Even if they got the exchange's order-book they'd probably just see a bunch of orders from some guys named Morgan Stanley and JP Morgan. So many of these trades are routed or entered by brokers or other large firms.
560 karma · joined June 9, 2017
My colleagues would get called away for hours, days explaining how our systems worked, how we verified it. etc. I recall some had to go testify in court about them!
I think this article is a bit over-hyped. I know in my circle we sorta joke that trump trades on his tweets, or has cronies/staffers/friends that do, and he probably does. I'm sincerely not sure how anyone would know for sure, that's beyond me.
In any case, by the time things hit the exchange it's mostly just brokers and market makers. There's few "people" that trade directly on exchanges. Some big firms, sure. But I doubt any one person profited heavily from this. Another thing to remember, you've gotta have the money to actually buy all these in the first place and that's a lot put on the table. 82k contracts at the money, about a month out right now would cost me ~$84mm. I'm sure insiders get better margin rates than me but that still gives some idea as to the barrier of entry for this kind of trade.
If the traders expected a large move, why trade all at the final hours? Why not spread the volume over a few hours or, hell, even days like the article alleges they had on occasions?
There's entire teams of people at large brokerages and banks that work specifically on hiding their large trades among the normal volume, so competitors don't intentionally try to ride the large, incoming volume. Any coordinated effort would've probably participated in such a process or done something similar.
The article also mentions just the futures, but doesn't say what strike and expiry. Depending on these, it greatly effects the actual outcome and cost of entry. These would also be interesting bits of journalism as it would speak to the level of risk assumed in these bets: way in the money = safe, way out = risky, short-dated=risky, far-out=safe. This suggests to me that the author doesn't really know how these contracts work?
Similarly, these types of securities are a more of a zero-sum game than equities, someone was on the losing side of those trades and they thought whatever position they took was worth the premium paid to them. There's really no "averaging down" in derivatives in the same way as equities, they expire and so does their value. Again, how quickly this happens depends on the contract expiry which the author omitted.
Lastly, derivatives traders love volatility. This presidency and recent world events have created lots of volatility. It's no surprise these contracts are seeing lots of activity.
I guess I just don't really see the plausibility to this and the article itself is painfully uninformative.
Somewhat related story time:
I used to sit and watch the pit the e minis traded in close on occasion--always kinda quiet towards the end of the day until the very end when things picked up. E minis still got quite a bit of volume through the pits at the time. Trading in my own time years later--much of the volume is on the open and the close electronically as well.
Going to meetups with pit traders, I remember a few here and there getting blitzed and rambling about market makers front-running them somehow and being able to out compete them because "AI" and "algorithms." But really they just moved faster and could act on more data than small shops or retail.
The CTO of a market-maker gave a talked I attended and he described how people yelling and arguing in the pits was such an obvious battle at the "forefront of capitalism" and people sort of understood and accepting of that. However, the fear the silence and all that they don't know about the computer and it's algorithms.-- I think all people somewhat fear finance, derivatives especially, in the same sort way. What you don't understand or see regularly can be strange or unsettling.
Obviously I have somewhat rose-tinted glasses on the subject.
An example from my life being: I spent much of my youth "practicing" guitar (guided lessons, learning theory, improving my abilities in different techniques) while my peers simply "played" and the difference in our skill levels (from a purely technical perspective) was noticeable. However, I still never had a successful music career :) whereas I can think of at least one of my peers who "merely played" that's since made a living off their abilities.
In the end, I get paid far more to work on "junk" (cloud infrastructure) and it's orders of magnitude more easy to walk away from it at the end of the day and sleep peacefully over. Maybe it makes my boss far richer than I'll ever be, but I'm happier, my family's happier, and overall I enjoy my life more. So for me, I'm gonna keep being a "drone" (and happily continue to serve my customers that do seem to need these things for whatever reasons they have) because it's easy and sometimes it just beats suffering ever day--even if it's for something you believe in. Maybe I'll find some meaningful "work" in my free time but at that point is it even really work?
