History

Since 1988 Gargoyle has been at the forefront of strategic innovations in the option trading marketplace, and remains committed to seeking out new ways to better serve our clients. We are confident that our drive to remain one of the leading practitioners of equity options hedging strategies will allow us to draw upon the experiences and expertise gained in our past to pave the way forward for continued success in the future.

The Gargoyle story began with the formation of Charles Goodgal Partners, L.P., in 1988. At the time, Chuck had been a successful options market-maker on the floor of the American Stock Exchange. Recognizing the potential for growth that existed in the options markets, he founded the partnership to leverage his knowledge and capital base by training new traders to take advantage of the opportunities then available on the AMEX floor. In those days, before the arrival of handheld computers and sophisticated options pricing models, successful trading required an extensive knowledge of relative value options arbitrage and an instinctual ability to accurately calculate probabilities on the fly, as well as the fortitude and discipline to act quickly upon opportunities as they presented themselves. It was not a game for the faint of heart.

"In those days ... successful trading ... was not a game for the faint of heart."

Another floor trader who embodied these qualities was Bruce Rogoff.  In 1993, Rogoff became a general partner of Chuck Goodgal Partners, L.P, and the entity was renamed Gargoyle Strategic Investments. Together Chuck and Bruce turned Gargoyle into one of the most successful trading firms on the Amex floor, expanding the organization’s reach with the purchase of a Specialist book in 1994, and training and employing more the 40 traders. Gargoyle’s focus on floor-trading and market-making continued until 1999, when it became apparent that the business trend was moving away from the floor and towards off-floor market-making and facilitation of customer order flow. The Specialist book was sold for a substantial profit, and Gargoyle moved its operations “upstairs”. From offices at 2 Rector Street in the heart of the Financial District, Gargoyle made markets in the options on over 900 different underlying equities and partnered with all of the major banks and brokerage houses, as well as many smaller, independent brokerages, to price and place their client’s orders.

"An event that would be pivotal for the future of Gargoyle took place in 1998 ..."

An event that would be pivotal for the future of Gargoyle took place in 1998, when Josh Parker and Alan Salzbank became partners in the firm. Applying their options trading expertise to the construction of an equity portfolio hedged with index options, Josh and Alan had created what would become the Gargoyle Hedged Value Fund in 1997. This flagship fund was the core of Gargoyle’s client-facing business operations for many years. Subsequently, Josh and Alan developed the Gargoyle Enhanced Alpha Fund as well as Gargoyle’s Option Overlay Services and Managed Accounts for Institutional Investors. Over time, these strategies and the clients they serve would become the core focus of Gargoyle’s operations.

As the options marketplace evolved, technology played an increasingly vital role in successful trading. In 1999, Phillip Martin joined the firm as the Managing Partner of Information Technology. Phillip’s experience as a systems programmer for IBM and an options trader on the Amex made him uniquely suited to tackle the difficult challenges presented by the integration of information technology and sophisticated options strategies. Phillip developed the Ovid software program for handheld computers, which was the leading application for traders on the Amex and PHLX floors. At Gargoyle, he oversaw the development of proprietary software for portfolio trading and risk management. He also created one of the first electronic market-making programs, enabling Gargoyle to enter the all electronic option trading marketplace as one of the first members of the Boston Option Exchange.

The years from 1999 – 2005 saw rapid growth for Gargoyle, as both the market-making and client-facing sides of the firm continued to expand. In 2002 H. Jay Easterling joined Gargoyle and became the Managing Partner of Business Development. Jay played a key role in expanding and servicing Gargoyle’s growing client base. To keep pace with the increasing complexity of the financial and regulatory reporting environment, Alan S. MacKenzie, Jr. joined the firm in 2007 as Gargoyle’s Chief Financial Officer, and became the Managing Partner, CFO and Compliance.

While Gargoyle’s client base and assets under management continued to grow in 2006-2007, those years saw the first signs of declining margins in the options market-making business, due to the dramatic tightening of spreads that was occurring in the marketplace. 2008 reversed this trend , as the turbulence caused by the financial crises provided Gargoyle’s option desk with the opportunity to record one of its best years on record, but, as things settled down, the compression of margins in the industry resumed apace. In 2013, Gargoyle made the decision that options market-making no longer presented a sufficiently compelling use of time and capital, and closed the market-making arm of the business in order to bring more resources to bear to better serve Hedge Fund and Institutional clients. This was not an easy decision, given the role played by market-making in the history of the company, but efficient allocation of capital and human resources is one of Gargoyle’s core principles underlying every investment decision.

"We are proud that we have weathered the storms that have shaken the markets, and that we have found ways for our clients to prosper in the long-term. We will approach the next 25 years with the same commitment to value, performance and service that has been the cornerstone of our success."

The last 25 years have seen many dramatic and volatile events in the markets. From the panic created around the Long Term Capital Management debacle in 1997, through tech euphoria of 1999-2000, and the corporate governance scandals of Enron and Worldcom, the tragedy of 9/11, and the inflating of the housing and credit bubbles and the financial crisis of 2008-2009, many firms have come and gone, and many household names are no more. At Gargoyle, we are proud that we have weathered the storms that have shaken the markets, and that we have found ways for our clients to prosper in the long-term. We will approach the next 25 years with the same commitment to value, performance and service that has been the cornerstone of our success.