00:11:39 · Henrique Dubugras, Nik Storonsky
[00:11:39] S1: And you thought at that time that you're going to go back or no? [00:11:43] S0: I thought actually that I would work for someone for two years and I start my own business. [00:11:47] S1: In Russia or outside? [00:11:49] S0: Doesn't matter. I just wanted to start something on my own, but then reality, Lehman Brothers collapsed and I went to Credit Suisse and back then I was on the rock permit visa. So you can't really resign from the bank and start your own business because then you will lose access to the country. Right? So I had to wait, I think five years until I get passport. And then the day I got passport, I just resigned. [00:12:13] S1: Oh, wow. So, okay. So you're at Lehman. And what was your first job? What was the kind of... [00:12:18] S0: Trading. Trading? [00:12:20] S1: Yeah. And what was the... Like, it's probably like a very... You know, it's a very intense... I imagine it's a very intense culture. Like, what was the culture like when you joined? [00:12:28] S0: It was actually quite fun. Right? And, you know, I was always, you know, enjoying trading myself because I mean, back then I thought it was like quite intellectual challenge to... [00:12:38] S1: What were you training? [00:12:39] S0: Options. [00:12:40] S1: Options. [00:12:41] S0: Yeah. But then the reality, option traders are not really speculating in the bank. I mean, they are speculating back then, but the majority is just market making, right? So you make prices on different derivatives And customers come, they buy or sell to you.
00:12:41 · Nik Storonsky, Henrique Dubugras
[00:12:41] S0: Yeah. But then the reality, option traders are not really speculating in the bank. I mean, they are speculating back then, but the majority is just market making, right? So you make prices on different derivatives And customers come, they buy or sell to you. [00:12:57] S1: So explain to, you know, Deionis how it works. Right? Like, what was options trading job and practice doing there? [00:13:02] S0: Well, you just come in the morning. Right? Usually come 06:30AM before the market opens. You've got you have a book, right, where you have all your positions, market opens, then you have incoming requests. Okay. Some customer might buy, you know, puts or calls or... [00:13:17] S1: I wanna buy like, you know, I don't know, you know, six month call from Barclays at like thirty bucks a share or something like that. Someone shows up there. [00:13:25] S0: Yeah. And... But sizes are usually large because of their old social orders. So they usually quote in like 10 or 5 or 10 or sometimes a $100,000,000 versus index. Then you make a price and then they trade with you. You effectively put it on your book. Then you hedge position. Then you go through a broker to hedge it, resell this option to some other bank or some other client. So just market making. [00:13:49] S1: And you were the one doing that. You're like talking to customers on both ends or you're getting some sales guys? [00:13:54] S0: Sales guys were bringing deals. [00:13:55] S1: Sales guys were bringing deals. You're doing the job of like finding out what's the right price.
00:13:55 · Henrique Dubugras, Nik Storonsky
[00:13:55] S1: Sales guys were bringing deals. You're doing the job of like finding out what's the right price. [00:13:59] S0: Yeah. You just, as a trader, you're just ensuring that you make the largest panel on your book as simple as that. So you need to hedge the book. Sometimes you also take propositions because you think, you know, market goes up, market goes down. [00:14:13] S1: And was there anything you learned in uni that was, you you know, helpful for this or no? You had to relearn everything? [00:14:19] S0: No. You knew you had to relearn everything. Yeah. [00:14:22] S1: Just the core math that you learned in university? [00:14:24] S0: I mean, the reality back in uni, I was studying like, you know, blacks and shorts models, how to price options as a cause. But reality, you work as a trader, as a market maker, you already have tools which price options for you. And you just become, you know, so much more practical in terms of how you value options. [00:14:43] S1: Okay. So then you're at Lehman. I mean, you were a trader and then it collapsed. Right? Like, were there when it collapsed. [00:14:48] S0: How was that? Think I was like '22 back then. '22. That's Yeah. Was fun fun experience. [00:14:54] S1: So tell me, like, what was the play by play when it collapsed? You were there.
