Okay, you asked for it and I'll try to do my best.

First a little history and a few groundrules. I have been a professional trader for 20 years. By professional I mean I have been employed as a trader during that period other than a few years when I went on my own and formed a partnership. I started in June of 1987 as a market maker in the US T-Bond options pit at the Chicago Board of Trade. After about 7 or 8 years of that I moved to spreading interest rate futures (2yr, 5yr, 10yr, Tbond). Then I moved to the Chicago Mercantile Exchange where I was involved in some arbitrage opportunities as well as spreading back month Eurodollars against 5 year notes. Then I moved off of the floor when electronic trading became more prevalent and traded a variety of speculation and arbitrage opportunities.

Currently I do a lot of different stuff. My main responsibility is managing an in house stock options portfolio. Luckily this isn't real time consuming so I have the opportunity to get involved in some arbitrage as well as speculative programs I have created and I also scalp spreads and outrights in a variety of markets. I am more of a jack of all trades rather than a specialist. I will trade anything that looks like an opportunity however there are some markets I like better than others. Over the years I have traded virtually every commodity and it's accompanying options in some form or another.

I won't speak specifically to many of the arbitrage things that I do and I won't discuss compensation other than to say I do okay.

What is the minimum intelligence level necessary to become a successful trader (assuming you have very good teachers)?

Do you think a prop shop is an ok way to break into trading for a living?

No idea really? I think anyone who is focused and willing to learn could do it. The main part is understanding the risks involved and being disciplined.

What returns were expected of you in the various assets?

I honestly don't know much about them. From what I understand you get some rudimentary training but are required to put up your own money. Is that right? Depends on what they get I guess? I think most of them basically want to churn you for commissions but I really don't know much about them.

Not to lose money! But it depends. As a market maker or spec trader you don't really think in terms of returns. You start each year zeroed out. For certain specific trades (ie arbitrages) you have an idea of what you are shooting for percentagewise but it varies from trade to trade. One trade might have a goal of 10% and another might have a goal of 25%. For example I do one arb where I sell it 10% or more over fair value and buy it back around 4% over fair value. Sometimes it will get as much as 15-20% over fair value where I sell as much as I can. I still don't buy it back until it gets back to around 4% though.

How did you get your first job as a market maker?

I was just finishing up my MBA in Finance and I really wanted to get into trading and particularly options. Since I am from Chicago I went and dropped off resumes and talked to anyone who would listen to me at the CBOE and CBOT. But that's not how I got it. Actually I answered an ad in the newspaper. My first firm was big at the CBOE and were looking to expand into interest options at the CBOT and targeting fresh MBAs so it was just what the doctor ordered.

Thanks for sharing.

A friend of mine with BS in CS from a top tier school and a MS in CS from U. Wash w/ 5 yrs of experience at MSFT wants to move back to NYC and become a trader. Does he have a realistic shot? Do you recommend him going to get a MBA?

I've been advised that a quant dev is his best shot but he doesn't want to be a quant.

This might be a little off topic but what is your opinion on black box algorithmic funds?

Best Trade? Worst Trade?

Mr. B.

I work for the CME... would you think a product that is equivalent to the VIX for grains (soybeans, corn, and wheat) would be worthwhile to develop? Please say yes!

I can't really say? I'm not sure what the environment is right now for getting hired. For me the MBA is basically worthless other than the fact it was a door opener. As far as what you learn as an MBA I feel is pretty meaningless to trading.

What college degree do you need for your job? Is any degree even required or just a 4 year degree? I have a social studies degree, is it possible to get in the door with it?

Thanks