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Typical Options Expiration Week Hysteria
Mark it down, today was another big winner for the options market makers. Any stock that was in an uptrend this month was instantly shanked (retail, oil service, semis). And any sector which was in a strong bear trend before this week was powerballed (shippers, steels, fertilizers, banks). All large put and call positions in these sectors will be effectively vaporized by Friday.
Somewhat of a strange day. As the market sold off, various junker banks were screaming on huge volume:
And the usual furniture junk was flying:
And of course, you had the mid-day panic chain selling in golds and oils upon the slightest hint of weakness in EUR/USD.
More proof that absolutely nothing is taken for chance these days. The first sign of topping produces an avalanche of selling. Shoot now, ask questions later. Big funds are not going to be buying anything these days that cannot be liquidated with a couple of mouse clicks.
But the big story today was Monster Worldwide, another "takeover" speculation:
How many guys were front-running this thing? Another 3Com??
Wonder how the SEC tackles these cases.
No doubt, they look up the trading records and find some big fish like Raj living in a Park Avenue apartment that takes an entire floor, and pays $1,200/mo. to park his spare AMG SL65 in the building.
But on the other hand, they may find some unemployed bartender, sharing a 2-bed Queens apartment with 3 other guys, daytrading on his notebook, just trying to make enough money to make the next month's payments on his Mini-Cooper and Equinox membereship. Or if he's lucky, he might throw a "Hail Mary" pass with his account and make enough to take the next year off so he can move to Los Angeles and try to get on a reality show.
I mean, really, with so many small time action junkies staring bug-eyed at HeatMaps all day, how do you tell which guys got the inside information first?
I suspect with the 3-mo. T-Bill yield now trading down to a paltry 3 b.p. and 5-yr. Bonds giving a measly 2.19%, there really isn't anything to stop the "Animal Spirits" from gunning whatever is moving the fastest and setting off short squeezes like this:
But you have to be careful not to ride stuff for too long, otherwise, you could get your head bitten off whole by a Goldman Prop Desk trader who needs a quick score to buy his mistress some diamond earrings.
Because in New York or Los Angeles, there is always some big swinging trader who is behind the 8 ball. And he has to score big in order to keep the attention of his mistress. A mistress who is routinely seduced by various and assorted rich men, like:
- Iranian rug merchants, plastic surgeons, opium importers
- High end realtors employed by Sotheby's
- Famous italian chefs and restaurant owners
- Professional athletes and/or their agents
Why are these guys so desireable for the girls?
Because they can live their lives, entertain, and shower unlimited attention on their women, without having to worry about staring bug-eyed at a monitor 24 hours a day, wondering which direction the EUR/USD is going to move.
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Rasputin's take on Hi-Fi trading....
......................
More on "Algo/Igor/Robo" trading and how it works.
Rasputin - Wed, Nov 18, 2009 - 08:49 AM
Since "High Frequency Trading" is all the rage these days, I have been
skulking around the Internet, digging up little tidbits on the enabling
technologies that allow this most-interesting activity to take place.
Well, the latest puzzle piece I uncovered comes from the recent
nVidia Technology Conference, held back in early October. One of the
presenters was Gerald Hanweck, of Hanweck Associates.
Hanweck is former JPM Chief Equity Derivatives Strategist (from
2003-2003) who Left to start his own technology company that provides
GPU-based ("GPU" being a Graphics Processing System board) systems to
assist in High Frequency Trading.
Here is a link to his thirty-minute presentation:
http://nvidia.fullviewmedia.com/GPU2009/1002-cupertino-hanweck.html
Frankly, Mr. Hanweck isn't the most dynamic speaker. However, he
did reveal a number of interesting factoids, even if they were
presented in a coma-inducing monotone.
Overcoming my urge to nod off during his diatribe, I managed to copy down the following salient points:
-There are currently 350,000 options (puts/calls) listed on 3500 stocks/indices/ETFs
-Over one million messages PER SECOND are being generated on these options (over FOUR BILLION per hour!)
-His system supposedly computes all "Greeks" on all options, in real time, using these 1 million messages per second.
-His system then feeds into "ALGO/IGOR/ROBO" real-time trading
systems so that the "black boxes" can all race to be the first to
execute the option trade
-There is a 10 millisecond latency for the feed into the above black box
-Hanweck quote: "Traders watch systems so they don't run amok" (Ras: LOL. Yeah, right!)
-Hanweck sold one of these systems to Lehman, who later went
belly-up (Ras: I hope Hanweck got the payment up front from Lehman!)
-"OPRA" is now the only option market online?
-Two more exchanges coming online in 2010.
(Ras Conclusion): SEC investigations notwithstanding, this
Hanweck guy seems to believe that HFT is going to be around for a while
and in fact will grow along with the addition of new options exchanges.
