The Compound and Friends - Tom Sosnoff Will Teach You Trading

Episode Date: September 19, 2025

On episode 209 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Tom Sosnoff⁠ to discuss: what it takes to become a trader, how Tom got into the business, his experience selling Think or Swim to TD Ameritrade, Chicago vs NYC, and much more! This episode is sponsored by Neuberger Berman and Apex Fintech Solutions Learn more about NBSD and get important information at https://www.nb.com/nbsd. NBSD from Neuberger. Investors should consider the Fund’s investment objectives, risks, fees, and expenses carefully before investing. This and other important information can be found in the Fund’s prospectus, and, if available, summary prospectus, which you can obtain by calling 877.628.2583. Please read the prospectus, and, if available, the summary prospectus, carefully before making an investment. Neuberger Berman BD LLC, is the distributor of the Fund and a FINRA member. Learn more about Apex at https://apexfintechsolutions.com/augmented-advice Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Tom, this is so exciting. I've been looking forward to this since we scheduled it. Yeah, you're so happy to see you here. Nothing's off limits. Okay. Nothing. Okay. You could go as long as you want.

I have no agenda. I have a show tomorrow in town, but that's it. Okay. Where you had it? Awesome. Stock Exchange? No, no, no, no. We do our own shows, so I have a show at Webster Hall.

You know what it is? That is sick. It's on 11th. It's on 11th Street. It used to be the Ritz, like, when I was a kid. And, yeah, we've got, like, So who comes to that, who comes to that show? Retail, we have like a thousand, a little over a thousand people signed up.

That's unbelievable. But we do them all of the country. Like two weeks ago, I was in San Francisco next weekend. We're not this coming weekend. The weekend after that, we're in L.A. Can I ask you a question? Yeah. It's weird.

So we started doing live events and we've done some really successful ones. You can put that on. Okay. And we did one in Chicago at the chop shop. And we sold it out and it was great. Yeah. One of the problems we're having. Do I need to wear this?

Yeah. It helps because it helps for the recording. One of the, because when you see something really funny, and I want people to acknowledge it. All right. We have problem finding the venue that matches the size of the audience. So like, how many people do you have? That's the thing.

It depends on where we are. Okay, so I got a girl, I got a woman that works for me. She's been with me for 10 years. All she does is book venues around the U.S. How many events do you do a year? We do one every other weekend. So, 25. So she knows every venue in America, basically.

And we use all kind of really, we use all Live Nation or, you know, we use, we use theaters. We don't use, like in Chicago, we just did one at Value Hall. I don't know if you know, it's a concert venue. It's really nice. Yeah. But we know every venue. Like she knows, she knows every venue. Just, I'll give you her context.

Like when you go to L.A. you do the L.R.A. theater. We've done the L.A. We're doing the Fonda Theater this time. Okay. But we've done L.R.A., like two or three times, great place. So my team does a pretty. good job, but it's always hard. It shouldn't be as hard.

It shouldn't stop that. It shouldn't always be as hard as it is, but it's like in this city, we have 300 people. In this city, we have 100 people. We don't know how many tickets we could sell. So are they, is it free or do you charge? No, it's paid. Oh, so when you pay, you have a pretty good show rate. Yeah.

Yeah. That's not the, right. The issue for us is we don't know these places. Yeah. So we do our best from long distance. Yeah. And then we'll fly out and see something. It's hard.

It's not easy to do. It's one of the more underappreciated aspects of doing a live event is the venue itself. Yeah. I have somebody that that's her full-time job, and she's amazing. But wait, you said this is important. If people pay, they show up. So you're saying it's risky to have people not pay because then who gives us shit? Right?

It might. Oh, I would have it. Yeah. But we do, we don't charge because we don't have, that's not in our model. So we only charged once, but we did it as a, because we had a slightly smaller venue. So we charged, and then if you showed up, you got your money back. And we had like, we had like a reservation. Yeah, exactly.

It was like a 95% show right there. Normally, when you just do it free, so our show rate, like we have maybe 11 or 1,200 people signed up for tomorrow morning. And we'll probably end up with a show rate about 65%. So we might get 650 to 700 in that range. And you just do your version of the show, but do it for a live audience, or this is a specific? No. All right. This is a very specific thing that you're doing.

This is a live trading event. So we trade live for, you know, 90 minutes to almost two hours. That's awesome. Are people, people are trading with you? They can, but we don't care. I mean, we're just, we're just trade nonstop for basically 90 minutes. And we trade everything. Wait, what time is it?

Where is it? I want to come. You can come. You would love that. It's doors open at 8. Show starts at 9 tomorrow morning at Webster Hall. I think it's on 11th. I think it's on 11th.

So I want to tell you about the time I figured out you were a genius. The year is 2014 or 2015. I never met you before. Okay. But from afar, I just said this guy is smart. So I land at the Las Vegas airport for the Salt Conference. And you see my ugly face up on the, up on the, keeping out internet. As soon as I get off the plane, I go to the baggage claim and all of the baggage claims in the Karen Airport, which if people are listening, if you've been in the Vegas baggage claim, it might be the largest freestand

construction in the United States. It's so big. All of the baggage claims are sponsored by Tasty Trade. Then I go outside. I don't need a cab because Joe Fommi's picking me up, but the taxis are lined up. And they all have Tasty Trade on the top. And I said to myself, look, this is like the one week of the year where every hedge fund manager in America is all in one place. Of course, Tom has the sponsorship thing. Well, that was actually a great sponsorship, and they did us right. So you remember this 10 years ago. You remember this? Oh, yeah. No, I negotiated that deal with whoever had the space. And it was actually very reasonable.

And we gave free internet. You know, basically that's all it was. Free internet. Then you got some of their digital screens and all the other stuff. And it was great. We kept it for almost three years. And then somebody came over the top. I think it was Google and offered them like five times what we were paying.

You don't want to get into a bidding war with Google? Well, we can't win that. For the baggage plane? I can't win that. No one's winning that. Does it feel good to be back in the studio? I love it. I love it.

We did a show at Future Proof last week, and we love doing live shows in front of the audience, but it's nice to be back home. Yeah, we don't ever do our show live. Why? Because it's not that interesting. Like, I mean, we find that the audience gets a little, you know, it gets a little bored. So what we do is all our live events are completely different. So we do like live trading and then we do some, you know, sometimes it's like we have all these.

So we've been doing, I've been on the road for 25 years. And we have different events every year. We change it. Like, we'll do some fun events with the audience where we give, waste money and they're all like some of them are teaching some of them are fun you know we we create all these like um challenging questions they're all like it's every show is a paradox of something of some math model of which we kind of don't tell them that in advance but then at the end we let them figure it out and so we play all these games over the course and we have like probably 10

speakers on the road you know but but but tony and i draw the you know the best by a lot how did you How did you find these people and then elevate them and, like, turn them into stars within your community? Is that just an organic thing? Yeah, it's organic. They found you? They find you? No, most of us have been friends for decades. Like, Tony and I, I did a show, we've been friends for 45 years.

Scott and I have been partners for 35 years. Okay. Liz and Jenny, we were friends for 20 years. I mean, these are long relationships. We don't. The new kids are great, but they don't draw. That's the hard thing. Okay, not yet.

Not yet. Yeah. Okay. Well, you got a really cool community, and we want to talk all about it today. So thank you so much for being here. When we're done judging the pumpkin bowl, are we ready to get the show on the road? Yeah. Like I said, you go anywhere.

I don't really care. All right. It's an important man, guys. Time is money. I like your energy, Pam. Thanks. Let's go. Hey, John, what episode is this?

Episode. Whoa, whoa, whoa, stop the clock. Here's a word from our sponsor. Today's show is sponsored by New Burger Berman. What does the Fed's rate cut mean for your fixed income portfolio? Lower rates are great for borrowers, but for investors parked in ultra-short funds, and not so much. The yield edge fades as rates fall. That's why you might consider the Newberger Berman's short-duration income ETF, ticker NBSD.

NBSD aims for consistent and efficient income and invest across rates and credit markets at the front end of the curve, targeting an investment-grade risk profile. If falling rates make ultra-short options less compelling, consider NBSD. Learn more and get important information at www.nb.com slash NBSD, NBSD from Newberger. Investors should consider the fund's investment objectives, risks, fees, and expenses carefully before investing.

