You can spot Peter Klink from a mile away. He walks tall, literally, and chances are he’ll be wearing his “dress for the day” outfit. With his years of experience as a floor trader at the CBOE and CBOT, he brings a lot to the table, especially when it comes to risk. He took on the role of Risk Manager at TD Ameritrade in 2008, and is now Director of Exposure Management and Modeling. In option-speak, that means he makes sure traders don’t over-leverage themselves. He’s also played a role in developing, marketing, and portfolio margin trader education.
1. Your title sounds heavy-duty. What does it involve?
I’m part of the Financial Risk Management (FRM) and my team provides the firm’s overall markets exposure tests for all products that’re traded on our trading platform. In part, we provide stress tests for customers’ exposure to the products they trade. We have to make sure there’s enough collateral in the customer’s account to handle their exposure. We want our customers to be long-term traders and not be wiped out on a one-day market event.
I’m proud to say we have a solid team of quants who develop models to measure and monitor risk and financial exposure.
We also continue to enhance our market exposure models as we analyze trading products and provide risk tools to optimize risk mitigation.
2. How does this touch the self-directed trader?
There’s a lot more to risk than the margin requirement of positions based on traditional fixed percentages or strategy rules that don’t incorporate option pricing models with implied volatility. We provide our customers with the same exposure models in real-time as we use for the firm stress test and provide a range of risk tools across the thinkorswim® platform. This allows traders to move stock or vol around so they can see what type of loss could occur.
We make sure our quants sit next to the thinkorswim trade desk. This way they can see what’s going on with our traders so they understand how it all works.
3. Speaking of floor trading, what’s with the pumpkins on your trading jacket?
I used to trade futures, and my acronym was PKP. The futures clerk would call me “pumpkin,” so a couple of guys got me a pumpkin jacket. It worked out. I still have the jacket and wear it during Halloween for fun.
4. Give us three golden rules for trading.
First, don’t risk your whole account on one trade or position. Every day brings new challenges and adventures. Second, make sure your market exposure using margin and leverage strategies are small enough to take advantage of market opportunities. You want enough ammo in reserve. And third, know what you’re trading. One nice thing thinkorswim users can do is always ask questions. We have a lot of experienced traders on our team. They’re happy to help.
5. Playing tennis is one thing, but completing a tough mudder is quite a feat. What possessed you to do that?
I remember thinking the morning of the competition that it was a bad idea—12 miles and 22 obstacle courses—but somehow, I finished it.