The bottom line: The "Animal Spirit" schemes not only continue
unabated, but will be running at ever-increasing speeds. Pretty soon
even the fastest F12-punching trader is going to be left behind if he
or she doesn't have one of these super-duper GPU-based platforms.
Good points, Robo. I spoke a month ago with the Colfax folks on nVidia's shortlist of supercomputer builders using their CUDA standard, and only Bloomberg was mentioned as one of the popular charting providers that is working on writing to the GPU (in the absence of which the horsepower goes largely un-used). http://www.aqumin.com/Index.html
For simple-to-complex charting, that is.
The finance HFT guys have had the tools that DO write to the GPU for some time, as you show, so it makes sense that we are seeing them prop-up the melt-up (puns intended).
I wonder what happens when the mass of traders using mainstream chart programs and tinkering with off-the-shelf mini-algos get their tools written to the GPU. Granted most of them don't pay $500-$1000 month for real charting, which tends to tempt one with the "lure of easy money" via automation.
Your photos of misc day-traders may someday feature them surfing, um, non-trading sites while their "video game-bots" try to win the Goldman lotto for them..
I suspect that won't work any better than the present system...the algo wars will be won on brawn, ie. it's a game for Goliaths...except if some of Renaissance's 600 PhD's who probably dream in algorithms start wanting to work independently and from home, that is..
A nation of day-trading speed freaks, on the way..
NYSE dude hawking the Intel Nahalem server at IDF 2009, claims eventually to get all North American equities on one server. Demo has them replaying real NYSE traffic.
http://www.youtube.com/watch?v=mbVQ9iI3UJE
Cool -- thanks for posting this. Wonder if they raise the price of co-locating HFT servers next to the NYSE
I love your posts! But I think you should change your name to Boob Man! LOL Ro-Boob Trader, maybe????
Reminds me of this clip... Ready,Steady, Go!
http://www.youtube.com/watch?v=WgJnzh4l7cw
an extensive interview with Faber from earlier today
http://www.bloomberg.com/avp/avp.htm?N=av&T=Faber%20Says%20%60Sky%20Will...
The bubble in China keeps rollin' along. HEAT was en fuego again today.
I don't think we have to worry about our mistresses getting tempted by "high end realtors employed by Sotheby's". The trashy personal trainer doing sit-ups at the gym is probably more tempting. Hmmm, yes he is.
http://jdvision.blogspot.com/2009/10/happy-monday.html
In related news, the FRNY has gotten so good at buying underwater loans from the FHA, it can almost do it on its own.
No job security anymore unless you're working for the world's largest hedge fund.
REITs have been nausieating the past 28 hours. Market goes down, REITs go further. Market bounces back at the end, REITS still go down. REITS trade way down pre market, except then 30 minutes before the open, REITs bounce back. Market goes down today, REITS go up and further up the more the market recovers. It's a rollercoaster ride.
That alligator picture with the diamond earring chick was classic....
Yeah, reptiles don't have tail risk.
Simon Property Group at a new 52-week high....
Duke Realty up 7%
There must be a vindictive, sadistic pleasure of torturing the SRS crowd with them doing this (in light of every single fundamental SCREAMING crapola).
One SRS fool screaming here.
another great one Robo!
admit it: you've been dying for the opportunity to put up a chart on that southern fried piece of shit RF.
speaking of junker banks, BAC got a double lift: Paulson pumping it as a two bagger and the Moody's credit action. Problem is, all anyone read on the Moody's was the headline that included the word "upgrade". The meat of the report simply confirmed that anybody buying into this piece of fecal matter should have their head examined.
Robo, Interesting article on oil storage. Look at how much is floating.
http://www.ogj.com/index/article-display/4821248832/articles/oil-gas-journal/general-interest-2/economics-markets/2009/11/market-watch__crude3.html
Lots of ways to look at it...how soon before floating storage is maxed out, any interest rate increase cuts into profit meaning lower oil prices.
How to go upside? Publish stories about peak oil...or hope for a war or refinery accident. You tagged oil on your header and there may be option plays afoot that you may recognize. (I am not that adept)
"Mark it down, today was another big winner for the options market makers. Any stock that was in an uptrend this month was instantly shanked (retail, oil service, semis). And any sector which was in a strong bear trend before this week was powerballed (shippers, steels, fertilizers, banks). All large put and call positions in these sectors will be effectively vaporized by Friday."
Uh, I'm calling bullshit here since THERE IS NO MARKET MANIPULATION OF ANY KIND WHATSOEVER! I know because I used to think otherwise and everybody that I shared that concern with said it was madness to engage in conspiracy theories. Look, we have a free market for equities. If you don't think that, you must be on the losing side of a trade. (sarcasm off)
RobotTrader - Can you show some love to the "unemployed bartender, sharing a 2-bed Queens apartment with 3 other guys, daytrading on his notebook"? Can you recommend some bars (on Wall Street, on Broad Street, on Liberty Street, or in Greenwich, Connecticut, or wherever) where an unemployed bartender might find employment and then pick up hot tips from those-in-the-know. Lips loosened by Stolichnaya, single-malt scotch, Grey Goose, sambuca, B&B, and Shirley Temples.
