Financial Silly Putty and Socially Acceptable Volatility

Steve Sears, President and COO of Options Solutions and long-time author of “The Striking Price” column in Barron’s, sits down with Steve Sosnick, Interactive Brokers’ Chief Strategist, to discuss the options markets’ past and present.

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Summary -Traders’ Insight Radio Ep. 7: Financial Silly Putty and Socially Acceptable Volatility

The following is a summary of a live audio recording and may contain errors in spelling or grammar.  Although IBKR has edited for clarity no material changes have been made.

Steve Sosnick 

This is Steve Sosnick, chief strategist at Interactive Brokers, and welcome to Interactive Brokers Radio. We’re taping this podcast today on January 26th, right ahead of the Fed meeting this afternoon. 

My guest today is one of my best friends in the business. Someone I’ve known for years and someone who I talk to on a regular basis. Someone who I actually haven’t called this week so that we’d have more to talk to on air. My good friend Steve Sears. 

Steve is the co-founder of Options Solutions, a money management firm. I was going to say based, I don’t even know where you’re based. Your firm is based sort of in several places, and you’re in Atlanta, but the firm’s in Chicago.

And many of you know Steve because he’s been writing the Striking Price column for Barron’s for a number of years. How many years exactly now? 

Steve Sears 

Something like 15 years and ten months. 

Steve Sosnick 

I was going to guess 12 but it’s 15.  And for those of you who are familiar with my work. You kind of have Steve to blame for it. He and I started talking regularly and we’ll get into that more as the podcast goes on and along the way. He was foolish enough to let me guest author or his column periodically when he would go on vacation. And that pretty much led me to being able to be the one person at our firm other than Thomas Peterffy who could speak to the rest of the world at large. And you know from there it’s all changed. 

So Steve, why don’t you introduce yourself, briefly more than I’ve done, if there’s anything I’ve missed to our listeners. 

Steve Sears 

Well, it’s great to be here with you, I was excited to do this podcast. 

As you said, I’m the President and COO of Options Solutions, which is a money management firm based in Chicago. It helps high net worth investors use conservative options strategies and their portfolios. 

I founded the firm with Bill Brodsky, the former head of the CBOE and with his son Michael Brodsky. 

And it’s really exciting to be able to take many of the things that I’ve written about and covered and actually put them to use. 

Aside from that, I’ve written, I’ve had enormously good fortune over the years.  I just sort of discovered the options market before the options market was really discovered. And I remember when I was a young Dow Jones reporter, I was fascinated with what made the markets move and the senior editors called me to their office one day and they said we want you to cover the options market and I said, and I quote, “what the hell is that?”

And they said we don’t know, but we think it’s important and what that did is that led me on this incredible journey where I got to meet people like Thomas Peterffy and so many of the other truly great investors in our market and then it led me to you.

And you and I have been I’ve been tight and close now for a long time.  We’ve seen all kinds of different market cycles, and I’ve been very fortunate to be able to participate in it. 

Steve Sosnick 

One of the things in your bio is that you call yourself VIX’s uncle. For those of you who have heard the term VIX but are not familiar exactly with what it is, the VIX is designed to be the market’s best estimate of volatility over the next 30 days. 

Why don’t you elaborate on that one? Because I’m not disagreeing with that at all, but that requires some explanation, so please go ahead. 

Steve Sears

Well, I’ll tell you when I when I first began to cover this market, and this really marked the first time that the Journal had ever covered trading markets. Prior to then everything was about a stock went up or down because of a research node or maybe because of a corporate transaction. 

And it occurred to me while covering what at that time, in the late 90s, were five fragmented markets, Philly, the P-Coast in San Francisco, Chicago, the Amex and New York, all of whom maintained single listings. And since there was no crossover, we needed something in the options market similar to what the Dow was for the stock market.

And you know, what do they say?  Invention is the motherhood to necessity or something like that? 

Steve Sosnick 

Necessity is the mother of invention. 

Steve Sears

Necessity is the mother of invention. 

So, I seized upon the VIX and it just sort of took off.  At first the CBOE was vehemently sort of opposed to me calling it the fear gauge. But soon, but ultimately it led to the creation of the VIX derivatives and helped people to understand the options market, whereas in the past it would have been hard to review it in its entirety. 

It was always fragmented strike by strike, ticker by ticker, but now suddenly we had this one essence that then enabled us to sort of talk about things in a systematic way. Now I call myself the uncle because I didn’t create the VIX.  That was Bob Whaley, who I think was a Duke at the time. But I claim some family connection because I helped to popularize it.

