By Grace Renshaw
Trading options first became a passion for Charles B. Cox III ’75 (BA’72) during law school. He remembers slipping out of law classes to check on his trades. “There was a phone in the hall right outside the two biggest classrooms,” he said. “I would get up from my desk, slip out and call my broker.”
Charlie Cox explains why it was important to him to include the words “Law and Liberty” in the name of the chair he and his wife endowed:
Whether a law is intended to promote morality, fairness or any other exigency, any law that diminishes the liberty of one person for the perceived benefit of another can never expand the liberty of society as a whole. Indeed, special protections accorded to privileged groups invariably erode the total liberty of a society. The initial perversions of liberty, under the guise of fairness or morality, demand more elaborate contortions to protect the original undue privilege. Hence the term ”Law and Liberty” in the chair’s title offers a pointed reminder: Law without liberty amounts to coercion.By that time, Cox had been interested in the financial markets for years. “I started following the market as a young kid,” he said. A Dallas native, Cox chose Vanderbilt to study economics as an undergraduate because he wanted to go to a school in another state. “It was pure luck,” he said. “In hindsight, I was fortunate I made that choice.” Although the natural next step for Cox might have been a degree in business or finance, he chose law instead. “When you study law, you train your mind to think critically about almost everything,” he said. “I have never regretted getting a law degree—I think it made me much better at assessing risks of all kinds, not just the risks of trading.”
After law school, Cox practiced law briefly with a firm in Clarksville, Tennessee, near his wife Lucy’s (BA’75) hometown of Hopkinsville, Kentucky. But when classmate and close friend Frank Massengale ’75 (BA’72), who had taken a job with the Federal Trade Commission in Washington, D.C., recruited Cox to join the FTC’s legal staff, he and Lucy eagerly moved to Washington. After little more than a year with the FTC, Cox took a side trip to Chicago to visit the newly formed Chicago Board Options Exchange while en route to a family vacation in San Francisco. “I walked onto the floor of the exchange, and I was hooked,” he recalled.
With money borrowed from his father, Cox bought a CBOE membership, and he and Lucy moved to Chicago, where he formed his own trading firm, CBC Options Corporation, and began a new career as an options trader. “I’ve always traded only with my own capital,” he said. “I traded by public outcry in the pits for about 20 years. It was a very combative atmosphere, but I was surrounded by great people—even if they didn’t fit into the typical corporate mode.” Cox particularly relished the pragmatic ethic of the trading floor. “People were very honorable, because if you didn’t honor your trades, they weren’t going to trade with you,” he said. “The marketplace imposed a strict discipline on traders.” At one point, Cox established a successful hedge fund. But he found the bureaucracy of dealing with outside investors tedious and time-consuming and returned to his proprietary full-time trading business after buying out his investors.
Options trading is a high-risk pursuit, a lesson Cox learned the hard way early on, when he lost all of his money in 1978. “On the trading floor, you have to make decisions in a split second,” he said. “Whoever can respond first gets the trade, and there are lots of ways to make mistakes. I had to start all over again.”
Since then, Cox’s skill and persistence have paid off handsomely—and most trading has moved from trading floors to computer screens. Today Cox executes trades by “pointing and clicking,” and Lightning Trading, the firm he founded in 2005, has financially backed more than 50 fledgling traders, including his son, David, helping them start their own businesses. Cox is a past chairman of the CBOE Arbitration Committee, which adjudicates disputes between CBOE members, and has taught introductory courses on options. “I really enjoy mentoring new traders and teaching,” he said. He currently serves on Vanderbilt Law School’s Board of Advisors, and he is a past president of the board of directors of Easter Seals DuPage.
Cox’s deep appreciation of the skill and commitment required to be an excellent teacher and mentor recently led him to endow a faculty chair at Vanderbilt Law School. “Dean (John) Wade and Professor (Paul) Hartman were fantastic teachers and mentors,” he said, “and Dean Guthrie has done a great job of assembling and maintaining a terrific faculty who continue their tradition.” His understanding of the contributions that faculty make to every generation of Vanderbilt Law students was reinforced by the experience of his daughter, Allie Cox ’11 (BA’08), who now serves as a public defender on the south side of Chicago.
The name of his endowed chair was particularly important to Cox. The Charles B. Cox III and Lucy D. Cox Family Chair in Law and Liberty honors both his family—in addition to Allie, the Coxes have two sons, David and Charles—and his principles and beliefs. He stated his reasons for including “Law and Liberty” in the chair’s name in a letter to Professor Tracey George, the inaugural chair holder. “The term ‘Law and Liberty’ in the title of the chair is a reminder that law without liberty is coercion,” Cox said.
Cox was especially pleased when George was named to the chair because she teaches Contracts. “Contracts is one of the most important classes you take in law school, and Professor George’s class challenges and engages students during their first year,” he said. “In our Board of Advisors meetings, Dean Guthrie emphasizes the importance of a great faculty, and one way to keep a great faculty is to endow chairs.”