The Best Beer I’ve Ever Had…

Editor’s Note: This article about Joe Corona’s “Best Trade,” is best
understood if you first read about his “Worst
Trading Mistake

Back in 1987, T-bill and Eurodollar futures opened before bond

I remember seeing front-month Eurodollars open 333 higher. That’s 333
basis points folks! I almost soiled myself. Some people did. The first thing we
had to do was cap our risk, we were still exposed to the upside and every tick
up was more money lost. I told our guys to hold fire and see if things would
back off a bit and give us a chance.

As opening for the bonds approached I remember the net change on Eurodollars
started to roll down like a gasoline pump in reverse, and bonds in London
started to fall. Stocks opened 30 minutes after bonds so I figured we had half
an hour to cover our risk before the freak out resumed and bonds shot back up

When the bell rang I was looking for call offers, any offers no matter how
ridiculous, we just needed to get stuff bought! There was nothing. Everyone else
was in the same boat as we were, and there were no call offers whatsoever. In
fact volatility was so pumped there were no offers in anything, puts or calls.
The clock was ticking toward the stock opening and I knew our window was

Suddenly a Refco broker entered the pit and shouted “88 calls (again, I can’t
remember the strike exactly) at 13 (13/64)!” “88 calls at 13!” I said “Sold!”
Now when you say “sold” on the CBOT it means you are willing to take everything
the broker has, no matter how large the order. He looked at me and said, “Are
you sure?” I just looked at him and said, “sold!” again. He said something like
“I’ll sell 4213 contracts” or some crazy number like that. I bought them all,
and they saved our ass because as soon as stocks opened the bonds shot back up.

I had cauterized the wound, making our positions into long butterfly spreads,
locking our losses and sealing off any further upside loss potential. I gathered
up the guys and said “the upside is sealed, now let’s get in there and get our
money back!” That was the best trade I ever made.

When the smoke cleared Friday we were up $600k. I remember cracking open a cold
one after the close on Friday with Bruce. He said, “This is the best beer I‘ve
ever had.”