In the 1970s, when Howard Tyllas worked as a photographer for United Press International, he had a friend who traded at the Chicago Mercantile Exchange (CME). Back then the CME was located on Franklin Street, and he would visit his friend during lunch break. “I visited [the Merc] and fell in love,” Tyllas says. “My friend started as a runner for Jack Carl Futures and ended up becoming his partner. He started as a runner and ended up running the company!”
This type of opportunity intrigued Tyllas, who would get a job as a runner at the CME to learn the trading business. In 1973 he joined Refco as a runner when Ray Friedman was still the man in charge. “I became Ray’s personal phone clerk,” Tyllas says. “I sat next to his personal technician; that is where I learned how to chart.”
He learned what a point and figure chart was, how to draw trendlines, all the different chart formations and what they meant. “I learned the basics,” Tyllas adds.
In 1974 he took a job as a clerk for a group of cattle brokers. “I learned how to be a floor broker and learned how the pit worked,” Tyllas says.
By 1976 he had learned the basics and saved enough money to buy a seat. “I could have bought an [International Monetary Market] seat for $10,000 or Mid-America Exchange seat for $7,200. He decided to buy the MidAm seat so that he could trade the grain markets. He joined the MidAm and all of a sudden was standing next to such luminaries as Richard Dennis and Les Rosenthal.
Tyllas remembers that the member from the CBOT would call up the MidAm every day prior to the opening to get an opening call from the MidAm.
Tyllas gravitated to spread trading. He mainly traded calendar spreads in the soybeans but the beauty of the MidAm was that you could trade all markets and in manageable chunks. He traded beans, gold, cattle and hogs. “That is why the best traders came out of the MidAm. If you could make it at the MidAm, the other exchanges were a piece of cake,” Tyllas says. “You didn’t have to sit in a quiet market, you could move to wherever a market was moving.”
As soon as options on futures were listed in the mid-1980s Tyllas took an interest. “I went to a seminar to learn what a put and call was. That was all I needed to see,” he says. “Unlike futures, you could make a trade [in options] with a known risk. That was the main reason I gravitated towards options. I saw a lot of traders go bankrupt [with futures].”
Tyllas has an analytical mind and liked the complexity options offered. He compares options to chess, while futures are much more like checkers. With futures, he says, a trader typically determines a trade on whether the market will go up or down. “With options you have a rainbow of opportunities to profit from and rainbow of ways to manage risk,” Tyllas says.
Once options on futures became established, Tyllas concentrated most of his trading on options. He left the MidAm floor in 1989 and continued to trade for himself. In the mid 1990s he became a broker and worked as an analyst. He also worked as a grain and energy analyst for F.C. Stone and operated an options hotline for Lind Waldock.
It was more than just a hotline. Tyllas would provide the directional trade and then gave the best options strategy to take advantage of the move. “I would tell them the reason why I put the trade on and a reason why to take the trade off.”
Currently Tyllas remains a member of The Chicago Board of Trade and is registered with the Commodity Futures Trading Commission as a floor broker and as a commodity trading advisor. He is president of Futures Flight, an introducing broker for MF Global. Futures Flight is also the name of his CTA, which he launched in February and earned approximately 28% in 2008. He also writes daily market commentary and operates howardtyllas.com, a Web site that provides market information and options trading strategies.
