00:08:17 · Nik Storonsky, Henrique Dubugras
[00:08:17] S0: Yes. So basically, physics I was doing for six years, university. So standard bachelor, do four years, and then two years, you do master. So when I done bachelor, I also applied for master degree in economics and finance in like top university in Russia. So I was finishing two masters in parallel for physics and then... [00:08:34] S1: Oh, wow. And they were both in Moscow? [00:08:36] S0: Both in Moscow. Yeah. Okay. Yeah. Back then, a lot of people, they wanted to go to do PhD in American universities, even myself. Yeah. Thanks God I haven't done it yet. [00:08:45] S1: Yeah. You don't seem like the PhD kind of guy. Yeah. [00:08:48] S0: Then back then, what actually changed my opinion on PhD because all the trading houses and investment banks, they came to recruit all the kind of brightest graduates from physics and economics in Russia. So I just decided to kind of change career path from PhD to get on work. [00:09:05] S1: To going to work. Yeah. But like, you know, The USSR had like a very different economic model for a long time. Right? Like, did you study the economic model or like, you know, it was... Like, how do you even think about... Was it fully capitalism economics or like, were there other ways when you're studying it? [00:09:19] S0: No. Russia actually... So USSR collapsed when I was eight years old. Right? So actually I observed all the kind of capitalism. Right? And it was like pure capitalism. Yeah. Because there was nothing. And then suddenly old people started, you know, building businesses or trading. So you were seeing that
00:09:19 · Nik Storonsky, Henrique Dubugras
[00:09:19] S0: No. Russia actually... So USSR collapsed when I was eight years old. Right? So actually I observed all the kind of capitalism. Right? And it was like pure capitalism. Yeah. Because there was nothing. And then suddenly old people started, you know, building businesses or trading. So you were seeing that [00:09:39] S1: from very close. How did it feel like? Like, what did it look like? [00:09:41] S0: Now I think I was too young, right, to get something done. So I kind of, you know, observed everything as a kid. Yeah. But I haven't done anything myself because I was, you know, too young. [00:09:51] S1: But you were observing it, right? [00:09:52] S0: I was observing [00:09:53] S1: it. What did you think? Like, you're thinking like, hey. I need to start a business because everyone's starting business this year is making money. Like, is that kind of the conclusion you got? [00:09:59] S0: I I just observed that, like, a lot of people, you know, become rich. You see, like, different cars. You see people buying cars before they they didn't have cars. And for me, it was like motivation to kind of, you know, earn money. [00:10:12] S1: Yeah. What was the... Was cars? Like, you're really into cars growing up? [00:10:15] S0: I was as a kid, as a as a young kid. Yeah.
00:10:15 · Nik Storonsky, Henrique Dubugras
[00:10:15] S0: I was as a kid, as a as a young kid. Yeah. [00:10:16] S1: Yeah. Yeah. You're like, oh, you know, I don't wanna a young... Get me money. I'm gonna buy this awesome car. Yeah. Yeah. Yeah. Yeah. You know, like for me when I was growing up, I was just a tall kid. I'm like my height since I'm 14. Yeah. And sometimes I travel and I just want... I wonder if I'm make money. I'm gonna go on business class, you know, because, like, this fucking economy, see, I don't fit in it. You know? It's terrible. I remember that being a big motivation. Yeah. Very cool. Okay. So you said the recruiters came [00:10:41] S0: to basically... So, Basically, after first year of MA, so recruiters came for the internship and then internship was in London. So I passed all the stages, flew to London. And I liked it there, right? They liked me, so they gave me a full time offer. I think they had like definite 10,000 Lehman plus Brothers. [00:11:07] S1: Lehman Brothers. [00:11:08] S0: Yeah. Yeah. My last year into universities, was actually working full time for Lehman Brothers and then in parallel finishing studies. [00:11:16] S1: Oh, wow. So you were doing like two masters and working for Lehman, which is not a chill job. Right? [00:11:22] S0: Not a chill job. To be honest, university last year was pretty chill. Yeah. Yeah. Wasn't that [00:11:29] S1: did you wanna leave Russia? [00:11:32] S0: Yeah. Was a good opportunity to effectively learn how things work abroad. And yeah, it's just cool. [00:11:39] S1: And you thought at that time that you're going to go back or no?
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.