This and other important information can be found in the fund's prospectus, and if available, summary prospectus, which you can obtain by calling 877-628-2583. Please read the prospectus and If available, the summary prospectus carefully before making an investment. Newberger-Berman BD LLC is the distributor of the fund and a FINRA member. This episode is sponsored by Apex Fintech Solutions. The time to compete for next-gen clients is now.

Transforming your business for the future might seem like something you could push off, but every year you wait, the further behind you fall. Eventually, you won't catch up. Augmented advice from Apex gives you the power to be what the next generation wants on your terms. It's a modern on-ramp to tailored advice using your brand, your personal touch, backed by Apex Innovation. Learn more at ApexFintech Solutions.com

slash augmented advice. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Episode 209, Nicole's here. When Nicole's dancing, I know it's going to be a great show. Duncan's doing a little bop.

What he got going on? Are you excited to be here too? Of course. All right. You have a microphone in front of you. You know that, right? I do. All right.

John is in the house. Ladies and gentlemen, we have a first-time guest today, somebody that I'm so excited to be speaking with. And I've been aware of his work for a long time. I've met many of his acolytes over the course of my career in finance and financial media. And today's episode is going to be just an, absolute blockbuster. So thank you so much for joining us. Tom Saznoff is a trailblazer in the online brokerage industry, driving innovation and financial education for investors of all levels.

He offers up expertise in the options market as co-host of Tasty Live, airing daily on the Tasty Live Network. A former floor trader, Tom became one of Chicago's most well-known serial entrepreneurs in FinTech when he built a breakthrough options trading platform, think or swim, which was eventually sold to TD Ameritrade for $750 million, leveraging over 20 years of experience as a market maker for the CBOE, one of the original OEX traders in the S&P 100 index pit. Tom pursued his vision to educate retail investors in options trading and build a superior trading platform. Tom Sazanov, welcome to the show.

Thanks for having me. All right. And I know there were other things that I was supposed to read. It's just so much. You're extremely accomplished, man. Can we start with the markets question? Yeah, sure.

I was going to do this whole thing, like state of the markets and like do this whole wind up about this is doing this and this is up that. But it's almost like a stupid question, I feel like, because I think your ethos is let's find the way to make money no matter what the state of the market is.

Do I have that right? I'm a strategist. I'm a trader. I really don't care what the market's doing. Okay. So that's what I wanted to get to. How did you come about that mindset as a market participant? Because most people don't start off as what they end up as.

And so I'd love to just hear that journey for you. And then we can get into the state of the market. So I started this business different than most people because I started in the trading pits where you don't decide. So I spent 20 years in. the S&P 100. So you don't decide what you want to do. You just take the other side of whatever order comes in the crowd. So I grew up never having an opinion about the markets. I grew up just taking the other side of what anybody else wanted to do. So I'm a pure contrarian. Okay. Because that's where the money is to be made? No, that's the only way you can trade.

So when you're a floor trader, the other traders, it's like going to, do you play poker? Yeah. Okay. So if you go sit down a poker table and it's just a bunch of professionals, you guys don't even want to play with each other. Right. But you have to wait for people like me come by, you know, to blow some money. It's the same thing in the trading world. The professional market makers don't trade with each other. They just wait for customer orders to come in. If there's no customer orders, they just stand there with their hands in the pockets. Okay. So what year did you start out trading and how did you get the job? I was, I got, I grew up in the, so I'm 68. Okay. I grew up. By the way, you look great.

Nobody would guess that you're 68. So I grew up in New York and I went to Sunni all Okay. And it was 1979 when I graduated college. And there was no freaking jobs. I mean, it was the middle of recession. Interest rates were 20%, 19, 20%. And it was hard to get an interview. I got an interview on Wall Street. I was a political science major. I thought I was going to be like a lobbyist. And I got an interview on Wall Street with Drexel. If you remember Drexel, Burnham. They were a good firm, like a boutique firm. And they offered me a job on the spot. So now I'm in finance. And I got a job with Drexel. I was there for probably about nine months in their training program. And one of they met a couple of guys there on their trade desk. And they were like, they didn't really

like the retail business. They wanted to trade. So they go, they were all married though. They go, you moved to Chicago and we'll put up the money. Okay. And it was $50,000. I thought it was $50 million at the time. And so they put up $50 grand and I packed up my car and just left and went to Chicago. Never came back. Because you needed somebody physically on the floor in those days. Yeah, you needed somebody. Right. Yeah. But, so it's like 1981 just before the market explodes. These guys get a little bit short. I forgot what stock it was.

I'm on the floor three days. They lost all 50 grand. I had, I made $18. I remember like it was yesterday. I made $18.75. Three teenies, three sixteenths. That's $18.75. That was your commission for whatever.

No, no, that was my commission. That's how much I actually scout. Oh, my God. And of the 1875, 1250 of it was. was given to me by other traders that just were like, hey, welcome to the business. Okay. So that was the end of a 16-year bear market. Yeah, basically.

And that, and they blew out in, it was, it was like less than two weeks in there. So now I'm in Chicago. I got $1,200 maybe to my name, you know, but I paid the rent for, I'm on a seat that I can't afford to pay for, and because seats were expensive. And I had to figure out, you know, and I figured it out. That's, dude, that's, that's an amazing origin story. And so your formative experience is not sitting as like, a strategist trying to figure out what's the year-end price target for the S&P.

No, that's all. You have to figure out how to make money on Monday. And then Tuesday, you have to figure out, how do I make money on Tuesday? I eat what I kill. But that was such an interesting time because... It was the greatest thing ever. I had never been to Chicago. I grew up here, and they said, why don't you fly to Chicago and check out the city?

So I land in Chicago, and I took a cab. I went up and down Lake Shore Drive just to check it out. And then I met this guy who I didn't know, who was a lawyer from New York who hated law. and he was now a trader. He takes me out of trading floor. It's the old trading floor. And it's all options that everybody's screaming and yelling. It's the most wild place I've ever seen.

And I walked on there within three seconds. I'm like, this is where I got to spend the rest of my life. It was the most amazing place. It was the last frontier of like true capitalism in my mind back then. And I didn't even know what I was doing. So in 1981, like how long did the psychology take to change when people were like, wait, maybe this bull market is real? How long did people fight it for?

I have no idea because when you're in the pit, you don't, all you care about is making 10-8s or 100-8s. You know, like- So you really don't give a shit. You only care about what orders can be. Can you scalp that order? It doesn't matter if it's a bull market or a bear market because you're affecting trades right now that are going to close very quickly.

Yeah, I always tell the story of the kids sitting next, there was a kid sitting next to me, you're standing next to me, and we became friends over the years and we're still friends today. And when the Dow crossed through 1,000, for the first time, he goes, take a picture because he's never going to see this again. Like, the numbers we were talking about are insane. Are you still a contrarian by nature? Oh, my God, yeah.

So trading back then was a physical job. Very physical. Yeah. All just big, freaking guys. A lot of ex-football players and, right? Like, a lot of, like, big guys because they could get close enough to the action. But a lot of everything. Like, so I started, a couple years later, I started to make some money and I started a prop firm.

And so we hired lots of traders. I probably hired 50 traders over the years. And I hired a first-round draft pick from the Kansas Chiefs that blew out his knee. And so he was the largest, he was, he was an offensive tackle, the largest human being ever. You couldn't move him no matter what you do. But he didn't make it. Okay. I hired a professional wrestler because he was just, he looked like Goldberg. Remember Goldberg? Of course. He looked exactly like him who once broke three people's ribs in the bond pit. He had the traps. Like he was steroid out. It was just insane. He was the largest, widest, he wasn't that tall,

he was the widest human. And people were petrified of him, but he never made it. And then I, I also hired like some crazy rocket scientists, some kids out of like Carnegie Mellon with master's degrees, PhDs, the whole deal. And they didn't make it. So you never knew. But then you get some kid from some Southside parochial school in Chicago that didn't even go to college and they kill it. So who makes it and why? It's a really good question. And we could never figure it out because back then the learning curve was kind of long. And the people that made it, you know, at some point, it just clicked. And I can't explain. Like we couldn't tell in a deal. Like, we had no idea if we hired somebody if they were going to...

