skip to Main Content
A Big Hit In Silver

A Big Hit in Silver

January 13, 2017

Chapter 61 in the exclusive series for Dynamic Commodities- becoming a commodities trader

Boliden continued to trade options with Philipp Brothers and the profits piled up. Shortly after the initial deal, Glenn Anderson left the producing company and Olle Johannsen took over for him. At the dinner in Stockholm I established a great relationship with the Swedish trader and we partied until the sun came up at Café Opera in the middle of the city. Olle pumped huge volumes of options through Philipp Brothers over the months that followed my trip and I got credit for each dollar the company earned. Sid was proud of me but he was also a bit annoyed that I was getting lots of glory.

Sid was preparing to speak at a gold conference in Hawaii and he did not command my presence which was fine with me. Sid decided to go to the Island for two weeks, one week for the conference and another for vacation. It was a treat to stay back in the office trading on the desk with Ralph, while doing deals with the customer that had become a cash cow for the precious metals department. It was March 1987 and both Ralph and I became bullish on the price of silver which was trading around $5.50 per ounce.

While Sid went off on his Hawaiian jaunt, we approached Chris Linen and told him we thought the price of silver would move higher and we wanted to take a long position using options. We outlined a market structure that involved selling one at-the-money $5.50 silver call and buying ten out of the money $7.00 through $8.00 call options for a small cost. If the price of silver took off we would make millions. Chris loved the trade. When Ralph spoke with Sid, who called in at least ten times each day, Sid told us not to do the trade as it was too risky. Chris told us not to listen to him and proceed. We executed the trade with Goldman Sachs and several other market dealers. Silver proceeded to rally to $11 in early April and the trade made $5 million. It was a home run with the bases loaded.

When Sid returned, he began doing victory laps around the firm telling everyone about the amazing profits. In April the options department made over $8 million from a combination of the silver position and deals with Boliden. While Sid took total credit, Chris Linen knew from where the profits came. That meant that Marty and Henry also knew. The relationship between Sid and Ralph began to deteriorate but I stayed away from the issues. I was on top of the world, between my customer business and trades with Ralph; I was a rising star in the company at 27 years old. At the same time, I became addicted to silver.

Post Series: Origin Of A Commodities Trader

Leave a Reply

Back To Top