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City RoomTM Public Affairs coverage from our award-winning staff

Chicago Traders Weather Wild Markets
Produced by Adriene Hill on Friday, September 19, 2008

Traders at the Chicago Board of Trade. (AP/Paul Beaty)

All the upheaval in the financial markets has an upside here in Chicago. The market uncertainty may be pushing investors into the futures and options exchanges. And some Chicago traders are nervously enjoying the wild ride.

Think back to your first rollar coaster ride...sort of a rickety climb up to the top...and then swoosh down. Think about the mix of excitment and terror that you felt.

It's not that far off from the way some Chicago traders seemed to feel on Thursday. They all seemed a little shell-shocked. Some of the markets were all over the place. Tommy Schmitz trades S&P contracts.

HILL: And how's it been?
SCHMITZ: It's crazy. It's nuts. They are up and down and all over the place. It's tough, it's tough trading.
HILL: You're smiling though?
SCHMITZ: I'm up a little money so I'm happy about that. It's very easy to be down a lot of money. So being up a little bit of money is a good thing.

He says he likes the ride, there's a chance to make money when there's volatility, and the recent turmoil in the financial sector has made for a whole lot of volatility.

SCHMITZ: So I don't know…for an investor it sucks…for a trader like me movement is good.

But all the excitement can take a toll. Jason Montgomery also trades the S&P 500. He says he hasn't slept much since Sunday.

HILL: So how have the last few days been for you?
MONTGOMERY: Rocky. Nerve-wracking. A sense of uncertainty and…it was organized chaos. It wasn't as disorganized as some sell-offs in the past have been.

Montgomery says he dodged a bullet in the last few days. He's planning to take today off. Dan Sullivan trades Eurodollar options. He's been trading for 7 years and has never seen anything like this…not even close.

SULLIVAN: In a normal market I'll be doing thousand lots, doing a thousand lots at a time. Right now I'm doing a hundred and I'm scared of it. In a normal day a 100, if it goes in your face, I'll get out of it for a 5,000 loss. A 100 lot today could have easily been a 50,000 dollar loss.

He's betting things won't improve anytime soon.

SULLIVAN: Today I made money, I care about how much money I might make in 3, 5, 6 years. Right now, if the economy goes into a sharp recession it's not going to be good for me or anybody else.

But right now it's very good for Chicago's futures and options markets. Volume at the CME Group and the Chicago Board Options Exchange is way up this week. The CBOE says trading volume hit a single day high on Thursday. The week is shaping up to be the busiest in 35 years.

Michael Gorham is the director of the IIT Stuart Center for Financial Markets.

GORHAM: Immediate effect is absolutely good. I mean whenever there is chaos people try to manage that and the whole concept of futures markets and options markets is transferring risk.

Gorham thinks the down-side may come in the intermediate-term. He expects that there will be fewer people making trades after this all shakes out. That could mean decreased volume, at least for a year or two. Quieter markets could also mean Chicago traders might get some sleep.

I'm Adriene Hill, Chicago Public Radio.