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Taleb Outsells Greenspan as Black Swan Gives Worst Turbulence – Bloomberg.com

Shared by Woolwit

This is an older article but has some great biographic info and also explains (to me anyway, a complete non-trader) what Taleb means when he says out-of-the-money.

On a freezing day in March 2007,
Nassim Taleb walked into a conference room at Morgan Stanley’s
Manhattan offices on 47th Street and Broadway to address a group
of the firm’s risk managers. His message: Your models don’t
work.

`He Cleaned Up’

On Oct. 19, 1987, he was sitting at a row of desks on First Boston’s trading floor at Park Avenue Plaza in Manhattan when his dream came true. The Dow Jones Industrial Average plummeted 22.6 percent in the biggest one-day drop in U.S. stock market history. The crash caused Eurodollar futures to surge after the U.S. Federal Reserve pumped liquidity into the banking system, lowering interbank borrowing rates. Taleb’s positions exploded once again.

“We all knew that he did well, that he cleaned up on that and made $35 million to $40 million,” Diakolios says of the sum the bank made on Taleb’s positions. “The equities guys below us thought, ‘Why did some guy upstairs make all this money on a day when everybody got killed?”

‘ The payday for Taleb was big. Without divulging the amount, he says 97 percent of the money he’s ever made was on Black Monday in 1987. `

`There are concentrated pockets of luck,” he says.

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