The number one rule I have learned from being in the options on futures pit learning arbitrage signals today is that it is never a race. Meaning, when receiving orders or calling them back to the desk it is more important to be accurate than to be the first to submit a bid or offer to the filling broker. A good arbitrage clerk knows that speed kills accuracy, thus leaves open the possibility for miscommunication that can potentially be costly and detrimental to the customer, the desk, and/ or the filling broker.
While I was watching and practicing mimicking the bids and offers, there were a few mistakes I repeated. One major one was in the middle of calling a bid I would switch from having my hands facing palms out to having them facing towards me indicating an offer (or that I wanted to buy instead of sell). Another mistake that reoccurred was forgetting the correct order with quantity and price. By this I mean when selling an option you indicate the quantity first on your forehead, then the price out in front of you. When buying an option you have to indicate price first on your forehead then the quantity.
Put and call spreads are a bit more intricate because you have to remember not only to call the month, but indicate if it is a spot or end of month order. If you are not clear on this again there are financial ramifications because end of month is priced differently. You then have to remember to have your palms facing the correct way because sometimes you will have multiple legs.
Lastly, I learned that it is important to always stay attentive to the desk and to write down all of the bids, offers, deltas etc. because a lot of these are repeated throughout the day and you can give your customer a better idea of where the market is in a glance. Doing so will also alert you to communication errors because you know around what price the market should be moving.
- Taylor Maid Trades