The index option game was blamed by many at the time for making the Black Market collapse worse — and some big Wall Street firms got out of it. Two years later, Wall Street revealed which firms were the busiest in index options, and there was relatively tiny Susquehanna — with just $25 million in capital — at the top of the list, with trading big-timers like Morgan Stanley and Merrill Lynch. Few on Wall Street had even heard of Susquehanna.
Stealth. Buying and selling fast. Hundreds of thousands of transactions a day. The finance world was beginning to catch on that Susquehanna was a player. Yass and company would ride their method right on through the high-rolling ’90s and keep adding traders and opening offices across the country and internationally, in Europe and Asia. The company made a fortune.
IT’S SUSQUEHANNA LORE. How Jeff Yass paid a caddie who made a hole in one. The version that has Yass forking over a million bucks to a guy who made a golf shot, which paid for his hip surgery, is wrong, because a million would be a problem — not the amount, but the logistics of packing up that much cash and hauling it around. … Had to be, though, at least $10,000 — anything less than that, Yass wouldn’t be interested. Everybody’s sure of that.
Okay. For the record:
“It was in 2001, the seventh hole,” says John McNeil, longtime caddy at Stonewall, a private club in northwest Chester County, “on the old course. When we were coming off the green at six, he said, ‘If you make a hole in one, I’ll give you a hundred thousand dollars.’” One hundred forty yards, an eight iron. “It never touched the green. Hit the flagstick, and crawled down like a rat in the sewer.”
Jeff Yass has “way more money than brains,” McNeil says. “He’s got too much money.” McNeil is kidding, because Jeff Yass has exactly the right amount of money, and he was more excited than McNeil when that ball slid down into the hole. Yass forked over $2,000 in cash at the end of the round — it was McNeil’s idea to split the 100 grand with the other caddie in their group, a 15-year-old girl who would later use it for college. Then, two weeks later, Yass hired limos, took McNeil and a bunch of his caddie buddies out to dinner at Savona in Gulph Mills, and presented him with a check for the balance. McNeil didn’t use the money for hip surgery; he banked it.
One hundred grand for a hole in one.
That’s just Jeff Yass fooling around, tossing cash at excellence and luck. Inside Susquehanna, a betting culture prevails. Not just in trading. It’s the philosophy that percolated in a dorm room in Binghamton, that anything that came their way would succumb to rational analysis. In the aggressive mentality of a trading firm, that means you don’t say anything you’re not willing to bet on.