A web-reading bot made millions on the options market • Hacker News Board

Re: A web-reading bot made millions on the options market

#101

Post by giarc » Sun, Apr 26, 2015, 2:38 PM UTC

consz wrote: post #99

darkxanthos wrote: post #97

Earlier quoted context omitted.

I can see why it could be viewed as robbing. The person selling options assumes there is no information asymmetry. The bots that do this aren't betting, they have new information that shows that the current options price doesn't reflect yet. I wouldn't say this is necessarily a bad thing myself just pointing out this is definitely not the spirit of what options are for.

But the information is public -- anyone can read the tweet as soon as it comes out, a computer just happens to do it a lot faster and better than a human.

Exactly and since bots are allowed to buy options, the seller shouldn't assume that only humans would be buying their options.

Re: A web-reading bot made millions on the options market

#102

Post by giarc » Sun, Apr 26, 2015, 2:42 PM UTC

onewaystreet wrote: post #43

xyzzy123 wrote: post #13

Earlier quoted context omitted.

Probably because you've never bet a lot of money on natural language processing before. Backtest and check alpha. cpercival's idea is pretty good though. I'm reminded of: https://xkcd.com/793/

These bots don't actually do much analysis. They just weight keywords and sources. "Buys" or "acquisition" in a WSJ headline has a pretty clear cut meaning. Financial headlines also tend to be pretty easy to parse (e.g. "X Buys Y").

Do you think "buys" would be less lucrative than "in talks to buy"? I imagine by the time company A buys company B, there has already been rumor and the markets have already moved to reflect that speculation.

Re: A web-reading bot made millions on the options market

#103

Post by giarc » Sun, Apr 26, 2015, 2:43 PM UTC

Turbo_hedgehog wrote: post #9

My bet is insider trading with someone writing a simple bot to make the trade once they see the trigger words made public.

Then that's not insider trading. The news was made public, your bot just acted on that public knowledge before anyone else could. It's a matter of speed not knowledge.

Re: A web-reading bot made millions on the options market

#104

Post by giarc » Sun, Apr 26, 2015, 2:45 PM UTC

liquidcool wrote: post #76

onewaystreet wrote: post #37

Earlier quoted context omitted.

It's no longer insider trading if the information has been made public. There would be no advantage to doing this either. There are thousands of firms and individuals running keyword based trading bots. You would be competing with all of them.

You may be much better educated than I on insider trading, but as I understand it courts have ruled that insiders have to wait a reasonable amount of time for the public to absorb that information. "Reasonable amount" seems to have changed over the years (first read about it in Business Adventures, Buffet and Gates' favorite biz book), but I note that most trading firms today state you must wait until the 3rd busines…

>wait until the 3rd business day to act on that information?

Definitely no. Just watch the news and see that the stock price of any company changes after pretty much any news.

Re: A web-reading bot made millions on the options market

#105

Post by giarc » Sun, Apr 26, 2015, 2:49 PM UTC

romanixromanix wrote: post #72

>>*Correction, April 21, 2015: This article originally >>misstated that a purchase of options on March 27 >>immediately followed a tweet by journalist Dana Mattioli. >>It occurred 19 seconds before the tweet and followed a >>newswire post by one second. So the title of the whole article is totally misleading. It has nothing to do with Tweets & Twitter. Maybe the same bot (script) has done dozens other trades (false p…

I wonder how accurate the timing is, although 19 seconds is a very long time to be off by.

Re: A web-reading bot made millions on the options market

#106

Post by giarc » Sun, Apr 26, 2015, 2:50 PM UTC

kenrikm wrote: post #17

Next step, make a bot to tweet out (fake) news to trigger this bot and place itself on the winning side of the trade.

I imagine these bots only follow reputable news sources.

Re: A web-reading bot made millions on the options market

#107

Post by mlvljr » Sun, Apr 26, 2015, 3:47 PM UTC

giarc wrote: post #101

consz wrote: post #99

Earlier quoted context omitted.

But the information is public -- anyone can read the tweet as soon as it comes out, a computer just happens to do it a lot faster and better than a human.

Exactly and since bots are allowed to buy options, the seller shouldn't assume that only humans would be buying their options.

You are not allowed to count cards in Vegas!

Re: A web-reading bot made millions on the options market

#108

Post by dannnn » Sun, Apr 26, 2015, 3:52 PM UTC

giarc wrote: post #104

liquidcool wrote: post #76

Earlier quoted context omitted.

You may be much better educated than I on insider trading, but as I understand it courts have ruled that insiders have to wait a reasonable amount of time for the public to absorb that information. "Reasonable amount" seems to have changed over the years (first read about it in Business Adventures, Buffet and Gates' favorite biz book), but I note that most trading firms today state you must wait until the 3rd busines…

>wait until the 3rd business day to act on that information? Definitely no. Just watch the news and see that the stock price of any company changes after pretty much any news.

That's because of the NON-insiders trading.

Re: A web-reading bot made millions on the options market

#109

Post by dsjoerg » Sun, Apr 26, 2015, 3:59 PM UTC

If you feel entitled to your business, and someone starts taking it away, that will feel like robbing, yes.

But it is pathetic for a serious businessperson to feel entitled to their future business success. That's the kind of pride that comes before a fall.

Re: A web-reading bot made millions on the options market

#110

Post by discardorama » Sun, Apr 26, 2015, 4:25 PM UTC

barrkel wrote: post #71

82xx wrote: post #64

Earlier quoted context omitted.

It would be easy to write software to parse that particular phrasing of that particular relationship ("Company X in Talks to Buy Company Y"), but to catch any arbitrary relationship between two entities in a given domain? That's no longer an easy problem. Not to mention that you'll need to represent that world knowledge coherently in ontologies / knowledge bases and write complex logic around it to make the data acti…

All you need is a positive correlation between an action taken on a weighted evaluation of a headline containing key words, and profit. You're overestimating the difficulty of the problem. It's model training; there's lots of historical data to tune on.

> It's model training; there's lots of historical data to tune on.

Is there a timestamped archive of DowJones Newswire articles? I found it difficult to find archived news articles the last time I was looking for them.