships and must work cooperatively with other partners in a high-stress environment. Traders with bad tempers or those who are unwilling to compromise frequently do not have good floor rep­utations and risk losing business in the long run.
A sound sense of business conduct and morals must also be considered an important virtue. Most exchanges now require new members to take an ethics course, conducted by lawyers and surveillance officials, that stresses the serious consequences awaiting a trader who breaks the rules. Although the overwhelm­ing majority of floor traders are scrupulously honest, floor traders may eventually encounter some individuals or situations where violating exchange rules may result in some unethical or illegal profit. Unethical and fraudulent traders, however, will almost always be discovered over a lifetime and suffer large fines or expulsion, as they should in every profession.
The professional path of market makers is likely to be varied, and there are several ways to start on this career. For upstairs market making in electronic screen-traded over-the-counter financial options, market makers are employees or partners of large investment hanks, international banks, or other trading firms, and often start as clerks or asnistant traders. Market makers on option exchanges are sometimes regulated specialists, as in stock options, or may be independent traders trading for a partnership or their own account.
Capitalization of many of the independent market makers is relatively small. Current full memberships on futures and option exchanges in the United States range from $1,000 to $500,000 (with the New York Futures Exchange probably the lowest, and the Chicago Mercantile Exchange the highest). Other memberships, including special option memberships, may be almost anywhere between those two extremes, although perhaps half of all option memberships in the United States are under $50,000. Sometimes option memberships may be leased, with leases currently running from 1 to 2 percent of option seat value per month. In addition to seat capitalization, option market making requires liquid capital to meet basic margin requirements. This is hardly ever less than $25-50,000 as a minimum. For over-the-counter option markets, capital requirements may be significantly higher to handle large institutional trading.
The 1980s was the second decade of continued strong growth of option trading in the United States. This has been the spur to the expansion of option markets. European and Asian option markets are following the growth path of the United States, promising that the 1990s will be the third consecutive decade of growth in world option markets. Many of these new markets may prove to be among the best option markets for market makers.
John Maynard Keynes once called trading a game. If this is true, it may not be whether one wins or loses that counts, but whether one ever ventures to play. For those who do, good luck.
 
Appendix
Option Software for Market Making
To keep track of the risks and profitability of large option positions it is almost always necessary to use an option analysis computer software program. Although hand calculations are not impossible, a computer can evaluate instantaneously a constantly changing option position over a number of risk assumptions. Also, software is indespensable for printing fair-value sheets upon which market- maker quotations are based.
Listed below are some option software vendors who appeal to option dealers and market makers. Listing in this Appendix does not imply endorsement of services but is provided for informational purposes only.
 
TRACK DATA
The Option Group (TOG)
61 Broadway Suite 2301
New Yrk, NY 10006
212-943-4555
 
COMTEK
141 W. Jackson Blvd. Suite 1531-A
Chicago, IL 60604
EPSILON OPTIONS
Box 3207
Church St. Station
Now York, NY 10102
 
OPTIONS AND ALTERNATIVES SOFTWARE
Chicago Mercantile Exchange Marketing Department
30 S. Wacker Dr.
Chicago, IL 60606
312-930-1000
 
REUTER SCHWARZATRON
61 Broadway
New York, NY 10006
212-493-7100
 
SYSTEMS DEVELOPMENT CORP.
RAMBO
141 W. Jackson Blvd. Suite 1240-A
Chicago, IL 60604
312-408-1111
 
OPTIONOMICS
3191 S. Valley St. Suite 155
Salt Lake City, UT 84109
1-800-255-3374

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