Steve Sosnick 

I think your partner Bill Brodsky has to take a little bit of a role in that as well. Was he involved in the product?

Steve Sears

100%. In fact, in his office, he has the VIX formula framed behind his desk. And so, Bill of course, is an incredible executive, an incredible leader with it within this industry. And he introduced it, I want to say maybe a decade ago? I could be wrong. Options and futures on the VIX basically helped to give birth to the global volatility market.

And within my firm at Options Solutions, not only do we have Bill Brodsky, but we have Bill Speth as our head of research. Bill Speth who was at the CBOE, and he was instrumental in giving birth to index options and futures. 

Steve Sosnick 

It was very interesting when those came about. Because when you think about it, it’s really a second derivative and one of the things we always avoided in the earlier days of options trading was options on options. 

And effectively, though not exactly the same way VIX is its own index, but it’s really a derivative and then trading derivatives on a derivative. At first that was a big leap, but obviously the world embraced it. 

One thing, of course, where I think we differ is when you look at Bill Brodsky formula, you don’t see the word fear in there do you? 

Steve Sears

Well, I do. I do, you know.

I’ll tell you when we first began to use it this way, it surely did manifest fear, and the world didn’t realize it. But the world wanted a way to sort of quantify fear. 

Now like an old inside joke where if the column in the journal ever began, the CBOE volatility index declined, stock prices rallied then you knew nothing happened and so it’s kind of been like in Happy Days when Fonzie was jumping the shark. 

So that’s been supporting so often everywhere for everything, it’s like financial silly putty. 

But I think it’s lost, some of its oomph that it had in the earlier days. 

And now I really do look at it basically, #1 is a proxy for options, expensive or cheap, just at the very first level.  And then #2 is one of sentiment. And I won’t get into the fact as to how you can change fixed levels by the bid-ask spreads of the SPX.

Steve Sosnick 

Yeah, well, you know we could do that, but I think we’ll keep it relatively math-free here. 

I’ve written about this. You’ve written about it.

And by the way to the producers who are listening in, financial silly putty may be the phrase we want to gravitate toward. The other one, I figured it was going to be socially acceptable volatility, which is another one of your favorites, and please explain that one too. 

Steve Sears

Well, what fascinates me is how people react to downside volatility and upside volatility. 

Now most people don’t like it when stock prices go down, they think that’s bad.

Steve Sosnick 

It’s against the natural order of things. 

Steve Sears

It’s the natural order of things, and they don’t sort of see the offsetting increase in options implied volatility that normally occurs. Instead, what they like to focus on are the rallies. We’ve had a couple of very erratic days, really this week. 

And when people see when stocks should go down, 1,000 points as the Dow did you know, in previous sessions, but then suddenly races higher, the human mind is inclined to say phew the worst is over isn’t this great. But I look at it, the upside vol scares me as much as the downside vol. 

Markets don’t behave like that, and stocks don’t behave like that, and so that’s why I call it socially acceptable volatility.  There’s somebody on Twitter who I’m connected with, not you, and he says we need to make a ticker. So, he came up with the ticker SAFE, which I think is so clever, but I think the volatility we’ve been seeing back and forth in the stock market is quite disconcerting. 

Steve Sosnick 

Yeah, that’s something I wanted to get to. In terms of your strategies, which to my understanding, you’re actively writing against your customers core stock holding positions.

How do you handle this now? Because your firm is relatively new, it came about in a period where stocks were generally relentlessly rising, where volatility was generally quiescent, and here we find ourselves in the past few weeks in the opposite of that, and whether that persists or not is a bigger topic. 

But how have you found you’ve had to change your strategies?

Steve Sears

Well, there’s an old New Yorker cartoon that I always love and I think I’ve shared it with you. And there’s a couple sitting at the end of a bar and there’s this fellow in a suit and he’s speaking to the couple and he says “Sometimes I sell calls and sometimes I sell puts. It’s a full life.”

Steve Sosnick

Yeah, I’ve seen it. 

Steve Sears 

So when stocks are rising and if you’re short upside calls, you just have to be very artful and disciplined in strike selection of deltas and the same thing is true for on the downside.

The incredible thing though is– and you know this — that the options market or options trading is a discipline and a mindset. And what you tend to see is that people are very disciplined most of the time as to how they treat their equities, and so if something is taken away, if it’s exercised, there are ways as you know, to re-salvage the position. 

And sometimes that’s part of the goal is you can be paid by the options market to sell stocks at higher prices, and you can be paid by the options market to buy stocks at lower prices. 