What about now? Can you tell them now? Like, is it a personality type? Or what is it... Now there's no more game. It's all computers. But what I love about what you're saying is that we had Mark Fisher on the show. I know Mark Fisher. You know Mark.

Well, I don't... I mean, I only did one interview with Mark Fisher. Yeah. I did not know him as a trader. Right. So, but Mark told us the same thing. Yeah. He's like, a lot of people try to do this and you'd be amazed at who actually can do it.

Yeah, he was a New York junkie. He's a futures trader. Yeah. Like, futures traders are very... different. Like in Chicago, you had the CME, which was one kind of trader, and then you had the CBO, you know, like I did a really fun interview years ago. I did a documentary on Louis Borsellino. Okay. Do you remember it? No. Okay. Should I know who that is? He was for a years in the 80s. He was like the biggest futures trader. Oh, wow. Okay.

And then he, he's just got a great story. I'll send you a link to documentary. It's unbelievable. Yeah, I would watch the shit out of that. I love that stuff. Yeah. All right. So let's do state of the markets, though. So I would assume a year like this one, got to be a lot of fun for traders is a lot of ups and downs, but predominantly like the bias is high. Maybe the volatility is not as much as you'd want it to be if you're intraday. So our business is volatility-based. Okay. So we do better. And Tasty is a, is a firm where 90 plus percent, almost 95 percent of our business is listed options, futures, and futures options. That's what the users on the platform are trading. That's right. Okay. So we're like the largest

derivatives boutique in the world, but we don't trade a lot of stocks. So customers don't come to us for stocks. They'll go to Schwab or E-Trade or Fidelity or whatever, but they come to us to trade options and futures. Okay. Well, they'll do that separately from where they're doing their stocks? I mean, some people do. Okay. Why? What is it about Tasty Trade that makes them want to trade options with you guys? It's just a way better platform. I mean, it's just the technology is faster. Everything is from a single interface. You can do all the different stuff. Like the other interfaces are all legacy interfaces. They're old and clunky. Okay. So did April make your year? No. Why not? Because we don't like when people get hurt. Okay. And, and, you know, April,

the trading volumes were great, but you get situations where, like, some of your best customers. And they don't come back? Well, they come back. Everybody always comes back. There's nobody ever goes away. But some of our good customers got hurt, you know, because we're a premium selling firm. And, you know, you got slapped in April. April's kind of, you know, it was good for business, but not good for the overall business. Could you explain what you mean by that when you say we're a premium selling firm? Well, the way we teach and the way that we, so we, we, we're a think tank. We have two businesses. Our primary business is our brokerage firm. Okay. And that's pays everything. That's, you know, that's our business. That's our revenue. We're a 300 and something million dollar

revenue brokerage business. Okay. Way more than that, actually. But then we, we, have a network that that that which is actually for content marketing and we don't charge anything that's all free and it that's how we kind of get that's how we compete marketing wise with all the big firms yeah and the network when we built it the reason i built is i didn't like financial media traditional i didn't like cnbc i mean listen i like those guys i just didn't like the content i don't like interviews with people i don't like i don't care what somebody else has to say because that goes back to my mentality. Yeah.

So I didn't like Bloomberg. You know, I didn't like CMC. It doesn't make any sense to me. Why would somebody listen to somebody else thinks? Who cares? I don't know anything. So, so we built tasty. Duncan, we could edit all that out, right?

All right. Go ahead. So, so we built tasty to build a firm strictly around, around quantitative, you know, probabilities, statistics, quantitative, just math. We're just, we're a math-freaked firm. And you can do that in the options world, because the options, everything is just a derivative of black shoals.

So everything you can figure out, expected move, you know, everything's based on volatile. You're trying to figure out, like, what's in the premium, how much of this is time value, how much of this is intrinsic? No, we're really trying to figure out is the premium pumped relative to it not being pumped. Is it priced correctly or not price? No, it's always price correct. I'm trying to understand them. What is the math trying to figure out? Okay, so everything's always priced perfectly.

That's why firms like Citadel and all the other firms, they're amazing, and they price everything perfectly. So nothing's misprice. But sometimes volatility is high relative to itself, and sometimes it's very low. And so what we do is we try to help customers when it's high, tell them what they can do, like optimize strategies. And people really love math. You know, here's our basic premise. And everybody told me this would never work. People are super smart.

And I believe people are smart. People are good and they're smart. When I say good, they're just, most people are decent. So the premise behind Tasty was we're going to give you, we're going to tell you everything we know about trading and hopefully you use our platform because it's a goodwill, good faith marketing plan. Okay. And it worked.

And the reason people liked it is because we challenged them with math rather than tell them, you know, tomorrow, you know, Nvidia's going down or tomorrow Nvidia's going up. What we do tell them is based on the way options are priced, Invidia for the next 30 days has a $17 move higher or $17 move lower. So set your strikes wherever you want because that's going to be right 70% of the time. Okay. Because that's just a math model. Who are these people?

Who are your customers? Who are your like hardcore users? Oh my God. Well, we have, you know, I don't know, half a million customers. Okay. So all walks of life? Oh, yeah. Is there anything that they have in common?

They're probably very intelligent. But everybody's intelligent. I know you don't think so. But in the world of self-directed trading, everybody's our customer. Here, I'll tell you a quick story. So once we built a institutional platform years ago, I built a platform that's still used today by Schwab,

it's their institutional platform now, but I built it 25 years ago. And when I built it, I built it with partners. We had partners at AB&A&Ambro and UBS, a couple of big institutional firms. And I built it because I thought it would help us, you know, grow our business and our name and stuff like that. And every firm that signed up for it,

I would say, they go, we want it exclusive with our customers. And I go, I can't do that because, you know, Merrill Lynch says, every customer is their customer. And UBS says every customer is our customer. And then ABA and Aeros says, every customer is our customer. So I look at business the exact same way. Every customer at Robin Hood, every customer at Thinkerswim, every customer at E-Trade, every customer of fidelity, they should be our customers.

But obviously they're not. But that's the way I look at the business. We don't have, you know, we could have a 18-19. year old kid, we can have a 90, our thing, our oldest customer is like 99. You know, I don't know. Very short day of options at that age. Well, you don't buy right, you know, you don't buy. So you mentioned, zero day.

You don't buy the green bananas. You mentioned your customers got hurt in April. So most options expire worthless. We know that. So is your thing like, all right, instead of being the sucker who buys the options, sell them? Is that the deal? Yeah.

But don't a lot of institutions do that trade also? Like, how do you, how do, how to, uh, institutions are pretty on, on balance. They're pretty dumb. First of all, they don't have the expertise. They don't have the technology. They don't have the expertise. And they're very limited by liquidity. So institutions have to trade in a very narrow set of, you know, that's why you

have such a concentration of just all, you know, equity wealth. But it's the same thing for options. If you're an institution, you can't move $25 million in option, which is nothing. If, you know, in very many stocks. you have like five or ten five or ten different underlines max so the the futures world with respect to options is i mean the institutional world with respect to options is pretty limited and we don't do any institutional business okay we're a hundred percent retail so options trading is at record highs yes but i thought there was an interesting uh juxtaposition that i wanted to show you can we put up this uh cash and money

markets chart it's weird to be in an environment where people have never traded more options, whether it's volume of contracts or dollars, any way you want to look at it, it's an absolute explosion. But then at the same time, total cash and money market funds is at an all-time record high. And like a very pronounced one, almost vertical. People will look at that options chart and they'll say it's a speculative mania because they're stupid and they just infer.

And then people will look at this cash and money markets and they'll say, everyone's bearish. Neither of these two things are true. Not even remotely. Just there's a lot of cash and a lot of activity, and neither one of those things have to signal anything about the environment. They could just be things that are happening in and of themselves. I think you'd agree with that.

Yeah, the markets at the S&Ps are at 6,700. I mean, there's, you know, you're talking about an enormous amount of wealth that's created. That's why there's, you know, you could take a little bit of money off the table and you still have the same position you had on, you know, a year ago. So that's why cash is so high. So you said people are smart. and investors today are more informed than they've ever been. Fidelity made this video in 1994.

We've got a four-second clip, John, show this time. When I say the word stock market view, what comes to mind? Confucius. I don't even know how to read the... Too much of a gamble for me. Unbelievable. That's 30 years ago. How did... How much more informed as the public today than they were 30 years ago or even 20 years ago?

