For Yass, options presented a field day of opportunity: He could analyze the variety of possible reasons — some of them purely mathematical, plus a few complications and offshoots of options to play around with — why a stock might go either up or down. And he could figure out whether there was a market for the price, higher or lower, that would make him money; he would try to read other buyers and sellers, in other words. Just like with poker, where a good player reads both the cards and the proclivities of other players. Just like with Monty Hall, who is always going to open the door where there’s a goat instead of a Camaro. Virtually everybody might know that, but what almost everybody seems to miss is how that affects your odds. In trading, reading why a stock is fluctuating, plus divining what the rest of the trading world is likely to do — what, in other words, they’re thinking — happens at warp speed. You have to think fast and make your move.
Yass made a million dollars in 1982. He was 25.
A friend from Binghamton recalled how Yass “called everybody up and said, ‘Come on out here, we’re making a ton of money.’” Fun and games with huge cash prizes. Several Binghamton classmates moved south to Philly. At this point, the worldview was simple: Big money was there for the taking. They’d trade all day, go out to dinner and talk trading, do it all over again the next day.
Meanwhile, Yass and his friends bet money — big money — on horse races and at dog tracks and jai alai frontons all over the country, according to the Inquirer some 20 years ago. They formed a syndicate and named it RAMJAC, from Kurt Vonnegut’s novel Jailbird. Vonnegut’s RAMJAC aims to take over and run pretty much everything in the world, then redistribute wealth in a peaceful, but utterly pervasive, economic revolution. The Yass version would maintain a little more control of the bottom line.
The betting philosophy was pretty straightforward: Basically, if you bet enough money, covering a high enough percentage of possible winners, you’ll win often enough to come out ahead. Never mind that you’ll lose more often than you’ll win, because when you win, you can win big.
This is a central tenet of the Yass philosophy: If the odds are in your favor, go all out. At Susquehanna, when a trader takes the right position on an option, he buys big. It’s house money, and there’s a ton of it. It’s the opposite of gambling: The right decisions will yield positive results — what Yass calls “positive expectancy.” Maybe not in the short term, but certainly down the road.
In a 1985 lawsuit, Yass and friends revealed that they lost on 110 out of 140 betting days. No problem. They still came out way ahead. The Inquirer detailed RAMJAC’s stunning winnings:
In March 1985, they won $752,778 at a jai alai fronton in Miami after wagering $524,288 on all possible combinations in a “Pick-Six” jackpot.
Several days later, they won one of the largest payoffs to that point at a North American racetrack: a $764,284 Super Bet jackpot at Sportsman’s Park in Cicero, Illinois. They covered as many possible winning combinations as they could, betting $60,000 to capture the jackpot, which built until someone won.