Or at least some bars where a bartender can catch and savor the scent of mistresses of rich men.
tom maybe you should try your luck as a boy toy for a bored housewife whose man is working long hours on wall street.
here ya go:
http://bedfordpostinn.com/
CW - Thanks for the tip. The Yoga Loft looks promising...even has a gong like the 4pm closing bell on NY Stock Exchange.
"Kundalini Yoga: Known as the yoga of awareness, this form of yoga awakens the Kundalini energy through the system of 8 chakras, in and outside of the body. It combines repetitive movement with powerful breathing, sound and deep relaxation to energize all body systems and harmonize the mind, resulting in a deep connectedness to self, surrounding and relationships. Each class ends with ancient gong meditation."
Look at Japan. Remember them? Remember Nikkei 39000 when the Dow was 2750?
With all the media attention on Obama in China, Japan has to be feeling like the aging Hollywood sexbomb who, after not getting called for a role in the last few years, finally gets a call...to play the sexbomb’s mother.
Robo can provide the appropriate photos.
I realize this may not be the most relevant thing to post right here, but am I the only one who has noticed that the Nikkei has begun a really serious decline the last few months, and the SSEC declined overall since August. I conclude that the US rally cannot have too much farther to go.
Caution is necessary around options expiration days. Some of the NASDAQ stock timing signals have changed today.
time123
http://invetrics.com
And he shoots and he SCORES.
More on "Algo/Igor/Robo" trading and how it works.
Rasputin - Wed, Nov 18, 2009 - 08:49 AM
Since "High Frequency Trading" is all the rage these days, I have been skulking around the Internet, digging up little tidbits on the enabling technologies that allow this most-interesting activity to take place.
Well, the latest puzzle piece I uncovered comes from the recent nVidia Technology Conference, held back in early October. One of the presenters was Gerald Hanweck, of Hanweck Associates.
Hanweck is former JPM Chief Equity Derivatives Strategist (from 2003-2003) who Left to start his own technology company that provides GPU-based ("GPU" being a Graphics Processing System board) systems to assist in High Frequency Trading.
Here is a link to his thirty-minute presentation:
http://nvidia.fullviewmedia.com/GPU2009/1002-cupertino-hanweck.html
I figured this out about a year ago. Those bastards at nvidia are paired up with jackholes at Stanford with PHD's making up these stupid ALGO'S.
KNEW IT!!
You make a good point, although I think these guys are just tool sellers, although surely that drives the state of the art.
Renaissance Capital has 600 PhD's and spent $600million on hardware/software/etc by mid-2008.
That's a pretty big army of brains that ought to be working on a cure for cancer, solving real economic problems, or simply not making problems worse..
I was watching the computer industry raise memory clocks like it was crazy. It made no sense they went from 200 mhz clocks to over 800 and now 1000 mhz. They have to add more wait states and it has NO EFFECT on throughput. It's basically the same ram even though they've made one drop in cell width the entire time. But basically all they've done is make consumers buy new ram and changed the way it was used. Used to be managed by a north bridge chip on the motherboard now it's managed by on CPU ram controller. All these changes have made NO REAL improvements to consumer and business computing but it's made a HELL OF A DENT on latency. I have slowly and surely figured out it's all been for this TWITCH system which has been around secretely doing this more and more blatently over the last decade.
This stuff is call GPGPU computing or General Purpose Graphics Processing Unit. It takes several PHD's to program because it's highly parallel and simply makes most programmers go apeshit nuts.
This is why Nvidia is stuffed so far up Stanford Universities ass because they are the ones farming and teaching and supplying them with these evil fucking sociopathic sytems designers and why Standford University made such a killing on it's endownment fund for so long until reality came and bashed its testes with a hammer.
And do NOT GET me started on this cure for cancer crap. STANFORD also runs the Folding at Home program that does protein folding which is supposed to be cure for cancer. I would NOT BE AT ALL surprised if the bastards used it as a front to designer stuff like the H1N1 morph from frozen bio sample to lethal disease. Whenever I "connect" to that "group" of people I pick up very very very nasty hidden things.
There's a guy named Charlie Demerjian that does nothing but give Nvidia trouble. He's smart as hell and has caused them no end of grief and he hates them with a purity that is nearly indescribable. All I can say is I really like that guy. At first I thought it was madness but he's got a rotten egg and he's burying it in field of it's own crap.
http://charliedemerjianisadouchebag.blogspot.com/2009/05/nvidia-sued-by-...
Oh by the way the inquirer is boring as all get out without charlie LOL.
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