I mean, the dissemination of every... because we all, you know, we all have everything in whatever, in TikTok bites now. It's got to be significantly, you know, significantly higher. Here, I'll give you a number. That's really interesting. When we built Thinkersome was 1999, 2000, and the amount of option business that TD Ameritrade did was between 7 and 8% of all their volume. Now, they had a web-based platform, but remember they had bought like, you know, a bunch of

a different firms. They're pretty big. And seven, eight percent of their volume was options and they did zero's futures business. When they recently sold to Schwab, the TD Ameritrade, their business was over 70 percent options and futures. When you add them together, they're mid-70s. Wow. That was own, that wasn't that much, you know, that wasn't that many years later. Right. So the, the investing public has grown more sophisticated over time. Well, also they've grown more capital efficient. So the problem right now is you've got stocks, like you take 100 shares of spiders, just as an example, $67,000 for 100 shares. The average retail customer has a $40,000 or $50,000 portfolio. And so, you know, I mean, that's the average online customer. You know, there's obviously

places like Schwab where the customer size is bigger, but you can't even buy 100 shares of stock. Yeah. So why would you, why wouldn't just either sell a put where you put up, you know, eight or $9,000 or sell a put spread where you put up $250 or buy a call spread or buy a call, whatever you want to do. What is the limiting factor? It's the lack of understanding of how these instruments work. Not really anymore. Now there's so much content out there.

The technology is so freaking good. You can't believe how good the technology is today. Yeah. Well, one of the reasons why I think people feel more comfortable with stocks than options is not having to constrain their opinion of what's going to happen into a set predetermined window of time. so people will say. Because that's the old school way of thinking. I understand. But I wanted to ask you about that. So people will say like, all right, I'm going to buy alphabet. Yeah. If I'm wrong, it'll go down $20, but I'll just hold it until it goes up because that's how people operate. Nobody in our world thinks like that. Okay. Like I couldn't, I haven't found a person, you know, I mean, I respect, you know, the people that can do that. They can get away with that. Like, you know, the Warren Buffetts of the world where you can hold something for 20 years until it's right because nobody's ever leaving you. But in today's world, you're, you know, but in today's world, you're, If you're a money manager, you're only as good as your last quarter or your last month. And if you are a trader, you know, none of that place.

Well, you won't survive as a trader. You're dead. You couldn't do that. You're dead. You're dead. So the only way to keep yourself in check is kind of is trade size. There's nothing else. But again, the technology today and the information that's available to you, like, I mean, our platform, we'll show you.

Like, you get your worst case. Like, we'll give you a CVAR number. We'll basically give you everything to nice. 99% of the occurrences. Okay. You know, there's only 1% outliers, and that's kind of, you know, so the only way genius fails is when you trade too big. Okay, so you're showing people here, here's the, here's the mathematical probabilities

of what could happen here. Of course. You don't know what will happen. Of course. But you're stacking the odds in someone's favor by at least presenting them with upside downside. No, we're not giving, we're not, we're stacking the probabilities in their favor, but it's not a theoretical edge. Do you understand that's quantifiable? It's sure it's

quantifiable, but it's not a theoretical edge. What it is is it's just, we are just explaining to somebody. So in other words, if you want a 70% probability of success on every trade you make, you can do that no problem. And law of large numbers will deliver that return, we'll deliver that win percentage to you. But they won't necessarily deliver return to you. I was about say, what's the gain if you're, if it's that high? It's got to be relatively low. So you, so the gain is less. You take more risk. Of course. You risk more to make But you have a higher win percentage. So you mentioned Edge and how the market makers are so good.

The prices are always right. The technology is so good. The information is so good and quantifiable. Does that make Alpha or Edge much harder, paradoxically? Because everybody knows everything. Of course. Yeah. I mean, yeah, there is no such thing as Edge anymore.

Are there a lot of retail options traders who make a living and that's their sole source of income is the money that they're pulling out of the stock market? Yes. That's pretty impressive for somebody to be able to do that. It's really impressive. one in, is that one in 10,000 or is that one in a million? Like, what are the odds of somebody getting good enough and being consistent enough and emotionless enough to be able to really do that? It's extremely rare. We've done, we do. I'm sure you've seen it. We do a shitload of

research on this. Okay. This is, this is my word. Well, this is what I want to learn about. But let me just finish up with what you said, because I think it's important. So the reason that we take that high probability approach to trading is not because it means you're going to make a certain return. We do it because we teach people to win. Like all we care about, because we can't make you money or whatever, all we care about is you learn how to be, how to have a winning, how to win more than you lose. And then hopefully you figure out how to turn that into a positive return. And position size it. So I'm with you. So I'm a gambler. Yeah. And I would much rather do a three leg parlay where I buy points and it's plus 120 as opposed to an eight like parli. That's plus

$1,300. That's never going to hit. Yeah, but the problem with that trade, the problem with that Oh, I know I lose money. Believe me. Yeah, is you have, you have an embedded negative return. You cannot over time make money. Correct. In the trading world, so I'll give you a couple stats. It's interesting. So in the gambling world, you bet $100,000, you're basically paying $10,000 in fees, okay?

You bet $100,000 in the trading world, okay, you're paying $1. Because if you're trading something that's liquid, like $100,000 of Apple, $100,000 in video, whatever it is, the difference between the bid-ass differential is one penny. So it's $1 to $10,000. That's why, you know, if you want to gamble, have some fun, but it's not, it's impossible to make money. I used to lose three to five cents for every dollar that I was betting and Fandle. Yeah. And the bottom fell out for me, thanks to the chiefs and the fucking Texas and charges game. But anyway, so now I'm down to like six to seven cents loss for every dollar.

But that's right. Yeah, I lose six to seven percent of my bets or the dollar of every. Yeah. So in the trading world, it's, it's a level playing field and that's it. You know, it just depends on how you do. But is it as much fun? Maybe more fun. I don't know.

It really depends. I have fun gambling, too, but it's different. Okay. So the question about how many people could. realistically be professional traders. So think of it like a, because it's such a level playing field, if you, you know, make enough trades, it's all about making enough trades because then you average out what you're supposed to, which is just classic, you know, law of large numbers.

That's like poker. Of course. If you have an edge, the longer you play. Of course. The longer that edge, like the more money that edge should deliver to you. Of course. But even poker, the rake is, is pretty big compared to trading. But so, so I'm going to break it down like just a normal, like this is how our customers go.

16% of the people blow out. The attrition rate's about 16%. Within how much time does it take for that to happen? I have no idea. It could be, it could be, it could be three months, six months a year. Michael's case first trade. When you say blow out, you mean account goes to zero or they stop trading? They account goes to zero or they stop trading.

And that's why they stop trading. Yeah. The reason people stop trading is because the account goes to zero. Right. Right. And, and... So 16, all right, 16%? 16% blowout. 16% out. outperform some crazy multiple of risk-free rates.

So let's say risk-free rates are 4%, right? So 16% deliver returns over 20% or 25%. Wow. Okay, so that's both sides of your distribution curve. Everybody else falls in the middle. Everybody. And what's the middle? Just whatever? The middle is whatever.

So you have 34% above the midline, which now, for me, the midline is some multiple of risk-free rates. And then 34% fall below the midline, which is, You don't beat risk-free rates. So if there's no edge, why do people trade with you? Well, there is, we tried to optimize the mechanics because it's fun. Hell yet is. Because here, there is such a demand for speculative, there's such a speculative demand

because of either asymmetric upside or just, hey, I want to do something. You know, I want to take some risk. So I will argue the reason people trade is so that they make quicker decisions. So their brain processes decision-making faster. So they're probabilistic in the way they think about everything. And they become a much, they build wealth at a rate that is higher. If you run into anybody you've ever met that's very wealthy, they make the quickest decisions you've ever seen. And the reason for that is their brain just works faster.

It works for athletes. Is that real? 100%. That's why you have athletes like that can play Brady. Can I pause you though? Yeah. So then why? Are all the famous investors obsessed with telling you how slowly they operate?

Howard Marks, Warren Buffett, Charlie Munger. Is it stick? It's, they're a hundred. I understand. That's from a year's past where nobody had you find that interesting? No, I don't. Okay. I used to hate him.

