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Copper Options- The Introduction To The Wrath Of Manfred

Copper Options- The Introduction to The Wrath of Manfred

Chapter 48 in the exclusive series for Dynamic Commodities- becoming a commodities trader

Sid Gold, as part of his plan to expand the reach of his options business, spent a great deal of time educating and marketing to traders in other departments at Philipp Brothers.

Manfred Koppleman was the chief copper trader at Philipp Brothers. In fact, Manfred was notorious and many in the market called him the king of copper. When Manfred bought or sold the red metal in volume, the price tended to move as other traders and even those producers and consumers in the industry followed and feared the trader.

While Manfred’s business included dealing with producers and consumers of copper around the world, the main focus was proprietary. Manfred took massive positions on the long and sometimes the short side of the copper market in the quest to make money for Philipp Brothers. It was not unusual for Manfred to take a 100,000 ton position. Each London Metal Exchange contract contained 25 metric tons of copper and 4,000 contracts was anything but a small position.

Sid hit pay dirt with Manfred who one day out of the blue gave him an order to buy a large volume of copper call options with a price limit based on Sid’s opinion of the option price. As we began to buy the options, the price quickly moved above the price limit and we were only able to fill a small percentage of the total order. When Manfred came to the desk to see how Sid was doing on his order, Sid told him that the price had moved away and that the market deceived him when calculating the option price originally.

Manfred stared at Sid, his pale blue eyes were piercing and his cheeks reddened as anger grew in the German trader in his late fifties. Manfred screamed at Sid, “No, it was you who deceived me” and he stormed away. Sid was very quiet after the episode, disappointing Manfred was not a good political move. However, it turned out that Manfred had been buying copper as we tried to execute the order so he was the reason that we could not buy the options at the price level. It might have been the option order was just an effort to spoof the market higher and Manfred decided to torture Sid as an added bonus.

The wrath of Manfred was no secret in the firm. He demanded perfection. He had a reputation for being quite unreasonable when thing did not go his way. One of the traffic clerks who worked for him for years in the London office was fired on almost a daily basis. Despite being fired, the clerk would show up at work again the next day and often Manfred would fire him once again.

A successful trader can be a very volatile animal. Manfred Koppleman was a legend in the copper business around the world. He was a tough and often brutal task master but he was a big money maker for the company.

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Post Series: Origin Of A Commodities Trader

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