Tweet-reading High Frequency Trading-Bots

Anscheinend hat jemand einen Bot programmiert, der auf getweetete Wirtschafts-Gerüchte reagiert und über Options-Käufe in den letzten Minuten drölf Millionen Dollar macht: The Wolf of Wall Tweet. Schöne neue Species der High Frequency Trading-Predators in the new Machine Ecology.

What we’re talking about here are options trades based on breaking rumors. And because options are derivatives—you’re buying the right to buy shares, not the shares themselves—it’s possible to achieve larger wins for a smaller outlay of cash. What makes these particular trades so striking is that they were made at the very tail end of the day, when the bought options were all only minutes from expiring. The odds that any given stock will suddenly rocket in the next few minutes are extremely low, which makes buying expiring options cheap and the bet very lucrative if it pays off. Consider that if the purchaser of those Altera options had taken his $110,530 and simply bought regular stock in Altera with it, he would have cleared about a $34,000 profit by the end of the day. Instead, using options, he made $2.4 million.

Bots that make trades based on news content have been around for years. […] In the case of the Altera incident, though, a bot appeared to read a rumor, understand it, and instantly execute an options strategy based on it. And for my friend—at least in his corner of the business, a corner he’s worked in for seven years—this felt like something radically new. “It used to feel like a race that we could win or lose,” he says. “But whatever algorithm they’ve developed, we are now completely helpless. Sitting ducks. This is by far the most advanced version of this we’ve ever seen. It’s at a totally different level.”

The Wolf of Wall Tweet – A Web-reading bot made millions on the options market. It also ate this guy’s lunch.

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