Attorney Sheldon Cohen started out his trading career as a risk manager for Goldberg Brothers, a CBOT clearing firm that was later sold to LIT Holdings, and eventually began trading at the Midwest Stock Exchange. He bought his own seat at the Chicago Board Options Exchange (CBOE) in 1976.
“At the beginning, I would try to go down and be a scalper. I would try to get flat, and make a couple of bucks,” Cohen said. “As time went on, it became more difficult and I became more of a spreader. And when puts came in, I became more of a specialist in puts,” he said.
In the early days, “the sky was the limit” in terms of opportunities, Cohen said. In the first part of a two-part interview with John Lothian for the Open Outcry Traders History Project, Cohen said that on the securities side of the business, “you were not just a spreader or a scalper. In a lot of cases, you were building up organizations.”
Those trading groups “backed clerks, the clerks became part of the organization, and so on and so forth,“ he said.
Cohen’s career included time as a member, clearing member and director of various exchanges. He also served on the board of directors of both the CBOE and the Pacific Stock Exchange.
Cohen said he was on CBOE’s executive committee during the stock market crash of 1987 and got pulled away from trading to make decisions on issues like temporary trading shutdowns.
He recounted a story of his worst trading day during that year, in 1987, when he got caught in a losing stock position. He was finally rescued from most of his losses by one of his brokers, but ended up with a deficit of about $5,000.
He attempted to bring in a check to return his account to even, but his risk manager, the longtime trader and mentor David Goldberg, wouldn’t take it, he said. Goldberg told him to bring in a check for $500 every day until his debt was paid.
“When you write one check, it hurts once.If you write a check every day you are more motivated to make money, “ Goldberg said.
“In Dave’s mind it was more disciplined,” Cohen said.
The legendary trader J. Peter Steidlmayer used a similar tactic, Cohen said. If he would draw a trading deficit he would be more motivated to get back to zero. “That was fine with us,” he said.