Archie Block is a broker with over 30 years in the business. He is from Flatbush, Brooklyn.
Archie Block started in the options trading business in 1958 as a clerk. But in just ten years he would make the jump to having his own firm: Marsh Block, & Co., Inc. He witnessed the rise of high-frequency trading, and the beginning of the listed option. He talks to Paszport do Wall Street about the transformation of options trading.
"Options were an exotic thing," Block says of the business circa 1960. Only a few broker dealers dealt in options and they were all sold over the counter. Block recounts how if, one wanted to buy an option, one had to call a rep, who then connected to them to a central line that would connect them to several broker dealers all hoping they were offering the lowest price.
"I like the old options, when you had to negotiate it," Block said. He worked with only the newspaper and telephone at hand, quoting prices based on his own knowledge of the company, yesterday's closing price, and the volatility and trading volume of those shares. Much of it he had to know off the top of his head. "I used to give out three to five hundred quotes a day," said Block, and he had to hope he was offering the best price (and that he could find an even cheaper price to buy the option at).
"It was very tricky, very exciting, very stimulating. Everyday was go go go," said Block.
Later, prices became set as options became a listed security. Block witnessed the growth of options offerings, from an initial 16 or so companies, to the huge availability of today.
"Once the listed option became more and more prevalent, the OTC option slowly died, and all the older brokers folded," said Block. But not his firm: when the SCC dropped fixed pricing in the 1970's Block was versatile and made his business into a discounter, like competitor Charles Schwab. There was a time during this period, Block remembers, that the trading volumes of stocks were so high that the market was closed on Wednesdays, and only open on half days the rest of the week, because brokers could not keep up with the demand.
"During that time I worked sixteen hours a week. The rest of that time I spent buy the pool in my apartment building. It was crazy," said Block.
Ever an innovator, Block's firm was also one of the first to use Quotetron, the first automated quote generating computer. It listed the last sale, whether the price was going up or down, and the volume of trades of a certain stocks. However, Block recalls that their company pushed to develop the technology, adding more and more features. "We were very instrumental in expanding the Quotetron possibilities," Block recalled.
However, he does speak to how automated trading has contributed to the volatility of the market.
"A lot of the activity of the market today is high frequency trading firms whose decisions of what to do and when to do it are made by computers," said Block. Which is fine--except when the demand creates, in Block's words, the sensation that "everyone is rushing through the same doorway" when a market event occurs.
"It exacerbates the move of the market," said Block. However, he's hardly sorry to let go of the past.
"It's a tremendous business today, trading in gigantic volumes," he said. "Options continue to be a real tool for the market."