For NYMEX traders, making money has 'never been harder'


For traders on the floor of the New York Mercantile Exchange, the demise of commodity volatility this year only adds insult to the injury done by electronic trading. Save for a sharp reaction to the recent news out of Iraq, moves in crude oil and gold have been incredibly muted this year, and options prices have slid lower as little volatility has been expected. And that leaves veteran floor traders searching new strategies—and very often reminiscing about the good old days.

"It's never been easy to make money, but it's never been harder," complained Jeff Grossman, who's been trading futures on the floor of the NYMEX since 1980. "As a trader, you're really not supposed to care if a market is going up or down. But you need it to do something."

A trader works on the floor of the New York Mercantile Exchange.
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"We don't really understand why the volatility is so low, but it makes it really hard down here," said Albert Ng of Aurum Options Strategies. "As a market maker, you have to take bigger and bigger risks to make less and less money."

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In fact, sensing that the real opportunities in gold options were elsewhere, Aurum recently transitioned from a firm that largely served as a market maker on that floor to a firm that develops asset management strategies for individuals interested in gold. And as their business has changed, so, too, has their location—Ng has moved from the trading floor to the 12th floor.

"I'm still in the building, but now I'm behind a screen," he said.

On the floor itself, half-completed crossword puzzles verify the tale of boredom that many traders' faces tell. Sparse trading pits for commodities like natural gas and copper now actually offer a reprieve from the hustle and bustle of the tourist-swarmed financial district outside.

"It used to be that I would stand on the top step of this nat gas pit and get so jammed in, I would literally be lifted onto my feet," Anthony Grisanti said, gesturing to a now all-but-abandoned trading pit.

The NYMEX floor has become a less and less desirable place to be, even over the last few years. In fact, the price of a NYMEX membership seat has declined from $350,000 at the 2012 high to $210,000 today, according to data provided by CME Group, which owns the NYMEX.

With less activity on the floor, traders say that physically being there provides less informational value than it used to.

"You used to be able to follow the markets more easily down here," Grossman said. "But now, we'll have CNBC on, and all of a sudden, you see something just spike. And you don't know why. Maybe it's because some intern pressed the wrong button."

A reprieve from the boredom, at least, might come this week, when traders will watch World Cup games on the floor—playing particular attention to the American and Italian teams (given that many traders happen to be ethnically Italian). But the few faces on the floor are rapidly aging, and survivors are none too hopeful about a floor-trading resurgence.

"If you're thinking of doing it—don't!" one 34-year veteran of the floor yelled out to this reporter.

—By CNBC's Alex Rosenberg