00:14:54 · Henrique Dubugras, Nik Storonsky
[00:14:54] S1: So tell me, like, what was the play by play when it collapsed? You were there. [00:14:58] S0: So on Sunday they announced that Merrill Lynch was bought out by government or bailed out and then Lehman Brothers was effectively let go. So on Monday I came to work, all the systems were closed, you can't trade. You... And there were, like, other, like, you know, two, 400 traders on the trading floor. No access to the systems. You just sit there, and they were all playing, like, the same computer game. [00:15:23] S1: Which one? [00:15:24] S0: As I'm shooting helicopters. Okay. Web based, the only game which was not blocked by corporate system. [00:15:31] S1: Wow. And... But like were the days before, did you already think it was gonna happen? Like was it really No. [00:15:37] S0: No one ever thought it would happen, to be honest. It was completely unexpected. [00:15:42] S1: Wow. So like on the Friday you're like, know, I'm just gonna come to Monday. And then Monday the show is like, oh fuck. [00:15:48] S0: It's done. But to be honest, I was very young and very confident in my abilities to find any other jobs. [00:15:55] S1: So you weren't scared? [00:15:56] S0: No, not at all for me. It's like interesting what happened there. [00:15:59] S1: Yeah. Good learning. [00:15:59] S0: Completely. Yeah, exactly. [00:16:01] S1: Is there any learning that you took at that time about like, you know, what to do, what not to do, life, anything that we were thinking at that moment in time?
00:16:01 · Henrique Dubugras, Nik Storonsky
[00:16:01] S1: Is there any learning that you took at that time about like, you know, what to do, what not to do, life, anything that we were thinking at that moment in time? [00:16:09] S0: I mean, be honest, I was so confident in myself that, you know, in my mind, like I can do anything. Would never be without like, you know, money or something. [00:16:19] S1: Where do you think all that confidence kinda came from? Like did you just win a lot [00:16:23] S0: when you're... Yeah. Exactly. I think you know when I when I was a kid because of all these competitions. Because if you build certain track record also because you know, universities were very hard with exams. You kind of learned how to... [00:16:34] S1: And you were always like number one or something? Then you were like... [00:16:37] S0: First years in university, was like always like, you know, top grades and so on. But then I started working as well. And then I realized, you know, like going deep into science is not for me. So I started doing like, you know, some side projects, started working as well. [00:16:53] S1: Like what side projects? [00:16:55] S0: I was like, just to make money, like different things. Because back then, like a lot of students were trying, for example, buying cell phones, selling cell phones, this kind of thing. [00:17:04] S1: So you got into the buying cell phone business? Yeah. How did it work? Like, that was kind of your first, you know,
00:17:04 · Henrique Dubugras, Nik Storonsky
[00:17:04] S1: So you got into the buying cell phone business? Yeah. How did it work? Like, that was kind of your first, you know, [00:17:11] S0: business I mean, initially I thought I lost money. Right? But then, yeah, I actually made it all back. I think I made like, you know, five to 10 X on what I put in. [00:17:20] S1: But what was the business like? What was the spy and cell phone business? [00:17:23] S0: So basically there were guys who were kind of, who had their, I think one shop and it was really, you know, going well. They were selling cell phones. They wanted to expand. [00:17:36] S1: Like a retail shop, normal retail shop. [00:17:37] S0: Yeah, yeah. So, and so I gave them money and they went to the business, but then the business didn't do well initially. I thought I was lost at all. [00:17:47] S1: How about how do you get the money to give them? You're so young, right? [00:17:51] S0: Yeah. Desire to make money, right? Desire to take risk. [00:17:56] S1: But how did you have the money to give to them? [00:17:57] S0: Oh, because I was also working part time [00:17:59] S1: as well. Oh, you're working part time? [00:18:00] S0: Part time, yes. So I had... [00:18:01] S1: For what? [00:18:03] S0: So basically I was doing... I was working part time at the Institute of Economic Research. [00:18:07] S1: A what? [00:18:08] S0: It's Economic Research Institute. I forgot its name. [00:18:11] S1: But it's kinda like a research job?