And there’s a lot of much more sophisticated analysis that goes into determining where you are in that process, but that’s basically the gist of it. And then really the great thing is, despite how important the options market is to the financial markets and even the world and how risk is handled, we still face an enormous learning curve. 

So you can have the most sophisticated investors, people who have C-Suite experiences at major financial institutions or Fortune 100 banks and they don’t understand. Now which to us, is just such a common way of thinking. And when they do see it, it tends to sort of turn on a light bulb in their brains and it becomes a real a-ha moment. 

Steve Sosnick 

That’s interesting because you know one of the things that we’ve been really trying to stress here, and something that I’ve wanted to do my entire career and endeavored to it now that I can talk a bit more publicly is education.

And you know, I think as much as we try to educate, even as you say, even some of the most disciplined investors still view the options portion of their portfolios. “Well, that’s the money. You know, that’s like the money I take to the track. That’s my, you know that’s my that’s my gambling money” And fortunately or unfortunately, it worked so well as a gambling proxy.

Let’s say since March, particularly since March 2020, when I think a lot of the public who was new to the markets realized, oh wait, this is a way we can supercharge our investments. I think they’re finding it a lot harder, as things don’t move in one direction, which is where the discipline comes in. 

Steve Sears 

Well, there’s a great part. 

It is but you yourself are a perfect personification of this, because your analytics should be disciplined in what you do and that’s what I’ve always admired you know about your approach. 

I’ve spoken to you during the best of days in this market and the worst of days and you always sound you know completely calm. 

Steve Sosnick 

By the way it’s a podcast so I’ll point out that he moved his hand in a linear motion across the screen.

Steve Sears

Just very calm. 

There’s a chart going around now which you may have seen, which takes I don’t know if it’s GameStop or AMC and it just opposes that stock performance with Warren Buffett’s Berkshire Hathaway in the charts, titled The Tortoise and The Hare. 

And these GameStop guys, they’re trying to violate the Berkshire. 

Steve Sosnick 

It’s actually ARKK. 

Steve Sears 

I’ve seen ARKK on that one too. 

Steve Sosnick 

OK, I’ve seen the one with ARKK and it makes sense, right?  Cathie Wood, while I don’t know her personally, and I don’t want to denigrate her style, but it’s not my style. But she latched on as a futurist, let’s call it, to this type of names that people became enamored with, whereas Buffett slow and steady. It’s basically value versus growth. 

Buffett is, you know, or at least you could argue, some combination of value and growth at a reasonable price, whereas with Cathie Wood, I would argue her portfolio was more growth at any price and they’ve started to converge. 

You know Buffet, it’s all about the earnings and-

Steve Sears 

But I think they’re both geniuses. I think they have a lot in common and a lot that separates them.  I don’t know either of them. I tried to interview Mr. Buffett once and I got one of his assistants gave me some cryptic answer, but that’s a story for another day.

But Warren Buffet is a thematic investor and so is Cathie Wood, they just happen to have different themes.

Steve Sosnick 

Excellent point. 

Steve Sears 

And I think you know Ms. Wood is like Icarus, she flew very close to the sun. 

The success she’s had with her firm, is very hard to even think of anyone who’s been that successful that quickly.

I’m sure it wasn’t overnight to her, but if you look at her, AUM it looks like it was. 

And then Mr. Buffett is just, he’s phenomenal.  Obviously in every single way you size up an investor and a lot of what both of them do really, but really, Mr. Buffett has sort of influenced what we do at our firm. 

Because the problem with the option stuff, as you know, is that it’s very easy to misuse them or to use them in the most prurient ways. 

But there are very very sophisticated, smart ways to use them to articulate views on equities. 

And if you look at what Mr. Buffett does, and if you were to read all of his investment letters, and I have,

there’s always one word that always appears in there. It’s called compounding, and that word appears usually within the first paragraph. 

Steve Sosnick 

The eighth wonder of the world, compound interest. 

Steve Sears

100% and where I may differ from some people who use options as for options sake, I would say that I’ve met very few people who are so good that they can be an options expert and only trade options. I would put you in that category and a handful of others, but for the rest of us, what you can do is use options to curate your stock experience. 

And if you recognize that there is a natural lifecycle in ebb and flow to stock prices, and that you can use options to smooth that out into compound returns by reinvesting options, premiums, and other things like that. It gets very interesting, and I don’t think anybody is really doing that. And some people are but it’s not the key thing that you think of when people bring up options trading. 

