Springfield globe-republic. (Springfield, Ohio) 1884-1887, 1886-11-08
MADE CLEAR AS DAY.
WALL STREETS "PUTs," CALLS
SPREADS" AND "STRAODLeS."

~ iA%FNSO NV - llhNOOI1Os
Mr.. Russell Sage the Inventor of Thess
Ingenious Speculative Deviccs-A Con.
fdential Clerk Explains Them to an
Inquiring Novice.
Mr. Russell Sage was the pioneer who in
vented puts calls" spreads and "strad-
dies" He began dealing in them when he
first came 10 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 in
genious speculative device of Mr.. Sage's, and
stock privileges are just as well known on the
continental boursas today and in the London
market as they are here, and they are largely
dealt in. Perhaps not 50 largely as here, be
cause the device is American and an outcome
OF American genius, but transCOntinental
spcCulators could not fail to sc tho advant-
ages they offered and have perforce adopted
them. London declares that the nomencla-
ture, 50 far As spreads and "straddlcs" are
conccrned is not refined, and call them differ
emily, but what they deal in are American
sto,> privileges just the same.
MADE AS CLEAR AS DAY.
"And what are puts calls spreads and
straddlcs'!n asked the writer when he first
went down on Wall street.
We'll, said John +, McCann, the conf
dental clerk of Russell Sage, of whom the
question was asked, IN tell you if you if
you promise never to mention the pocticaI
subject again. 1t requires pretty deft word
ing 10 make the thing clear, SO it is not an
exhilarating subject to talk on. You hear
good deal about puts AMI calls but | ven
ture 10 say there are 81, 10000 persons in the
United States who do not know what they
Gre, nor what the meaning is Of the word
privileges Now n privilege Is a contract by
which the maker of it, Russell Sage S. V
Waite, Jay Gould or Harvey Kennedy, en-,
cages to purchase from the holder in the one
case, or TO sell to the holder in the other case,
number Of shares of some specified stock,
at a certain price at any time within a Ger
tain period at the option of the holder. Go;
thatI'
A call" EXPLAINED.
"a cali is privilege bought of the maker
at a certain price, and the owner of it is priv
LEGGED TO can for a certain amount Of stock at
a given price, within thirty, sixty or ninety
days, four or six months. IL man holds a
put he has the right TO deliver TO the maker
Of the privilege a stock at a certain agreed on
price within a certain number of days. Cleari
No. Well, let's try once more.
Suppose Western Union is selling at 20 4
man wants a sixty day put on it at 66, be-
cause he believes the stock is going down. He
gives Mr. Sage, Mr.. White, Mr. Kennedy or
Mr.. Gould per cent. on the amount of stock
he wants to deal in. A hundred shares is
,,grtol aul I ia SIln IL
return a slip of paper signed by either one or
the other of these gentlemen. Then if West
ern Union goes below CO 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 check for $1,000 The holder makes
the difference. All, you understand. II
telegraph does not 20 below 66 the holder Is
out his 500. The cali business operates ex-
sctly in the opposite way. A man buys the
privilege Of calling Western Union at 7J
when it is selling at 20. II it sells above -,
YOU can cali on the maker of the privilege for
100 shares at IS, and the 100 shares are thus
bought by the holder for $500. and he turns
around and sells it at 50, if the stock is
selling there, and pockets the difference"
SPREADS AND "sTRADDLEs."
"What about spreads and 'Straddlesrr
a 'stTaddle is put and call combined.
The holder of one may put stock TO the
maker Of the privilege or call for it 'Strad-
dies come high, because there is money in
them whichever way the market may 60 II
the market does not go all, but stands still,
why, the maker is il the money he has been
paid for the privilege, usually about 3 per
cent, or $50. A spread is also a put and
and call combined, but there Is this differ
enca, 'straddle' is made at the market.
That Is to say, the maker of the privilege
takes the risk that the stock in question does
not move 10 any extent from the price at
which it is selling when the privilege is sold
In spread the maker has more leeway. II /
Western Union is selling at 20, to go back to |
the old Illustration, the maker of tn privi- |
cge sells a spread, say at O. and So If it
goes below O., the holder can put the stock .
md make the difference, and if it goes above .
20, the holder can cali it at that price and |
cap the profits. But so long as the price of .
he stock keeps within those points the maker
If the privilege is safe. To put it in another
way, the holder of a 'straddle' will make if 4
he market for the stock he is dealing in
moves at all. The holder of spread doesn't
make anything until the market moves past
,crtan limits. There is one thing more, the
maker Of privilege only receives the money
or which he sells the privilege, while the
lolder may make thOusands-Or nothing
Sew York Mail and Express