Traders in the State of Nature

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[Cross-posted from the original on SuperMogul.]
“Where were you the day the market sort of blipped?” isn’t necessarily an inappropriate question, considering the ‘once in every half-decade or so’ nature of yesterday’s “correction.” We’ve amassed some accounts of the bloodbath and its aftermath. It does kind of sounds like some sort of Civil War recount the way some people are putting it – with vivid descriptions of corpses everywhere, like that Goldman trader, although Bernanke’s comments today were hardly Lincoln-esque. In fact, Bernanke’s comments were like if Lincoln got up at Gettysburg and was like, “A better credit score and several hundred points ago…yadda yadda yadda…guns are still working well, our view on state’s rights hasn’t changed…carry on.” Anyway, here are some takeaways from various floors on the Street, which, to tell the truth, are much better if (at least mentally) narrated by David McCullough (the primary Ken Burns’ documentary narrator) with “Ashokan Farewell” playing in the background (just play this while you read).
As for this morning, an individual who works on a volatility desk told us the following:

People are just treading lightly (trying to cling to some semblance of a poker face)...I think most people agree with Bernanke in that there should really be no change in expectations i.e. nothing fundamentally has changed...but on the flip side no one seems to be taking any big bets (as far as I can tell)...
The vix (volatility index) yesterday opened at 12.12 (previous day had a 10 handle), hit a high of 19.01 (which is crazy), and closed at 18.31...today it opened at 17.21 and has just gone straight down (currently in the 14s)...trying to price anything right now is comedic. Also the pick-off artists have come out of the wood-work...it is like Christmas for them.

Whereas vol traders like when there’s blood in the water (at least sometimes), some were having trouble treading. One derivatives trader (who’s made quite a bit in the last few years) yesterday could do nothing but croon Daniel Powter lyrics after market close:

People were taking it quite calmly to be honest, although we all lost a ton of money. Trust me, I was putting on a brave face, but I was losing my shirt. I had my worst pnl day in my career. Fortunately futures are up half percent or so.

His advice – if we're down another 2% it’s probably time to buy.
Not everyone was running around shirtless yesterday, scribbling orders and prices on the walls in human (and sometimes animal, don’t ask) blood and feces. Some people had a slower day than usual, recounted by an equity derivatives sales trader:

Well, a lot of options traded yesterday but a lot of it was customer to bank as opposed to broker dealer. Things were moving too fast, with people just going straight to floor as opposed to having us “shop,” not a lot of actual vol trading (which is what we normally deal with). A lot of people hitting bids or lifting offers on the electronic exchanges (ISE), thus me sitting with my thumb up my butt, yet my clients busy as shit. That's also why a lot of guys back in like ’99 and ‘00 who were market makers on the floor made beaucoup dinero, a ton of orders were just market order, like “where can I get done.”

Most I-bankers, however, remained un-phased by the market movement (in no small part because firewalls are starting to prevent access to everything but Excel and PowerPoint). One banker told us:

Yesterday? World events? No clue. But I can tell you what would happen if this one EMS non-client acquires almost every other company in its industry, not that it’s looking to. Our MD just had a pitch-gasm. I was just thankful it wasn’t during normal working hours. (please help me)

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