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Spot Trading llc 
Carl Kershaw
Overview 
Options prop shop 
➔ No outside investors 
Trading on 11 Options exchanges 
➔ CBOE, AMEX, ARCA 
Primarily long-term options, some HFT
Finances 
● Prop shop - no transparency 
● Haircut to measure risk 
● Profits highly variable 
● Delta neutral book 
● Thrives on stable volatility
History 
● Founded 1999 by Rob Merrilees 
○ On-floor trader 
○ Moved to off floor equities 
● Five member team - grew to ~200 now 
● Focused on technology 
○ Started the same time as electronic trading
What is “hot” 
● Short term VX (VXST) 
o New product 
● Market Maker designations 
o Saves on commision, etc.
Secret Sauce 
● Traders don’t get commision 
o everyone is one team 
● Breadth of field 
o expand into new markets... 
o but no OTC products 
● Research 
o in-house, not Bloomberg 
● Technology focus
Story 
● Interned 
o well treated 
● Revolving door 
● Strange environment for devs
Competition 
● Other prop shops 
○ Akuna 
○ Belvedere 
○ Wolverine 
● The market 
○ Low volatility 
○ Irrational actors
Predictions 
● Up 
o Market expansion 
● Down 
o Slimmer margins - Low Vol 
o More regulation - HFT especially 
o Public opinion

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EECS 442 ckershaw presentation

  • 1. Spot Trading llc Carl Kershaw
  • 2. Overview Options prop shop ➔ No outside investors Trading on 11 Options exchanges ➔ CBOE, AMEX, ARCA Primarily long-term options, some HFT
  • 3. Finances ● Prop shop - no transparency ● Haircut to measure risk ● Profits highly variable ● Delta neutral book ● Thrives on stable volatility
  • 4. History ● Founded 1999 by Rob Merrilees ○ On-floor trader ○ Moved to off floor equities ● Five member team - grew to ~200 now ● Focused on technology ○ Started the same time as electronic trading
  • 5. What is “hot” ● Short term VX (VXST) o New product ● Market Maker designations o Saves on commision, etc.
  • 6. Secret Sauce ● Traders don’t get commision o everyone is one team ● Breadth of field o expand into new markets... o but no OTC products ● Research o in-house, not Bloomberg ● Technology focus
  • 7. Story ● Interned o well treated ● Revolving door ● Strange environment for devs
  • 8. Competition ● Other prop shops ○ Akuna ○ Belvedere ○ Wolverine ● The market ○ Low volatility ○ Irrational actors
  • 9. Predictions ● Up o Market expansion ● Down o Slimmer margins - Low Vol o More regulation - HFT especially o Public opinion