Review of options trading pit

By WILLIAM ALDEN MARCH 24, CHICAGO — The pits where generations of sweating traders in colorful jackets once bellowed out orders for wheat, corn and cattle contracts, using hand signals and sheer force of personality, are almost empty.

The smattering of traders who hung around them on a recent day appeared listless, some glancing at tablet screens, others staring blankly into space. He said the planned closing was inevitable.

But the official end of the commodity futures pits this summer — including those in New York, where metals and energy contracts are traded — will nevertheless amount to a loss.

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Gone, too, will be dozens of jobs. The CME Group , which runs the pits in Chicago and New York, said that about 50 of its employees who help operate the trading floors would be laid off. Perhaps even more significant for Chicago is the disappearance of a career path that for over years allowed scrappy teenagers and former high school athletes to hustle their way to wealth, or at least excitement.

Futures trading — as distinguished from options trading, its more cerebral relative — was for many years a way for those with a blue-collar background to enter the white-collar world. Futures contracts — agreements to buy or sell something at a certain price in the future — were invented to protect farmers against price movements for grain.

The system for trading futures stayed remarkably consistent.

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In the pit, traders shouted offers to buy and sell while keeping their eyes and ears open for other offers to jump on before making eye contact with the counterparty and then writing down the trade on a card.

But the technological change, when it came, happened quickly. The Merc introduced some electronic futures trading in the s, and the board of trade opened its own system for electronically trading agricultural futures in As it became faster and often cheaper for institutions to trade online, orders to the pit began to dry up. The monthly trading volume in soybean futures, for example, was less than 5 percent electronic in July , according to exchange data collected by Mr.

Irwin and Dwight R. Sanders , a professor of agribusiness economics at Southern Illinois University.

Eighteen months later, the professors found, more than 80 percent of that trading volume was electronic. These days, according to CME, open-outcry trading accounts for just 1 percent of the total trading volume in futures.

Crudele, using a new system for electronically trading S. The two of them now run an online trading room, E-Mini Exchange. Crudele, who had struggled to find his footing in the pit, embraced the new technology, Mr.

Ceres, like the Jack Schwartz tobacconist, was once packed wall to wall with traders every day.

After one trader lost a fortune in the crash of October , Mr. View all New York Times newsletters. Calascibetta, 61, who has an accent from his native Turin, Italy. The trading floor today can seem as much like a soundstage as a working exchange. Fox Business has a studio there, and Rick Santelli of CNBC broadcasts in front of the pits.

In a twist, the options pits, which traders say were hardly ever as raucous as the futures pits, are now the only place on the floor where anything resembling the old level of activity can be found. And sometimes customers still send orders there.

A version of this article appears in print on March 25, , on Page B1 of the New York edition with the headline: Last Days of the Scrum. Order Reprints Today's Paper Subscribe. Tell us what you think. Please upgrade your browser. Sections Home Search Skip to content Skip to navigation View mobile version. The New York Times window. DealBook As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes.

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