Veteran Trader Joe Corona Shares His Best Week Trading Ever

John Lothian

John Lothian

Executive Chairman and CEO

In Part Two of our Open Outcry Traders History Project Interview, Corona Tells of Recovering From Horrendous Tuesday Thrashing After Ten Point Bond Jump After Black Monday.

Joe Corona’s trading group derived its name from its experience in the 1987 stock market crash. He and his partner Bruce Lawrence named the firm “Meltdown Trading.”

Corona and several members of the Meltdown Trading group team were in the bond pit and had similar positions that left them short volatility going into the stock market crash of October 1987. While the Monday of that week is known as Black Monday for the plunge in stock prices, Corona called Tuesday “Horrendous Tuesday” for the sharp rise in bond and Eurodollar prices that also saw volatility soar as bond prices jumped 10 full basis points in London overnight.

Corona and his group lost a lot of money and, he said, “We knew we had been completely destroyed.”

Because of differences in price limits between Chicago and London bond markets, Corona said their positions on paper actually looked like they were making money.

However, he said he marched into the office of Shatkin Trading and told Hank Shatkin, Pat Arbor and Wally Weisenborn what had happened and that it was not apparent on the statements. He also said that there would be outstanding opportunities in the trading pit during the week and asked for the opportunity to earn back the money his group had lost.

To the credit of Shatkin, Arbor and Weisenborn, they said go for it.

The situation in the bond options pit was one of chaos. Brokers were tugging on Corona’s trading jacket, begging him to make markets for customer orders they had, Corona said.

Half the bond pit locals blew out due to the ten point move and were gone; the other half were in liquidation mode and not making markets by trying to get out of their own positions.

As a result, the bid-offer spreads in bond options that week were very wide, giving Corona and his team lots of opportunity to make money.

Before the week started, Corona and his group were down eight figures and by the time the week was done on Friday, they were up $150,000. They had made back all the money they lost and $150,000 more.

This is what Corona told his team: “Everything you had, everything you hoped to have, everything you hoped your grandchildren to have is gone, we have one option and one option only and that is to get into this pit and make all this money back by Friday. And you have to be just an absolute animal.”

While I was working for Corona and Lawrence at Meltdown Trading, they had an experience that nearly bankrupted them. Unknowingly, both of them had decided to take a vacation at the same time. While they were away, some of their soybean option traders decided to buy some long-dated out of the money call options in large quantities.

The positions started to deteriorate and they were forced to liquidate them. Because of a lack of liquidity, the traders took a beating on the positions and ended up losing most of the capital Corona and Lawrence had in the firm.

Corona’s preferred style of trading is what is called a Power Condor, short near the money calls and long out of the money calls in larger numbers. However, he said he adapted his trading to the market depending on conditions.

He said that openings were times of huge opportunities, where there was lots of physicality and chaos as brokers filled orders.

His style of working brokers was just to be there consistently, while he noted that working with other locals was a highly competitive environment.

The trading pit was a very charitable place with a different cause every day, Corona said.

The life lessons he learned was to expect adversity and to learn from the experience. Learn what you are going to do with adversity, how you are going to pick yourself up.

Corona had many mentors through the years, from people he worked for to people who worked for him. Charlie Cottle was an early mentor in the bond option pit. Tony Saliba has been a mentor and longtime collaborator at multiple firms, including his current one, Matrix. He also mentioned his partner Bruce Lawrence, and traders Larry Schulman, Rod Davis and Dave Ellis.

Corona stopped trading in 2007 when he joined LiquidPoint in a sales role. He eventually moved to a sales liaison role before the firm was sold to Dash. He joined Matrix in 2018.

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