Like, Charlie Munger used to drive me crazy. I couldn't listen to that guy. You know, when you start, when you start, when you start, like, I mean, I used to, until he died, he used to rant against him all the time. I'm like, shut the fuck up. You know, you're, this is not good for a business. Okay. I there's so much so quick decision making is alpha even if they're not good decisions just the fact that you were able to be decisive you're saying is how you get rich so I've been doing this on the

retail side now for 25 years 20 years I spent as a market maker then 25 years building think or something tasty and if I told you the number of people that said you know what I couldn't trade for shit yeah but my business exploded from what I learned from trading oh I love that's incredible Okay. It's incredible. The number's just off the charts. Well, you know what? Money won is better than money earned.

And the reward, the dopamine hit from seeing that exponential growth in a short period of time. I mean, nothing better. I'm a grinder. So I'm a little different. Like, I'm somebody that, like, you know, I don't really get that kind of asymmetric upside. You're not looking for lottery-esque feeling. You like to win consistently over time.

Yeah. Okay. I think on that way, too. But you can't have longevity in the trading business if you're just shooting for long shots. It just, you'll, you'll, you'll, you'll bust. Can we talk about that 16% that are at the top of the distribution? Yeah. Okay. So these are the 16% of people who are earning far in excess of the risk-free rate, multiples of the risk-free rate. That's the only way you can measure, right? That's the only fair way. Okay, fine. So what is it about those people? And how do you replicate them? How do you

find them and how do you bring more of them on platform? I mean, first of all, we try to bring everybody on platform. So it's not like, you know, we don't. But those are great customers because they'll be with you forever. Forever. Yeah. Yeah. I mean, in this business, remember, in the brokerage business, you know, at TD Ameritra,

I think it was 6% of the customers did 80% of their business. At Tasty, it's like 20% of our customers do 80% of our business. So you're right. That's what we want. I mean, those, we want to teach people to hang around for 40 years. And, you know. Tom, are you born that way? Or can anyone become that top 16%.

Oh, anybody. Anybody can. Yeah, anybody. So you agree with the turtle traders, like the idea what, it said, like, basically, if anyone walks in off the street and does this method, they can become a trader. So you sort of believe it. It's not exactly the trading places thing. Understand.

But it's a little different. I think anybody can become a successful self-directed investor. I think the key for me is teaching people to improve their basis. Like when first start, you know, what's the greatest thing you do? Just improve your basis. Just give yourself a better statistical chance than somebody that buys something. It's a 50-50 shot. Give yourself a better statistical advantage.

And then also teaching people about financial strategies and also how to use, like, this technology and how the markets work. It's so valuable. You understand everything. You know, I mean, we've probably taught 5 million people. over the last 25 years Okay So if someone's going to

If someone's going to go on that journey with you How much of their day Does it monopolize? Because if you have options trades on It's not sad and then forget it It's not buying trades right now Yeah you haven't traded in 10 minutes Since we've been talking

No but like somebody has to I am a junkie just so you know Somebody has to be committed to like I'm going to have alerts set I don't give a shit No but I don't care Is that relevant to the people? I mean you don't have to

You know, you do whatever you want. It's like, you know, all right, you like to gamble on sports. Okay, how many times on a Sunday do you look at your phone to see what the score is? A million. He looks away from his phone. Okay, there you go. Same thing. I mean, you know, and you still work.

You know, you figure it out. It's just like anything else. The 16% of the elite traders, I would imagine that there's a lot of turnover in that group. Or are you saying that it's, okay. There's some, yeah, there's always, there's turnover at everything. Okay. But you know what? Like, you can't, can't overthink this stuff.

Like, the world's moving. There's no question that on the reach. I'm not talking about the institutions like that never changes. It's old. It's legacy. It just stays way it is until somebody completely disrupts it. But on the retail side, everything's moved short term, you know, whether it's zero DT options, whether it's, you know, trading, you know, the biggest growth we have is in futures options. The biggest growth. It's like we're like 25% year over year in futures options. There's not enough leverage in futures. Options on futures. Options on futures. As opposed to just straight trading futures. Yeah, we're the largest. We do

the largest percentage of options on futures of any firm in the world. Okay. And it's crazy, but that's what customers are attracted to. What's the purpose of options on futures, more leverage for the dollar? No, strategic. Tell me more. Strategic. You can, you can, you can make money if you're wrong, potentially, and you can lose money

if you're right. You can bet on something staying inside a range. Okay. You can risk a little to make a lot, or you can risk a lot to make a little, depending on what probability says you want. The model for futures options is the exact same as this for listed options. Doesn't make a difference. Do you think that overall the explosion in retail trading that I would put like the beginning

of that, let's say March, April of 2020, I know retail trading has been growing in popularity forever since Charles Schwab, you know, in San Francisco, but just in the last four years, five years, it really feels like a renaissance. Do you think that on balance that's been a great thing for most people or a really really great thing for a small group of people or like do you have like a philosophical take yeah i think it's been i think i think i think you're you're talking i'm positive on it yeah i think you're talking about like kind of really that meme stock movement in 2021 and what exploded from that you know i don't know like 30 million new retail traders or whatever the number is that was the inflection point most of them

young i agree i think it was transformational moment and of course i'm going to say it was amazing for the business and and i don't care if some people lost money because Because we introduced. That's life. Yeah. And we introduced markets and trading to, you know, maybe 50 million new people in the end. You know, because there was obviously carry on after that. So, I mean, no, it's huge.

It's great. Introducing teaching people about managing your own money is so freaking important. And nobody wants to touch this because they're all scared. But nobody realizes, hey, you know what? You're just as the next guy. You're maybe probably even smarter. Yeah. What do you say to somebody who says, all right, I tried this.

I tried to be very active. made a lot of decisions quickly. They weren't great decisions. It turns out in hindsight. And it made me very anxious. Would you ever say to somebody, hey, you know what? I actually think you would be better off with ETFs

and don't do this. Well, we would never say that, but I'd be totally fine. Like, I wouldn't, like, we don't tell people, I build technology and I write content. I don't talk to people about their, you know, their stuff. I mean, you're not anyone's financial advisor. Right.

I'll answer, I'm an email junkie too, so I answer like, a gazillion emails a year, but I will help people with, they have a question, but I don't tell people what to do. Okay. What's the coolest story you ever heard from somebody who learned to manage their own money and trade on your platform and what happened for them as a result? The coolest story? Yeah, like what's like a, what's like an awesome outcome? I'm not sure how the outcome ultimately resolved itself because there were some negative things. I can't wait to hear this. But the coolest story I ever heard, which was back when we owned

thinkers from him was there was this woman who came to an event that we did she was she was nice she was an accountant she was a CPA and she was she was gone to wake far she really smart master's degree and we started talking because she was a huge North Carolina basketball fan because she grew up there she loved Michael Jordan the whole deal and we started talking and she moved a hundred thousand dollars from wherever she had her money because she was really intrigued we did an options seminar, it's like 2005. And she emailed me a couple times, and I had no idea. And she moved $100,000.

So my partner, Scott, comes up to me one day. This is probably 2007, 2008. And he goes, do you know this woman? Because she says she knows you. And I go, yeah, yeah. I met her in, like, you know, North Carolina. I was doing a show, whatever. Super nice.

She writes me emails all the time. He goes, she's up $10 million this year. And she's firing, and she's firing like, thousand lots, you know, in the SPX. Yeah. It's like 2008, 2009. And I'm like, what? Like, I go, she moved to $100,000.

I go, she's up $10 million right now. Okay. And she's like, you know, probably early 60s, like the quietest, nicest southern woman, you know, like, like, and I'm like, what the hell? So, so they're watching her because when you get, when you start trading a certain size, you know, you pop up on our risk monitors. Yeah. So, you know, and she's a premium seller and all this other stuff, but she mostly sells puts.

and she caught the absolute bottom in 2000 end of 2008 to the beginning of 2009 she sold a ton of puts and over that period she made a hundred million dollars no way started with a hundred thousand dollars she made a hundred dollars now she the story has a bad end and I don't really want to get into it you married her no I got my own problems there but but but she legitimate and people would be like and we did a series on her for a while like we we told the story because it was great and so many people writes us like it's all bullshit you guys are so full of shit you know like and i'm like dude we watched this we watched everything because we were worried about firm risk yeah we couldn't shut her down did you copy or trades no no and she traded she was by the time was she was she doing though

she was so special she was just selling she was just selling 5000 lots of of different strangles and condors in in the sps and that's a lot back then it's there she was the biggest trader in the world. So when she was right, she made a lot of money. Yeah, but she didn't have a lot of drawdowns because what she did is she always stayed long delta. She always stayed on balance long, theoretically long in the market. And so she caught from 2009 to like 2013.

