Churning and Burning

25 Nov 2014

Just ran into this highly entertaining weblog, Churning and Burning. A daytrader at a New York prop firm lost a few bucks in trading some OTC/Pink sheets stocks. Nothing new here, except for the fact he sure knows how to write. The hilarious MS Paint graphics are the icing on the cake.

Although I do know some daytraders who are consistently profitable for many years, daytrading isn’t my game (and “technical analysis”.. ah nevermind). However, I assume everybody in the business has once taken a six figure hit on a bad day (at least, I did). Or sat next to someone who did.

Anyway, with markets slowing down towards christmas it’s a funny read during the day. The guy is not only a comedian, has got some smart things to say.

why didnt i get out

Pieterse left Optiver

23 Nov 2014

Joop van der KrukDidn’t see it coming when the news broke last Wednesday. Edwin van der Kruk, nicknamed Joop – since he looks like television mogul Joop van den Ende, left Optiver last month. Even bigger news is that Hans Pieterse left the building as well (although he will still be on the payroll for a few months). Joop did not have a big profile (Quotenet is still searching for him on this image), but Hans Pieterse is known within the trading world.

As someone already mentioned in the comments, the entire senior management has left the firm over the last years :

The silly thing is that Optiver’s kinda flushed their whole management in less than five years. Edwin van de Ven: gone. Randal Meijer: gone. Jelle Elzinga: gone. Hans Pieterse: gone. Joop van der Kruk: gone.

As far as I can tell founder Johann Kaemingk is still active in the risk management business of Optiver. His successor, CEO Paul Hilgers has taken over the helm beginning this year.  One could wonder whether he could get along with Joop and Hans.

SlagerJoopAnyway, Henk Willem Smits can stop searching for an image of Joop. He’s not on the large picture (“behind the guy in the yellow shirt”). This is him, in the last century. Photo by Etienne Jong.

As a public speaker, Hans Pieterse is a lot easier to find.

Last month Euronext announced to cut fees for option trading for retail investors. In order to match TOM’s transaction fees, the fee was lowered from 40 cents to 31 cent per option. The question is always whether or not the brokers lower the fees to the investors, or are happy to keep the extra profit margin in their pocket.

DeGiro, always keen to capture free publicity with empty promises (Alibaba IPO), announced they would follow suit (link, nl). A drastic cut in the transaction costs, the more you trade the lower the fees. A new low transaction feee of 50 cents per option for the most active traders. Sounds great. This sunday they released their new fee schedule. See below.


Seriously. Other brokers are a lot more expensive, DeGiro doesn’t have an incentive to lower fees. But this new fee schedule is embarrassing. DeGiro seems to have lost touch with reality.

Everyone even getting close to the 10.000 option contracts threshold per month should leave DeGiro and switch to a professional firm (say, Better Options). Suggesting retail investors spending EUR 50k per month on option trading fees. What a joke.

Goeie ouwe tijdOctober is not only the month of legendary stock market crashes, also time for updates from Euronext on who’s who in the option markets. Here’s the overview of all stock options with the market makers providing liquidity. Some new firms joined, some others left. Won’t surprise you only two new entrants to game.

New entrants

Commerzbank. Quoting as competitive market maker (cmm) in all ten large caps (ING, Unilever, Mittal etc). The proud new owner of a large chunk of Imtech is also CMM in a dozen small stocks. Don’t really understand why a large bank would like to quote Aalbers or Wereldhave. Worth mentioning, not quoting Imtech. No index trading.

Wolverine Trading UK. Similar to Commerzbank all ten target group big caps and a few smaller ones (like again Aalberts, USG, Wolters Kluwer). No index trading either.


Last year we had to say good bye to a lot of smaller firms. This time even All Options is throwing in the towel as liquidity provider. Used to be active in smaller stocks last year.

  • Archelon Deutschland. Don’t know whether or not they exist elsewhere in Europe. Have been around for quite a long time.
  • All Options. Rumors haven’t been good lately, and as of next week they stopped providing liquidity. Understood Allard won’t entirely stop trading, maybe shifting to market taker business model. After all they are still hiring.
  • M & M Trading. Small shop shut the doors.
  • The Hague Options. Disappeared from the list. Has always been a one man show probably.
  • Smart Trading. Similar to the small ones above.
  • Inhouse Trading. Similar to the small ones above.
  • Goldman Sachs. Not very similar to the ones above. But not on the list anymore.

Who’s trading what

A few market makers are left providing most of the liquidity.

  • Susquehanna is in a way the new All Options for Euronext. They quote everything when the rest of the market isn’t interested. The spotlight options, but also stuff like OCI.
  • Srocca (/Fluhalp) is quoting everything, using their second license in the AEX as cmm. Just a very few options are left out (Arcadis, Nieuwe Steen etc).
  • Webb is trading with their memberships Caerus II and II. Have left the index and Heineken, don’t know is this is related somehow. According to this source they just switched to T-Bricks. (“One of Amsterdam’s largest financial trading firm’s has appointed Tbricks” – right..)
  • 323 Trading. Is primary market maker everywhere, including the AEX index.
  • Optiver is active this time with three memberships. They have two entities for the large Dutch stocks, and one for Anheuser-Busch Inbev in Brussels. Not active in smaller stocks.
  • IMC. Still active as PMM in nearly all stocks, including the index.
  • Nino (Kemp) is active in half of the stocks, but not in the index.
  • Liquid, Maven, Leopark, Market Wizards, Tibra, Cebulon and Better are only active in the index.

Here’s the pdf with the entire overview. While you’re at it, compare it with last year’s edition (here).


Blast from the past. Volkswagen and the mother of all short squeezes. This blog Priceonomics has reconstructed all events back in 2008. The squeeze has caused some post traumatic stress for dozens of options traders. (Via

Hong Kong based Algorithmic Trading Group (ATG)  has finally become a member of Euronext, Tom Voute will open the market Friday the 31st. Search here for the video.

LekkerBezigA little bit outside of the scope of this website, but Imtech has been the talk of the town lately. We’ve seen a fat finger trade, claim/stock arbitrage and rumors about firms making or losing millions in the meantime.

The 131:1 rights offering has been a text book example of a messy finance operation. Retail investors holding regular shares received a claim for 131 new shares at 1 cent each. That was a 20% discount of the regular stock price. In reality, these rights can be seen as in the money call options.

Stock price dropped a bit and all rights expired worthless.  Think about it, a modest stock drop and investors losing 96% in a few weeks. Not many folks must have realized the tremendous risk of this rights offering.

There’s more some investors probably have missed. Monday the reverse stock split ratio will be announced. When the ratio is higher than 210 old shares for 1 new one, the contract size for each option will drop from 106 (current situation following the offering) to less than 0.5 share for each contract.

The rules from Euronext are very clear. Regular options have a contract size of 100 shares. They won’t allow options with an underlying of less than one share. If contract size drops below 0.5, all options will be delisted and settled in cash. Reference is the closing price. In Imtech this means calls will settle at 1 cent, all puts will settle 1 cent below parity.

Unsure how exchanges, clearing and brokers will handle such an operation in terms of transaction costs. Very well possible traders and investors will be confronted with unexpected transaction costs for worthless calls. Open interest is large. TOM will follow Euronext, but Eurex will accept options with a fraction of a share as underlying. Imtech, what a mess.

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