I'm not an expert on it, but I've worked with it some to verify distributed systems at a FAANG company (with the oversight of real experts)--so it does get used there!
In any case, there's a lot of strategies to show that you understand a concept without relying on exact memorization. For example, a common answer I give if I can't remember something might be something like: "The language has a sort function that can accept a list, I don't remember the exact API or the underlying implementation but let's assume it's n log(n) as that's a common runtime complexity for sorting--I'm going to define that as 'sort(listArg)'." I don't remember the exact function, so I'll just define and explain how it might work myself. If you're expected to be able to compile the code you're writing, simply ask the interviewer and explain the API you're looking for, I've had great success with that as well and prefer when an interviewee asks me over staring at the screen or board.
If it's a problem where you're expected to produce some algorithm, if you can't come up with any solution, explain to your interviewer what you're stuck on. They may provide a hint that will get you rolling. I had this happen during an interview at Microsoft (spoiler, I got the job) where I forgot how to determine the length of the hypotenuse of a triangle haha. The interviewer wrote the formula on the board and we moved on. Interviewer later told me I seemed nervous and he chalked it up to a brain fart--good call, I was really nervous! The point of that problem wasn't to see if I knew the Pythagorean theorem--it was just a small piece of the puzzle I was stumped on. Similarly start from a simple, naive solution, and interatively optimize rather than trying to recall a perfectly optimal solution. If time is running low, explain your intended optimization or ones you think might be meaningful, making note of any uncertainties in that explanation.
I've worked at Microsoft, Amazon, some other notables and interviewed at many others. I am speaking from that experience. Others may have better ideas. Of course, not all places approach this in a reasonable fashion and some are just missing the point entirely with their interview and they do expect you to somehow memorize everything.
Is a transfer interview not common elsewhere? Anyone know if Amazon or Google requires something like that?
If any software folks who understand where I'm coming from wanna chime in on that, I'd love to hear about what you did about it... Or maybe I'm just a negative nancy, that's plausible too.
Personally, there's quite a few unknowns that would deter me from entering this trade off the bat, as I don't usually trade IPOs. I don't really know what the short pressure on such a stock would be immediately after IPO. Ideally, I'd want an expiry less than 30-45 days away since I'm selling but, I'm uncertain that's enough time for this trade following IPO. I might execute it after seeing what happens at IPO for a few weeks or so. (edit) Of course, that may be far too late.
Also, I think it would be a hot stock for people to trade against, so I expect the spread to be reasonable, but the pricing to be extremely aggressive, which means the potential upside may not be enough for me to want the trade.
Options are all about timing, sooner may not be better.
The long put is more sensitive to timing whereas the short call spread limits upside returns. Trade-off depending on your goals.
Edit: not to be confused with a short call, which has unlimited downside risk.
More nuanced ones can often be caught by using all args constructors and requiring the constructor values with Objects.requiresNonNull() or similar. Using spring? Don't use field or setter injection, always constructor so the above applies as well. Making the state of your objects largely immutable means their state is more consistent and what is null and when becomes a lot less surprising.
Lastly, write good tests. If you're exhausting the behavior of your system with tests, these things are much less likely to surprise you later.
NPEs are definitely a problem with Java, but they're a very avoidable one as well.
Edit: I don't understand the downvotes. The parent said they're a huge deal and I'm disagreeing because I think they're relatively simple to avoid?
That is not what I'm advocating at all.
Stocks are kind of the "beginner's" asset. They're fairly easy to understand conceptually. "Trading" them is even easier. However, trading them in isolation for a profit _consistently_ is very difficult or just a product of luck. I don't know anyone who does it and wasn't burned eventually.
The thing to remember is, people doing funds or "trading" professionally aren't just buying and selling FANG stocks all day. They're balancing these trades with futures and options or options on futures and other alternative assets. They're hedging their positions and setting themselves up so that their probability of coming out ahead is much greater than you're standard "it either goes up or down" stock movement.