And she developed this on her own just using your platform. Using the analytics on our platform. And I interviewed her, I would just like, Tony and I interview her when I was just shaking our head, but like, it's not fucking possible. like it doesn't because and the guys in the SPX pit who we're all friends with still because that's where we grew up you know with on the trading force so that we're shoot route the orders and they'd be like they'd be calling us and feel like what what the fuck's going on how does this woman write you know like you share what you what you nickname her

because you definitely had a nickname for this whale oh yeah yeah oh our nickname was karen the super trader can the super trader yeah okay um what did that tell you about the power of your platform it didn't it didn't that that was that wasn't it because because because I mean, that was the Thinkersome days. And then when we built Tasty, you know, we changed the game again. Like, Thinkersome changed the whole industry, you know, and it also... I was going to ask you about this later. Tell us, for the audience, that is not aware of what Think or Swim is.

Let's do this now. My first trade was on Thinker Swung, 2008. There you go. Why was it called that? Why do people still talk about it in glowing... People loved Think or Swim. It's a beautiful platform. What was it about it?

And then why just... sell it. It was a cult-like firm. So I was trading in the OEX pit one day in the S&P, you know, 100. And my partner was Scott Sheridan. We've been partners for 37 years or something. And we still are. And I turned to him, I go, you know, everything was going electronic in the end of 1999. And we were also short the market and those stupid internet stocks were exploding. So we're like, I was just a bad mood. And I go, I'm ready to try something different. I've been doing this for 20 years, standing in one spot. Literally, like, in two feet of space.

And I'm like, I, you know, I'm sick of all these guys spitting on me and, you know, sweating on me and all this stuff. Like, let's try something different. And we had already built a money management firm. So we were managing half a billion dollars of like some institutional money on top of trading, all this stuff. But I'm like, I want to try something different. I want to build something.

And I got a great name. Think or swim. Nobody will ever, I made it up. I just walked through my house. I tell my wife, I go, think or something. What do you think? She goes, idiotic. It's a great name.

So, so I go, nobody will ever know. Turn out to have been a great name. Nobody. And when we, when we launched the platform, Crane Chicago, which is like a business paper name, they go, worst name for a brokerage firm ever. This will we wrote a whole story. And I'm like, I told Scott, I go, we fucking nailed it. Because if this person hates it, we got it. And so we built Thingerswim, and we had a, you know, we had, built it with seven guys originally.

And a bunch of Russian developers because there was nobody around in the U.S. And it turned into be an amazing cult firm with a really beautiful piece of technology. And it still exists today. It's one of the best platforms. And the reason we sold it was because, first of all, we're traders, right? And at the time, was the meltdown in 2009. Oh, that was the era that sold it. So we were trading over a billion dollars.

And then we dropped down to like, you know, let's say 600 million because they killed all the financial stocks in 2000, end of 2008, early 2009. And then all of a sudden, you know, TD had tried to buy us twice before. And we turned them down both times. And then Options Express started talking to us in another couple of firms. We had three firms bidding for us. Was there offer lower than the previous ones? They were all about the same.

But here's why we did TD Merrittry. Who you negotiated? Is this Mooglia or is this Ricketts? Moglia. No, it's not Ricketts. Mooglia was the CEO at the time. Okay. And so I was negotiating with Joe, who I'm friends with to this day.

Yeah, we're friends with Joe. Yeah. So my favorite Joe Mugly's stories, we're sitting, we're negotiating this deal. And I'm in New York doing a show because I'm just always promoting. and I'm in New York doing a show and Joe calls me up and I go, why does your phone sound so bad? He goes, because I'm taking a shit. He goes, are we done?

Are we done with this deal yet? And I go, I go, I guess. How could you say no? Exactly. Yeah, yeah, yeah. Anyway, so and but here was the problem. This is even a better part of the story. So we agree to the deal.

And, you know, we think this company's worth, we think they're paying a little bit more. than we're worth, but that's because all the financial stocks are killed. And TD Ameritrade's trading for $11 at the time. Yep, I remember. They killed their stock. So we're like, we don't want cash. Smart.

We want stock. Like selling a putt, basically. Contrarian. Because I thought their stock was too cheap. And I thought our stock was too cheap, but I thought their stock was even cheaper. So I'm like, I want your stock. And they're like, we want to give you cash because it's a creed up to them if they do cash. it was it was not a good deal it was i shouldn't say it wasn't a good deal it was a great deal for them but

they wanted to do all stock but then the beautiful thing is at the exact same time the same exact day month whatever the rickets tom ricketts wants to buy the cubs okay and the cut so to buy the cubs he needs cash oh it's perfect so he needs about 350 million cash over what so they could buy the cubs from i think it was sam zelle or whatever at that time so so rickets the ricketts need $350 million, we want stock, and TD wants to do the deal for stock rather than, I mean, for cash rather than stock. So we did a three-way deal. And we never announced this like to the public.

But the Rick has got their $350 million cash. We got our stock. And TD was able to, you know, was able to keep their stock. What a story. Perfect time. A three-way deal at the existing time. There would have been a cool way if you would have gotten the Cubs. But I guess, well, the biggest mistake I made from that is that, so when he did that,

then Tom Ricketts goes, because we're all kind of friends, you know. And we even sponsor the Cubs today. We're one of their lead sponsors. He still owns them. Oh, yeah, yeah. They're great. He's the best owner in Chicago, for sure. Well, he delivered finally.

But we're on the mound. Oh, that's cool. Tasty trade. Tasty trade's on the mound on Wrigley. Every, every, you know, every telecast. But so Tom goes, listen, he goes, Tom, you should, we're still need a little more cash. You should throw some money into the cups. because it's a good deal.

And I'm like, I think it kind of is a good deal, but I just was like, you know, going through this intense deal to do the whole deal. So I didn't buy it to the Cubs, so I missed that. But anyway, that's why we sold it. How long did you sit around until you said, I got to do this again? So it was two years.

And I, and then Mowgliah left, and this guy named Fred Tomzac took over, T.D. And Fred was, Fred was great. He's a great CEO. And we're very good friends, even to today. And Fred comes in and he's, he says, you know, he wants us to work there, me and Scott for a couple years. You know, we signed like a three-year deal. After two years, I went to him, I said, Fred, you know, this is not for me.

Like, I, you know, this is too corporate for me. You know, I'm a, you know, I'm a T-shirt wear. I mean, I'm not, this is not me. So he goes, what do you want to do? I go, I have an idea. I want to build this financial network called, and I didn't tell him what, right, because I know he hates all my names. He hated the name, Thickersome, and now I know he's going to hate Tastyy trade. And I go, all right, I'm going to build this financial network called Tatechrate.

He goes, that's the dumbest idea I've ever heard. He goes, but I'm in for $20 million. Because he goes, he's betting on you. He goes, whatever you do I'm betting on. And so they were our first investor. We never even took the $20 million. We took a piece from them. And so he supported it, which is great.

And then Tate's Trey was born in 2011. We sold it in 2021 for $1.1 billion. Wow. Unbelievable. Unbelievable. Michael wants a fist bump. So you sold it, but you're still there. You're still part of it. Yeah. Well, no, I don't need the specifics in your contract, but like you sold it. Who bought it?

IG Group out of London. Okay. All right. Are you having fun now that you took all that risk off and you can just do what you do, do the shows and... You know what? I don't give it crap about the money. I know it sounds weird, but like... Well, you were doing okay before the sale. were okay before. You didn't need the money from this. Well, I mean, it's always, like, you always, like, you want to be, like, it's your legacy kind kind of thing. Like, it doesn't, it didn't change my life at all, but, you know, I still worked my ass off. I mean, the company, we sold it four years ago, it's worth double that today.

So what still drives you? You're just competitive? You're a maniac? Yeah, and plus I don't have any hobbies. Well, this is your hobby. You love, you love this. Same with us. Plus, you know what? So, this is going to sound weird, but I work with all my friends. Like, most of us have been together 25,000. to 45 years. Like, these are my only friends. Like, this is what we do.

