How To Make Money With Quant Trading
Models + Software
First, using sophisticated software and its built-in JumpDiffusion model, Apple’s ($AAPL) stock price was 170.16 @ 2:57 P.M. CST. The market price for the Jun17 $170 Call was $9.35, but the model predicted that by close, the price should be $8.99. So the option is sold and the trader waits for the price to converge.
Pictured below: 250 Jun17 Calls sold for a premium of $233,750.
After waiting for market close to arrive, the model proves to be accurate. The price converges to the projected price and the order is sold for a cost of $224,750.
In all, selling the call option 2 minutes before close captured a premium of $233k, then buying it back 2 minutes later created a cost of $224k. This spread resulted in a $9,000 profit (before fees+tax) in less than 2 minutes. Now, imagine employing this a hundred times a day, over hundreds of different stocks.
In the age of trading access for all, trades like this are more abundant than ever. This form of trading is known as relative value trading. The jump-diffusion model used is what you’d find in most proprietary option funds that employ these strategies on a daily basis.
With Options-Quant, you have access to the Jump-Diffusion model and hundreds like it. Our team of traders, statisticians, and economists, we offer direct and practical guidance on branching into systematic strategies with our platform. Whether you want to trade a form of arbitrage, exploit an inefficiency, or even just want to learn and test new strategies, we are here to provide 1-on-1 support.
What is this platform?
The Options-Quant platform is an options pricing engine that is used to calculate inefficiencies in option prices according to various different pricing models. This includes options on futures, FX, equities, and fixed income. The models featured are used in various hedge funds, and are curated by researchers at leading Universities.
How do I use it?
Upon purchasing, you will receive a digital download of the application as well as a robust documentation that outlines the concepts, explaining how each function works.
E.g.; The overwhelming majority of our users make trades based on the model value of the option relative to the current market price. If MertonJumpDiffusion model estimates the price of an option to be lower than what the market price is trading at, the trader shorts the option and vice-versa. This strategy, also known as relative value trading, uses the platform to exploit pricing inefficiencies.
Can I make trades on the platform?
Currently, the platform is only meant for pricing the options. To submit trades you must use a third-party brokerage, like Robinhood or TD Ameritrade.
Which operating systems are supported?
Currently, we only offer the platform on Windows devices.
Does the platform use any external data?
The platform relies only on user-entered parameters. It does not connect to any external data source or API.