A simple example is the "wheel" strategy in options. A short put at a .30 delta on the underlying, assuming 1 stddev movements gives about a 70% chance of collecting the premium without assignment (of course this isn't perfectly true, it's an approximation). This is already better than buying the stock, which under the same methodology, would have a 50% chance of profit (either going up or down from the purchase price). When assigned, turn around and open a short call against the assigned shares at a similar delta and repeat. In the flat market we've seen the last year or so, this is reasonably profitable and very low effort.
Edit: The reason the "buy and hold an index forever" strategy is recommended is because it's the lowest effort, highest probability of profit strategy one can probably take. I agree with it entirely for 99.9% of people. But that's not to say there isn't other opportunity out there if you're willing to learn about it.
Source: spent a few years at the Chicago Mercantile Exchange working on these sorts of things exchange side and now trade regularly on my own.
My point of reference is my family's house in a rural area that is about 2x the size of mine (the property is 10x) and costs 1/3 as much. I wish my career as a software engineer better enabled this type of living but, alas, my corporate overlords require I am ass in desk every day in a metro area.
I can actually afford a house. My dog has a yard to play in. I haven't been mugged since I left! No one uses my doorstep as a bathroom. My neighbors actually come say hi to me and are invested in forming relationships knowing I won't just up in move in the next year due to housing costs. We have decent enough restaurants, bars, bowling alleys, pool halls, movie theater, mall, etc, and if I really want to, I am within driving distance of the city (edit: for a day trip, no way in hell would it work for me as a commute). Yet, I haven't been back since I left.
I think it's more nuanced than your comment indicates. You might be surprised how many people might take up an offer from Google to move to the boonies (I'm at least one).
Objects usually fell into one of two categories: discarded immediately or held for the entire application lifetime. Anything in between was problematic. Most things ended up using object pools. We also used to never really convert anything from binary format and just used wrapper objects to access the byte arrays directly.
Another sort of trick was scheduling GC for times when the application was OK to pause helped considerably, and made behavior more predictable as well.
It'd be tough to compare it to C/C++ given the complexity of the application. But without giving away specifics, we had solid performance afaik. But you're correct that it does end up making for some interesting Java code.
That being said, the only time I feel this is in social settings and it's usually minor. People ask where I went to school and then I usually get an "oh?" back, as they've never heard of it. But it's never really impacted my professional life to my knowledge. Maybe I didn't get the same opportunities as these people as quickly, but I've worked at and enjoyed success at a few of the big names and am enjoying my time at a well known "start up" now.
Kids, go to school where you can afford. Bust your ass, make connections, move on and move up. School doesn't matter once you're out of it.
Options let you just roll the dice on probabilities off the assumption that the market is effectively random. You can use them to push the 50-50 probability much further in your favor.
For example, I stand to profit nicely at the next expiration (May) of most of my options as long as the market doesn't move more than a stddev in either direction. It could go up, down, sideways, no matter. I will make money. If it drops significantly, I will lose marginally until my "insurance" (far OTM puts) kick in and I start marking money again.
Edit: A common beginner's option strategy is to write a put for a stock you'd like to own. If the stock stays flat or goes up, you make money off the premium. If it goes down, you now own that stock. You can now turn around and sell calls against that stock, collecting premium until you're forced to sell the stock because it's moved back up again. You only "lose" if the stock makes an extremely large move down (like going bankrupt, or a GE style dividend) and you're stuck with a stock you can't sell premium against. Far from the 50-50 bet most people think of when they think of stocks.
I left because it was my first job out of college and I wanted to see what else was out in the world. But it stays a fond memory of a solid job.
Killing in response to being disarmed is probably one of the most "American" things its citizens could do.
I personally would _never_ willingly turn mine in--they're for my and my family's protection and have saved my life before. I am certain many gun owners feels this way as well. Trying to enforce such a rule would be difficult, if not impossible.