And so, you know, so I work with my friends. I still have fun. Dude, I get a text from Michael, like, every three months. And he's always like, it's always some version of, like, I feel really bad for you that you can't enjoy the ride that we're on. Like, we're working our asses off. He's a miserable prick. I'm such, I guess I'm, I guess I don't appreciate what you just said enough.

See, say it again. You're working with your friends. Yeah. It's not about the money. So I, I check every one of those. boxes that you just said, I'm working with my friends. Yeah. Like, I do need the money. I'm not in your situation,

but like I'm okay. It's not every day is do or die the way it used to be when I was a retail broker. So I'm fine on money, but I just can't like on a daily basis. I have ups and downs. Yeah, sure. But I don't appreciate it enough. And can I read this? Yes. This is what Michael texted me. They make me cry by

yes. No, because Michael's my friend, like first and foremost, right? Yes. So, so, and I feel bad about it, I know he's right. So he goes, I wish you could, this is yesterday,

two days ago, 7.30 at night. I wish you could enjoy the ride. It's going to end one day. These are the best days we're ever going to have, literally, doing everything we ever dreamed of

and more. It breaks my heart that you can't find the joy in this. Or if you are having fun, you have a weird way of showing it. You don't have to respond, but I had to get this off my chest. And that's maybe the fourth time

he said some version of that. I'm a good friend, right? You are a good friend. I wouldn't say that I'm not having fun. Yeah. But I'm definitely underappreciating the aspect of it that you just described. Well, fix me. So the only thing that money is good for, the only thing that, I mean, of course, there's, I shouldn't say the only thing.

But the really nice thing about making some money is that you can afford to do things that you have fun with. Like, I don't give a crap about buying shit. I don't even own it. I'm a minimalist. I don't own anything. but I'd love to be able to do things where I'm having fun and so like what I do I'm having fun like the investments I make I'm having fun the businesses I build I'm having fun I'm not going to do anything at my age I'm not doing anything anymore which is not fun okay I don't believe and you don't have to so all right so how does Josh have fun well no no no but I'm not in the I'm not in you I still have to do things that I can't help I think I know I still have to do things that I don't want to do but it's okay like this is what I'm this is part of you know I'm this is part of Part of my journey, part of my adventure. Sure.

You have a lot of years on me. You probably did a lot of things that you didn't want to do, but you knew you had to. And then your success, the point that you had now is, like, you don't have to do those things anymore. So I'm not there yet, but I'm closer to being there than I ever in my life thought I would be where I am able to say no to a lot of shit. Yeah, it's good. And I think I under appreciate it.

But that might just be, this is the way I am. I can't do anything about it. You know, one of things also that's a really fun takeaway is that. I like the fact that I have made people that have hung around with me, like, very wealthy, too. I love that. We, Scott and I and Christy, we gave away $50 million. We gave $20 million to employees when we sold, I think or something, $30 million when we sold tasty. This is an addition to everything else.

We just gave them, like, just handed out checks for $30 million on top of everything else we've done. So we... That's got to be the best. The best feeling in the world. The best. Okay. And you see these people still every day or often. So one of the things with wealth is that you do lose a few friends because some people can't handle it. It's a weird thing. Somebody that I know when we were a lot younger sold their business to Goldman Sachs.

And I said, it's amazing, right? And he's like, yeah, but I lost a couple of friends. I go, why? And he's like, because some people couldn't handle it. Many people that don't have the money that you do can't be your friends anymore? Yeah. Maybe from jealousy or whatever. It's something. And I see it sometimes in business. But my friends, we've been like, The hardest thing was, like, there's a bunch of people that you know that I've hired over the years that I think have done your show. I think, did JJ do your show? Not yet.

Oh, not yet. But, like, Q did your show, right? Steve Quirk. Steve Quir. Yeah. So, like, these are guys that we all traded together in the pits, you know? And it's hard, you know, like, and Tony, same thing. The first time I offered Tony a job, he's like, I'm not working for you.

And the second time I offered a job, he's not working for you. JJ was the same way. I offered him a job. He goes, I'm not working for you. And then Q is the first time he's, I try to bring him to me, he's like, I'm not working for you. Like, we stood next to each other in the pit. You know, and then a year later. You get that, though, because if the situation will reverse.

I totally get it. You would probably, like, if you were J.J. Kinnahann and you were like, working for Tom? No, I totally get it. And then, but, you know, then years later, you know, they've amassed a ton of wealth because they just bought in and they learned so much. And, you know, it just, it's, it's cool. that kind of stuff is cool. Like, we have a tree that goes to every firm, like Robin Hood and E-Trade. And every single firm out there has finger swimmers and everything.

You're like the Bill Parcells. I actually think, Tom, I think that's actually the coolest thing in the world. What do you think about Robin Hood? What's your, I mean, this is the most, I would say. I don't give a crap. No, no, no. I mean the success that they've had. It's amazing.

It's amazing. Okay. So I think in the last 10 years, it's definitely the most exciting new brokerage business to come along. Sure. I mean, they, they, you know, they clicked the viral button and it worked. And the virality that they did, I mean, I was trying to do that for, you know, I mean, I'm not, I had an amazing career. But like, what they did, incredible. Yeah. I don't, I don't give a crap.

Like, I mean, I like those guys, you know, on balance. I like those guys, but I'm also a competitor. I want every one of their customers. They kind of bent the industry to their will. 100%. With a zero percent commission. Dude, that's why TD had to get bought by Schwab is because of Robin Hood. Why?

Because the commission-free trading destroyed the business, no? No. Of TD Meritrade? It didn't? No chance. Come on. No. What do you think it was?

The TD sold? Yeah. Because they had a bunch of idiots on their board who just wanted to take the money. They were so... But you don't think commission-free trading was disruptive? No. No. Here, TD Ameritrade was owned 40-some-odd percent by TD Bank.

Right. TD Bank was in trouble for, like, you know, a bunch of crap. But they also, they hate each other. They wanted to hit the bid. They just wanted out of that thing. And everybody was like, you know, I mean, no, the Ricketts, Joe Ricketts and Schwatt, they hate each other. They didn't want to do the deal. I'm sure that's true.

The way that I see it is that when Schwab, that had nothing to do. But when Schwab said we're going commission free too, Schwab stock got hurt. Let's just say 10%. They only went commission free. But TD got destroyed and then Schwab said we're buying you with our stock. We're just going to swallow you. No, that's not. And TD at that point was doing 70% of their business and options.

They didn't go commission free. Okay. They only were commission free in stocks. They didn't even care. it's nothing to them they had a they had a they had a no commission platform of ets for the r a custody side of the biz here when we when we went to when we did the think or some t-d deal at first they were doing about 300,000 to 400,000 darts a day that's trades daily average yeah yeah yeah it's the number of trades that's back in 2009 they were doing

about 300 or 400,000 at the first board meeting I walked in I said said, we're going to do a million trades a day because of our platform. Because you bought TOS, you're going to do a million trades a day. They're like, no fucking way. Within six years, they were doing four million trades a day. When they sold to Schwab, they were doing over four million trades. They were killing it. They sold because they were dysfunctional.

They didn't sell because they had to sell. So you think they could have stayed by themselves in zero percent commissions. But they could have survived with zero dollar commissions. They don't, nobody, we all have zero dollar commissions. Everybody has zero. So payment for order flow, margin lending, that would have been enough, enough reason to stay independent. Of course. Okay.

The Robin Hood going to zero, none of us have gone to zero on options or anything else. And so we've all just went to zero on stock because nobody makes any money on stock anyway. Let me ask you a question. Options is the better business. Options and futures. Is it because the spreads are so wide? Like, why are options such a great business? Because you can actually make money with them and because the customers, the customers like them because they're

strategic. And the firms like them because they can actually make a little bit of money. Can't make any money in stocks. Yeah. So, okay. The technology is really expensive to deliver. And the marketing is really expensive. Everything's expensive. And nobody helps you. So, you know, you've got to get market share. I want to ask you about options strategies in ETF wrappers. How do you feel about that? I don't care. So we do. So do you think that those products are worthwhile? Do you think they're like executing that those strategies well, what are they missing? Like, why aren't they working as well as they should?

