'A web-reading bot lost millions on the options market' also happens too.
A web-reading bot made millions on the options market
21–30 of 134 posts
Re: A web-reading bot made millions on the options market
#22Re: A web-reading bot made millions on the options market
#23My bet is insider trading with someone writing a simple bot to make the trade once they see the trigger words made public.
That was my first thought too. Since sometimes these are sub-second trades, it'd be interesting to look at whether they're physically possible (i.e. whether speed of light is respected.) Would explain stuff like [0].
[0]: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/t...
Re: A web-reading bot made millions on the options market
#24I don't understand why this is even considered news. Bots have been monitoring and trading on realtime news information for years.
Re: A web-reading bot made millions on the options market
#25Earlier quoted context omitted.
This feels a lot more plausible to me than the idea that someone made sentiment analysis not suck. If you can respond faster than everybody else, you don't need sentiment analysis. Just bet on volatility increasing (aka. buy options on both sides) whenever a news story appears about a company.
I agree with you (that's a great idea), but if you're going to bet 100k+ you could afford humans in the loop. I guess you could tell the difference by looking at what options get bought.
Being able to afford the money which humans cost is easy. Being able to afford the time which humans cost is not so easy. The optimal strategy might be to trade within a few microseconds based on "something happened to this company, so something is likely to happen to its stock price", then trade a bit more a few milliseconds later based on "a computer thinks that this sounds like good news", and then make a third trade a few seconds later based on "a human pushed the (green|red) button when they saw the headline".
Re: A web-reading bot made millions on the options market
#26Interestingly, they don't discuss the possibility that someone just has a radically better UI for acting on market gossip. "“It would be impossible for me to do. By the time you could read the news, process it, and press the ‘buy everything’ button, it would take too long." I'm picturing the context switch between reading a tweet or news article and some rocket ship of a program which gives you enormous power but tak…
Given the description I would probably have the program queue up what it would buy based on the story and push the 'go' button. Except I believe the reason the options trader doesn't believe that is happening is that to do this you would just be sitting there watching all the possible 'go' buttons go by and clicking only the "right" one.
Have a fast NLP engine looking at the queue, and when it spits out a >80% certainty for a buy or sell action flash the news item up on the screen with a green or red background accordingly. Double-click to confirm, order only goes out if the reaction is quick enough to make it worthwhile. You could even flash it up on several traders' screens and do it by majority vote.
Re: A web-reading bot made millions on the options market
#27Interestingly, they don't discuss the possibility that someone just has a radically better UI for acting on market gossip. "“It would be impossible for me to do. By the time you could read the news, process it, and press the ‘buy everything’ button, it would take too long." I'm picturing the context switch between reading a tweet or news article and some rocket ship of a program which gives you enormous power but tak…
This feels a lot more plausible to me than the idea that someone made sentiment analysis not suck. If you can respond faster than everybody else, you don't need sentiment analysis. Just bet on volatility increasing (aka. buy options on both sides) whenever a news story appears about a company.
There are many times a news story appears about a company that have absolutely no impact on the stock. In fact, the anticipation of a news story that turns out to be nothing note worthy will lead to a drop in volatility and make your trade a losing one.
See every time a company announces earnings in line with expectations for example. "x company made 1 billion in profit" could fail to move the stock at all.
Betting that news is market moving requires a decent amount of analysis of the news and the credibility of its source.
Re: A web-reading bot made millions on the options market
#28Next step, make a bot to tweet out (fake) news to trigger this bot and place itself on the winning side of the trade.
This reminds me of the recent Tesla April Fools press release for a new watch called the 'Model W'. Clearly there were bots written to monitor Tesla feeds and other companies for new products and trade automatically as the stock price jumped $2, before returning back to normal by the end of the day.
Re: A web-reading bot made millions on the options market
#29My bet is insider trading with someone writing a simple bot to make the trade once they see the trigger words made public.
That was my first thought too. Since sometimes these are sub-second trades, it'd be interesting to look at whether they're physically possible (i.e. whether speed of light is respected.) Would explain stuff like [0]. [0]: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/t...
Well if it doesn't respect the speed of light then they didn't wait for it to become public. What your parent was inferring was waiting for the news to actually hit the wire so it does look legitimate.
Re: A web-reading bot made millions on the options market
#30Earlier quoted context omitted.
This feels a lot more plausible to me than the idea that someone made sentiment analysis not suck. If you can respond faster than everybody else, you don't need sentiment analysis. Just bet on volatility increasing (aka. buy options on both sides) whenever a news story appears about a company.
There are many times a news story appears about a company that have absolutely no impact on the stock. In fact, the anticipation of a news story that turns out to be nothing note worthy will lead to a drop in volatility and make your trade a losing one. See every time a company announces earnings in line with expectations for example. "x company made 1 billion in profit" could fail to move the stock at all. Betting t…
Betting that news is market moving requires a decent amount of analysis of the news and the credibility of its source.
You don't need to be right every time in order to make a profit in the long run.