John Wiesner and Joe Pfeiffer
Options Traders
Alumni Profiles -- (Winter 1999-2000 Newsletter)
Standing on the floor of the Chicago Board Options Exchange
is to watch life in a blur. Traders, anywhere between several
and several hundred, stand in a large semi-circular area with
cascading steps to allow for maximum visibility of each other
and of large screens endlessly scrolling economic indicators.
As traders analyze the future profitability of options to
purchase or sell stock of some 2,800 American companies listed
- whence the name, "options trading" - runners wearing
multi-colored jackets stream constantly into this "pit,"
carrying orders to buy or sell certain options.
Traders decide on the spot whether a security should be bought
or sold and at what price, and they shout out their orders
to other traders. Desks and phones line the room, no more
than a couple of steps away from each trader, so brokerage
houses from across the country can place orders quickly -
all so traders can buy or sell, can make money or lose money,
often tens of thousands of dollars, in a single trade. They
try to "buy low" and "sell high." How
they do that makes all the difference in the world. Someone's
making money; someone's losing money. Lots of it. All the
time. A chain-smoking-free environment this is not.
This is the world of Joe Pfeiffer ('86) and John Wiesner
('89) who are survivors in a game that chews people up and
spits them out. The longevity of an options trader is about
three years. They have been doing it for more than a decade.
Pfeiffer and Wiesner each started out "on the floor,"
but now do most of their work in offices a few floors up,
working at computers all day. Although they are at arms length
from the loud rush of floor activity, they monitor it on screens
and call in orders to their brokers on the floor. In spite
of such frenetic activity, the work is not very exciting,
they say. But it's not supposed to be.
"In the stock market, you want life to be boring,"
says Wiesner. "You want stability. Basically, it's like
watching paint dry and hoping it doesn't catch fire."
Pfeiffer reaches for an old saying, too: "Trading options
is a lot like picking up dimes in front of a bulldozer. You
can pick up a lot of dimes, but you always have to keep your
eyes on the bulldozer."
"You have to have a strategy, a sober plan," says
Pfeiffer, "that will take into account various economic
indicators and then compel you to trade a certain way, whether
you are 'feeling lucky' or not. The market is not the place
for river boat gamblers." Both, however, feel lucky to
have come into the job. Following graduation from the College,
Pfeiffer was one year into a Master's program at the prestigious
London School of Economics when a schoolmate told him about
options trader Jim Hart, who was looking to bring liberal
arts graduates into his business. Pfeiffer, who was then chomping
at the prospect to practice economics rather than teach it,
decided to bail out and join Hart at Okoboji Options, Inc.
Meanwhile, Wiesner had spent a year as a proverbial "starving
teacher" in a start-up independent Catholic high school
in Kansas City. He had heard of Hart's opportunity at the
end of his senior year at the College and had even gotten
a perfect score on Hart's mathematics test, but he wasn't
interested. He had taken a year off in the midst of his junior
year to work as a penny stockbroker and earn tuition money.
He hated the experience, in spite of demonstrated aptitude
for understanding financial instruments.
But Hart tracked him down and exposed him to the options
market, altering his preconceptions of it. Wiesner signed
on. Now some ten years later, Wiesner has assumed CFO duties
of the eight-member boutique trading house, in addition to
his trading work. He also is completing an MBA at the University
of Chicago.
Both Pfeiffer and Wiesner were among the first traders to
recognize and leverage the power of PCs in creating options
trading strategies. They saw that computers could calculate
discrepancies in market pricing and monitor price data more
efficiently. They each devised trading programs that have
allowed them to spot trading opportunities more quickly. They
now trade 300-400 companies per month.
Both see the advantage of having a classical education in
doing what they do. "This kind of work is best learned
by understanding the underlying principles of the financial
instruments and not just from a textbook full of modern financial
formulae," Wiesner explains. "And it's our kind
of education that best enables you to unearth something's
underlying principles." Pfeiffer adds: "We really
try to take a dispassionate approach to trading, looking at
it as an intellectual challenge without emotional involvement."
Also, they are not about to let the almighty dollar govern
their trades. Even when large profits are available, they
refuse to trade stocks of large pharmaceutical companies that
peddle abortifacients or contraceptives, or of cable television
companies that are conduits of pornography. "We think
it's immoral to participate in their profits," says Wiesner.
Thankfully, they work for an organization that respects their
views, an allowance they might not have elsewhere.
Pfeiffer and Wiesner are devoted family men who commute an
hour from their homes in suburban Chicago and who credit their
wives with keeping their households together, especially in
undertaking the homeschooling routine. Pfeiffer and his wife,
Sonny, have seven children; Wiesner and his wife, Renee, have
five. Both families are expecting additions soon - options
that neither of them would be willing to trade.
-- Qtrly Newsletter, Winter 1999
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