Steve Sosnick 

That’s very fair, because Warren Buffett’s had an interesting experience with derivatives himself. Remember, he’s famously known for calling them instrument of financial destruction or something, something of that nature. Weapons of-

Steve Sears

Weapons of-

Steve Sosnick 

Sorry? Weapons?

Steve Sears 

Yeah, weapon of financial mass destruction.

And so I called him one day. Some years ago, we saw a bunch of options trading going on and you know, in a filing and I called his office and my impertinent question was “But Sir, you said these were weapons of financial mass destruction?” and I never got to speak to him to his assistant said

“Hold on, I’ll go ask him” and the answer that came back was “Hart Scott Rodino freezes”. 

So, he was involved in a merger, and he was using it to control stock. And then you know as well as I do that, he became one of the great sellers of S&P 500 index options that expire in 13 years and that the insurance companies have to buy for their variable annuity policies.

And maybe five years ago, that market convulsed a little bit. When they realized oh my god, I went through a 13 year you know, trade with this guy. He’s 90 or however old he is. 

Steve Sosnick 

Yeah, but also remember you know that’s again, sort of, sometimes the folksy image obscure stuff. Think about what he did, he some of his greatest trades have involved warrants. Some of the stuff in the TARP or the Goldman Sachs warrants that he that he was involved in.

Steve Sears 

Bank of America. 

Steve Sosnick

Absolutely. 

Steve Sears 

All this sort of stuff.

I think when he says weapons of financial mass destruction. 

I don’t think he’s necessarily talking about that which we do, but perhaps you know, credit default swaps and all kinds of other exotica elsewhere. 

Steve Sosnick 

Which, quite frankly, if we had another hour and we could go into the fact that credit default swaps kind of had a huge role in the 2008 crisis. 

Steve Sears

Big time.

Steve Sosnick 

You know the short version is a lot of European banks used credit default swaps with AIG instead of permanent capital because they were allowed to do so. And unfortunately, it worked when they were a AAA credit and not so well when AIG became a rocky credit, but that’s the short version of the financial crisis. 

One thing I wanted to do was you know, you and I sort of over the last few years, our paths changed. 

Now your path has changed a few times. You went from journalist to exchange executive to journalist and whereas I sort of always stayed on the prop trading side and now I’m kind of quasi journalistic strategist while you’ve become full time trader and investor.

Go through some of the things you went back and forth with ‘because that’s how we first met was back when you were working for the exchanges. 

Steve Sears 

So, when I was a young reporter, I noticed that each of the major exchanges only traded, you know one specific blue-chip option. So, I think like Intel is the Amex, IBM was at CBOE, Dell was in Philly, and they never traded in any place else.

And I remember asking somebody a question at one of the exchanges “Why is that [options traded on only one exchange] when stocks traded every place else?”. And the answer that came back was “You can’t force people to compete if it’s not economically viable to compete.” So, I thought “I don’t think that’s true, actually.” 

And so, we wrote a story about this and the very next day, the Department of Justice launched an antitrust investigation, which led to a complete forced overhaul of the exchanges. Now these things are traded on any exchange. 

The spreads have come in, they initially came in like 75 to 80%, but now I’m sure it’s even more than that. And I was wrapping up my, I wanted to see that story to closure. 

Steve Sosnick 

OK. 

Steve Sears 

And then simply, what do I want to do next? At that point the options market, I won’t say that it was in its infancy because it had been around since ‘73 but it wasn’t anywhere near what it is today. 

Sandy Frucher, who was most recently vice chair of the NASDAQ, at that time, was the chairman of the Philadelphia Stock Exchange, the oldest Stock Exchange in America, for like two years. 

Steve Sosnick 

Which at that point was in this nondescript building on Broad Street and in the basement of the building no less, but yes. 

[ed. note. – the building was on Market Street, not Broad Street]

Steve Sears 

Oh yeah, so there was no glamour there whatsoever. But what there was, was an incredible opportunity to fix and advance that which I had identified as being broken up as a reporter. And Sandy is an infinitely fascinating guy and he hired me on as a senior advisor to the chairman. Next thing I knew, I had most of the exchange reporting to me and one other fellow and we just redid strategy. We did the balance sheets, cash flows, technology change, everything.

That got sold to the NASDAQ. About that time, and just before that happened to be at an airport, happened to be at JFK on my way to a conference, who do I bump into but David Krell. 

Steve Sosnick 

Explain to everybody who David Krell is please.

