Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1886-12-02
HADE AS CLEAR AS DAY.
Puts Calls, Spreads, and Straddles Described.
Inside View of the Ways of a Famous Wall
Street Mana Business in Which Some Big
Risks Have to be Taken.

There are few Offices near the stock ex-
change which are richer in "reminiscences
than those of Russell Sage, at Rector
street and Broadway, says The New York
Mail and Express. The headquarters of
Mr.. E. Connor are on the first floor, look
ing out on Broadway, and the rooms of
Mr.. Sage follow along the line on Rector
street. The general Office is at the head
of the stairs and the inner rooms are
reached through this. Here Gen. Grant
was a frequent visitor. When he is in
town, James G. Blaineis pretty sure to
call. Here the meetings of the Pacific
Mail are held, and these always
bring together a notable gathering of
millionaires. Among them are Sidney
Dillon, with his tall, spare form, bronx
ed face, and gray hair, looking like an
old gentleman of a more oldfashioned
kind than are common nowadays. Here
is G. P. Huntington, portly and handsome
followed by Henry Hart, round and gray,
climbing up the stairs with the noisy as
sistance of his cane. J. B. Houston,
elegantly dressed, with his overcoat car
ried over his arm, of medium height and
what the ladies would call too handsome
for anything, bring up the rear.
he uOOrS are clOSou. anu bhi0 "SOGluS
scarcely begins when Edward Lauterbach,
the diplomatic of the Reading organiza-
ton, short, roundly built, with smiling
face and well kept whiskers, hurries up the
stairs and breathlessly follows on the
members of the corporations for which
he is attorney.
And before and after the meeting, and
sandwiched in between such distinguished
people as have been mentioned, come
brokers' clerks and brokers' messengers,
intent on "puts" and "calls" and spreads"
and ''straddles." Mr.. Sage does not deal
so heavily in these famous, much-quoted,
and infrequently understood articles, but
still he does a great deal in them even
now-much more than S. V. White, Har-
vey Kennedy, and others. who, with less
capital and less ability to read the mar
ket, have in these later years followed the
pioneer into the field. For Mr.. Sage was
the pioneer. He it was who invented
"puts, ""calls, ""spreads," and "straddles."
He began dealing in them when he first
came to Wall street in 1861, after his
withdrawal from congress, and he has
been dealing in them ever since; and the
stock markets of the world have taken
up this ingenious speculative device of
as well known on the continental courses
to-day snd in the London market as they
are here, and they are now largely dealt
in. Perhaps not SO largely as here, be-
cause the device is American and an out
come of American genius, but transatlan-
tic spectators could not fail to see the
advantages they offered and have per-
force adopted them. London declares
that the nomenclature, SO far as "spread"
and "strddles" are concerned, is now re-
fined, and calls them differently, but what
they deal in are American stock priv
lieges just the same.
"And what are puts calls spreads,
| and straddles?' " asked the writer when
he went down on Wall street.
"Wel," said John E. Mccain, the con-
fidential clerk of Russell Sage, of whom
the question was asked: "Ill tell you if
you promise never to mention the poeti-
cal subject again. It requires pretty
deft wording to make the thing clear, so
it is not an exhilarating subject to talk
on. You hear a great deal about puts
and calls but I venture to say there are
fifty million people in the United States
who do not know what they are, nor what
the meaning is of the word 'privileges.'
Now privilege is a contract by which
the maker of it, Russell Sage, S. V. White
Jay Gould, or Harvey Kennedy, engages
to purchase from the holder in the one
case or sell to the holder in the other case
number of shares of some specified
stock, at a certain price, at any time
within certain period, at the option of
the holder. Got that?"
"a cali is privilege bought of the
maker at certain price, and the owner
of it is privileged to call for certain
amount of stock at given price within
thirty, sixty, or ninety days, four or six
months. If man holds put he has
the right to deliver to the maker of the
privilege a stock at a certain agreed price
within a certain number of days. Clear?
No. Well, let's try once more.
Suppose Western Union is selling at
10. A man wants sixty day put on it
at Sc, because he believes the stock is
going down. He gives Mr.. Sage, Mr..
White, Mr.. Kennedy, or Mr.. Gould 1 per
cent. on the amount of stock he wants to
deal in. A hundred shares is usual, and 1
per cent. is 500. He receives in return
slip of paper signed by either one or
the other of these gentlemen. Then
if Western Union goes below sc within
sixty days, he may buy it for whatever it
is selling for below that price, and put it
to the maker of the privilege at the price
agreed on, 66, and receive a check for
$4,000. The holder makes the difference.
Ali, you understand. If telegraph does
not so below Sc, the holder is out his
500. The cali business operates exact
ly the other way. A man buys the privi-
lege of calling Western Union at Is when
it is selling at 20. If it sells above IS
you can call on the maker of the privilege
for a hundred shares at rs, and the hun
dred shares are thus bought by the holder
for $500, and he turns around and sells
| it at so, if the stock is selling there, and
pockets the difference"
''What about spreads and 'straddles?'"
"a 'straddle' is put and CALI combin-
ed. The holder of one may put stock to
the maker of the privilege COR cali for
| it. 'Straddles' come high, because there
is money in them whichever way the mar
ket may go. If the market does not go
at all, but stands still, why, the maker is
III the money he has been paid for the
privilege, unusually about per cent, or
$500. A spread is also put and cali
| combined but there is this difference: a
OF ~ Of ho Tbot ia