In this video for The Spread, Alex Teng spoke with Bill Brodsky, an industry giant who led both the Chicago Mercantile Exchange and the Chicago Board Options Exchange (Cboe) during his long career.
Brodsky talked about growing up in New York City and following his father’s footsteps to Wall Street, where he became enamored of the stock market, and then buying a seat on the Cboe for $10,000 before it even opened. Eventually, a headhunter from Chicago asked him to run the CME – then called “the Merc” and he moved to Chicago and learned about futures. He later ran the Cboe for 16 years as CEO and then for several years as chairman.
He also talked about joining his sons Jonathan and Michael in forming new companies, Cedar Street Asset Management and Options Solutions, where he is chairman and partner respectively.
He discusses how a number of products – such as stock index options – were invented or fine-tuned in Chicago, and he talked about the difficult transition in Chicago to electronic trading. He said the biggest fight in his career was getting the floor traders to recognize that “if we didn’t have some type of electronic trading we’d be out of business.”
He also discussed the options strategies used at Options Solutions and how he helps clients understand that options are not just speculative. He also said options are multidimensional and that the key to options is understanding the erosion of time value and how that works in the client’s favor.