Steve Sears 

So, David Krell was tasked by Bill Porter, the founder of E-Trade, with introducing electronic trading into the options market. And so, David assembled a small group of executives to do just that, and up until that point, all options were largely traded on the floors. 

Despite the story about, you know anti-competitive nature and you know, restraint of trade and bad spreads. The fact of the matter is when your order was executed from your broker or whoever it went down to a trading crowd, and they executed it. Not nearly as sleek as it is today. 

So, David was trying to set up a way where you had the dealers and the market makers existing in an electronic market not dissimilar to the NASDAQ. And so, it always been friendly within the time he was in New York. He says, what are you doing, and I said, well, I’m trying to take apart your business.

So, David said to me, so come see me when you’re back in New York and I did. 

 He made me an offer to come join. I think the office, I had this sort of like spooky title, Office of Special Services, or something and-

Steve Sosnick 

That sounds like henchman, that could be like, henchman. 

Steve Sears 

Yeah, it was something like that, so it wound up being, uh, initially like strategic planning reporting to the CFO. 

Steve Sosnick 

The CFO of what became the ISE.

Again, you and I are speaking in shorthand, but I realize that we need to clue everybody else in. 

Steve Sears 

Sorry, right so there are probably 40 or 50 people there. It was a very exciting time because something new was being absolutely created and I joined to come in and sort of provide, you know, strategic analysis, be involved in strategic planning, new product development. I was in charge of listings, payment for order flow. 

If you’re a media guy in any company, at any corporation, you’re going to get some of the media stuff, I had that report to me. I was in charge of lobbying Washington. I wrote the business plan for index options, listing index options because I see the equities, and I’m sure I’m leaving a few things out, but it was a really exciting time.

And when that company was bought by the NASDAQ, which also bought the Philly, I thought jeez like, what am I going to do?  Like what’s next?

And the exchanges were going into a different, I thought through the super exciting time was a sunsetting as these things became different types of businesses and–

Steve Sosnick 

Which I don’t think you’re wrong, the consolidation. We’ve had a huge consolidation of exchange groups, not of exchange venues, which is a pet peeve of mine, but some–

Steve Sears

Right no, you’re completely right. So, they got vacuumed off by some of the bigger exchanges and they could offer all kinds of different market structures and things like that. 

And I was thinking like what did I want to do? And I’ve always loved writing in markets, and they told me when I left there, Dow Jones, that I always– if I ever wanted to come back just to let them know. 

And after I don’t know how many years of leaving before my children woke up and coming home after they were asleep. I thought this might be a nice way to get sort of reacquainted with everybody, after so many years. 

Yeah, and it was. And I’ve just been so fortunate, and I wrote a book during when I got back to Barron’s and–

Steve Sosnick 

Which I recommend, by the way. 

Steve Sears

Thank you, thank you

Steve Sosnick 

Yeah, give everybody, the title and the publisher. I know it’s a few years old but please. 

Steve Sears 

Thank you, it’s, uh, the book is called The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails because I’m fascinated frankly with what I learned in the options market and how that can be applied into a non-option centric way of navigating the financial world, the decision making and discipline.

And the Barron’s thing, I mean, I love Barron’s. I think it’s a national treasure. I think everybody should read it. I think it’s one of these places where the information is as clean as it’s going to get. The analysis is solid, there’s no hidden agenda, it just is what it is. 

And, but then I’ve been in business, and I’ve been in journalism. 

Like some guys who revolve between corporations and government, I revolve between journalism and the street, and I’ve just been very lucky to be able to function in a lot of different ways that have all really appealed to me. 

My pen is still active, which I’m very grateful for because as you know nothing forces you to really think quite like having to fill up an empty page. And then I’m very lucky to be able to take all the things that I’ve experienced and learned and now also run an asset management firm, which is pretty exciting. 

Steve Sosnick 

That to me, you’ve had this great trajectory. I guess, yeah, the government versus corporate is a great analogy. 

We’ve gone a bit long, but there’s one part I have to get back to.

Steve Sears 

OK. 

Steve Sosnick

And it’s about the multiple listings. So, just to clue people in each of the exchanges had their monopolies at some point that did start to break. So, new IPOs after a certain date were sort of free for all for everybody, and they were multiply listed, but the grandfathered stuff remained grandfathered. 

And here’s the part, and I think you were at the PHLX and I don’t think we’ve ever discussed how this actually went down. 

What would happen would be when a company would get taken over for stock, the options would go up for allocation, because let’s say you traded a company that was single listed on the CBOE, and it was taken over by a company that was single listed on the Amex. So, somebody had to trade the options on

you know, the de facto old options that existed because the people in the CBOE still had positions, and those would basically just vanish over time as the as the options expired. 