Because they stink. You ever get called for help with any of that stuff? Well, I have one friend that's a really good trader that manages one of those funds, but I'm not going to bring him into this. But the other... Is it Yield Max or now? I don't know the name. Okay.

So let me read this real quick. Okay. This is from our friend Jeffrey Patek at Morningstar. Yield Max coin option income strategy, ETF, gained 42% per year from its 2023 inception through 2025. Okay. Over that period, the ETF received nearly $2 billion in cumulative net inflows and its daily assets average around $560 million.

So Jeffrey says, how much money did investors in this ETF make in dollar terms over that period? Because there's a 42% a year. It's only two years, but still, they didn't make any money. They lost $35 million in total. How do investors lose $35 million in an ETF that's gained nearly 42% per year? I don't know. Amazing.

So they're buying and selling it at the wrong time. No. Horrifically. What else? Here's the problem with these. And I don't want to get into like a lot of, the problem is that they can't use the, they can't use the listed markets.

Because the listed markets are not big enough for what they want to do. So what happens is they are forced to go into the OTC markets and they just get, they don't understand how bad they're getting ripped off by JPMorgan, Goldman Sachs and everybody else. And so, so they're at like, you know, like where customers are trading one tick off midprice,

these guys are trading 10 or 20 ticks off midprice. And they don't give a shit because it's not. not their money. So the ETF sponsor, the asset manager, can't go into the same options market that you and I can go into because these are $500 million funds. Right. Okay. So there's not enough size in the contracts they want to buy. So they go into an OTC market where it's a little bit more of a Wild West, like the pricing. The counterparty is just some bank. And the bank has to lay it off in the public marketplace in some way. So the bank has to have enough edge to find it. They have to capture something in between.

Sure. So the difference is, I'll explain the difference. So the difference is when our customers trade and Citadel is the counterparty, Citadel makes money on scale, not on it. The edge is tiny. It's like a fraction of a penny, but it's all about scale. It's all about doing, you know, a billion trades. So it's all scale.

It's just the high frequency game is a scale game. The game that these guys are playing is the old school way where they're giving up the edge to the counterparty and then the counterparty's Goldman, Goldman, Morgan, whatever. And that's a just an absolute, like, conceptually, I'm okay with it. It's just not my thing. You know, I don't like the product.

I mean, they've gotten popular amongst investors, which is why we're asking about it. Remember what happened in 2007, 2008? Remember what the most popular fund was then? Closed and covered call funds. Oh, yeah. 150 of them were created. Every single one of them went out of business.

Wow. They did not survive the financial crisis. Right, exactly. Counterparty risk. or was it something else? It was structural risk. Structural. Yeah, structural risk.

It was counterparty structural, the whole deal. But they didn't survive. None of them did. Because you mentioned ABN Amro. There was a moment in 07 where the entirety of the retail brokerage business was selling structured notes. ABN was one of the biggest counterparties. Lehman. Well, those were different.

LaSalle Street. When you think about the whole credit default era then. Yeah. So we were just having this conversation today. because we, so firms like us, we sit on a lot of cash. Like, let's say we have $8 billion in customer capital. I think it's something, but it's all cash because nobody, nobody buys stocks. I mean, nobody brings their portfolio to us.

It's all just trading. So we probably have, you know, four or five million dollars, billion dollars in cash all the time. So in 2008, it was a little less than that, but in 2008 or seven, every firm on the street was like, why are you guys leaving your money in overnight repos and treasuries, you know, because you could get four, six percent more. because that's your revenue. That's your only revenue. And I'm like, yeah, but who's the counterparty? Like, this is customer funds. And if you remember what happened in, when the meltdown in 2008, E-Trade almost went up business. Commercial paper started blowing up, money markets were blown up.

Not only Lehman, but, you know, Merrill Lynch basically had everybody who laddered out, just like a couple years ago when the, you know, with the Silicon. Yeah. But this was even way worse in 2008 because everybody jumped into those credit just to get, just to ladder out and get a little bit more money on their money. Even TD Ameritrade, if you remember then, their money funds went under a dollar. Yes. Famously. Famously. So the firm that had zero risk was thinkersome back there because we didn't do any. We only left all the money because we're like, that's not our business. So in the middle of the crash, I called Ken Griffin and I said, because he had bought all the E-Trade. Which crash? Oh, 0-8. Okay. He had forgot that. Ken Griffin bought E-trade. He basically

bailed out E-trade. Yeah. Okay. So I called him and I said, Ken, we're doing great. We had no problems. We had no issues at all. You know, maybe we lost five or $10 million and just, you know, customers blown out. But other than that, we had no other issues. So I go, I want to buy part of e-trade from you.

Okay. And he was like, listen, Tom, it's a, it's a shit trade because I don't know if this company's going to make it because I wouldn't feel good about selling you. He goes, if you really want one, I'll sell you a piece, but I wouldn't feel good about it. And I was like, okay. And we didn't, I didn't do anything. Because it's for that reason. you're saying, like, why was it a shit business at that time?

Because he wasn't sure that they were going to make it. He was like, he was like, they got so many mortgage issues and so many credit default swap issues that I don't know if they're going to be able to pull out of this. And he goes, I don't know if, you know, what you guys can afford to lose. And I'm like, that's fair. Thank you. And I didn't do it. And to be fair, it took a couple of years for him to make any money on it.

Okay. I want to, I want to, I want to, I want to, uh... But that would have been fun if we bought E-trade. I want to finish by asking you a culture question, New York versus Chicago. Where'd you grow up? You grew up in New York? Queens? No.

I grew up and I was born in Manhattan. My mom was a grad student at Barnard. Okay. And then we moved to just outside of White Plains. Okay. Westchester. Yeah. Okay.

About 20 miles from here. All right. You obviously are the center of the universe in terms of the Chicago trading scene. At least that's the way I've heard it. Yeah. Okay. But you've worked in New York too. Yeah.

What are the big cultural differences between traders in New York, Traders in Chicago, Wall Street versus Chicago. Like, what are your thoughts on that? Well, the first thing we would say in Chicago, there are no traders in New York. Okay. There's a financial community in New York that is huge. Yes. There are a lot of lawyers and bankers in New York.

There's a lot of money managers. All right. And there's a massive business here of, you know, assets under management, things like that. But we would argue there's no traders. You would say, like, the activity at the New York Stock Exchange, the NASDAQ, is more public relations at this point, less trading. Yeah. But I could say the same thing about the CBOE is gone.

The physical floor at the CME is gone. Yeah, but those exchanges are still, they're the monsters. Yeah. And mostly all the high frequency firms, I mean, Citadel moved to Florida, but mostly high frequency firms are still in Chicago. Yeah. And there's still a pretty, you know, dominant trading community there. Okay.

But, you know, like pro tail and that kind of stuff, you know, professional prop firms. Tom, you're never going to stop, right? You have another trick up your sleeve? What's next? I do. Of course you do. Do you know what it is yet? When does this airs tomorrow?

This is there tomorrow. Why do you have a big announcement coming? Maybe. Maybe. Wow. Good for you. Tom, this has been such a pleasure. We've followed you from afar and I've always looked forward to asking you these questions and have this conversation.

So thank you so much for being here. We always end this podcast by asking people what they're most looking forward. to. Sounds like the thing that you're most looking forward to. You can't say. But maybe what's the second most exciting thing? I should, I don't want to make it seem like it's some mystery thing. But there's, for me, what's really fun is building stuff. Okay. You know, so I'm, I probably most look forward to seeing, you know, like, what kind of cool stuff can we build in the future? Okay. Like that's it. I mean, I'm not, you know, I'm not going to ever retire. You're right. Oh, it's tasty AI. I mean, I mean, they're going to, is it AI? When I'm doing, when I'm doing,

something on stage, I always say, when I'm, when I drop dead here, just roll me in the dumpster in the back. I'm cool with it. That's okay. I want to die doing this stuff. Love it. You're a man. Thank you so much, Tom. Thanks. All right, guys, we want to say thank you so much for listening. Please like and subscribe, do all the things. We appreciate you. Great job on the show all week. John Duncan, et cetera. A whole team. Shout to the whole team. And we'll talk to you guys soon. Thank you. Thanks so much. That fun? It was great. You want to do it one more time just to make sure we got it?