One of the stocks, I think it was singly listed, was a stock called Visteon which was an auto parts maker.

Steve Sears

Yeah.

Steve Sosnick

Actually, I think it was multiply listed ‘because it was spun out of Ford and eventually I think Ford bought them back.

And the same sort of thing happened, and the options came up for allocation. But the options– we were the specialist in Visteon on the PHLX. And I was the person who sort of got the option allocation, I would sort of make the decision whether we would trade something or not. And the listing memo came up from the PHLX asking if we would like to be the specialist in Ford, which was I think, exclusively CBOE if I’m not mistaken.

And I said, “Ok but are we sure?” and the guys actually went and called whoever it was. You know, our specialist on the floor called, the office said no, no no, this is up for allocation, like of course I want Ford!

Then I kind of like thought a minute.  I went into Thomas’ office and said, “Thomas, I think I may have just like started a war here because we just got granted the specialist book in Ford which was a CBOE stock.”  And he thought for minute and goes “Ah, that’s going to happen anyway.  Just do it. “

And believe that is literally how the multiple listing war really kicked off. Does that jibe with your recollection? Which would be something, either you made a clerical mistake, or you made a willful decision. 

Steve Sears 

I don’t think I was with Sandy, yet at PHLX in that year. But I remember that moment in time ‘because I had the same reaction when I saw the information circular. And I don’t know if I called him at the time, but they knew exactly what they were doing.

Steve Sosnick

OK.

Steve Sears

Because as I recalled, they figured that they were dead meat with the Dell listing.  For people who aren’t part of the exchange trading community, these listings, they sustained the entire business.

Steve Sosnick

Absolutely.

Steve Sears

And you know Dell at that time was one of the most actively traded stocks and options in the country, if not the world and exchanges, plus transaction fees. This is before the exchanges let customers trade for free, so they’re basically like a cash machine. And as I recall, Sandy figured he had to move first, otherwise, he was dead meat on the street, but he did. 

Steve Sosnick 

OK. 

Steve Sears 

And then I think if I’m not mistaken, CBOE went after Dell within a week. 

Steve Sosnick 

Oh yeah, you know that, like all hell was unleashed as a result because they had to reciprocate

and boom, boom, boom.  But Thomas, after I kind of inadvertently accepted the volley of that first shot, knew what was going to happen, and it was going to happen. If it wasn’t us, it just happened to be. It just happened to be us. 

But there you know, that was the beginning of the change, and it’s good. 

You know what, talk about spread compression spreads that were a quarter or half a dollar? Now they’re what, a penny? A nickel? 

Well, that’s a massive contraction. 90% or more, and I think the type of volume that we’re seeing, the growth that we’re seeing the options business is stuff you and I couldn’t have dreamed of in the old days. 

Steve Sears

Well back in ‘99, if we traded 1,000,000 contracts for the entire day amongst four or five exchanges, it was a huge day. And I think now we’re trading — I haven’t seen the 2021 summing up — but on some days, we traded 40 million contracts. 

Steve Sosnick 

The open interest that expired the other day (January expiration) was, I think about 450 million give or take.

Steve Sears

Wow, I remember that Goldman had a stat out that $1.3 trillion–

Steve Sosnick 

$3.3 trillion you published it. I read it, I don’t get their research, so I read your version of it. 

$3.3 trillion of open interest was expiring on the January expiration, which much of that was expiring leaps. And so, the number was inflated by deep in the money options like whoever still had open interest in the Tesla $1.00 strike that was listed three years ago. But that was there. But this is stuff we couldn’t have imagined. 

Meanwhile, we’ve gone on a while. You and I could talk for quite a while. 

Steve Sears 

Quite a while.

Steve Sosnick 

So I think we’re going to wrap here. Is there anything we didn’t touch on that you wanted to discuss today?

Steve Sears 

No, it’s always a pleasure to be to be with you. 

It’s great to “See you” after the you know, all the COVID 

Steve Sosnick 

It’s been a while. 

Steve Sears 

You know, hibernation. 

Steve Sosnick 

Yeah, we were way overdue. 

So, I want to thank everybody you’ve been listening to IBKR radio. I’ve been talking to my guest, Steve Sears, COO of Option Solutions, and a long time Barron’s columnist. 

I’m Steve Sosnick, chief strategist at Interactive Brokers, signing out and wishing you all a good one. 

Thank you for listening. 

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