3 ms·
You can front-run the algotraders because you know what they're going to do. A simple example from Bloomberg View: "Take American Airlines Group Inc., which jo
by aianus 11y ago
You can front-run the algotraders because you know what they're going to do. A simple example from Bloomberg View:
"Take American Airlines Group Inc., which joined the S&P 500 after markets closed on March 20. Because the addition of the carrier was announced four days earlier, nimble traders had plenty of time to get in front of the less fleet-footed."
The bigger the index funds get, the more easy money there is to be made this way.
- tedmiston 11y ago> "Take American Airlines Group Inc., which joined the S&P 500 after markets closed on March 20. Because the addition of the carrier was announced four days earlier, nimble traders had plenty of time to get in front of the less fleet-footed." So, just to be explicit, is the suggestion to short AA right before this happens, then re-buy once the algotraders settle?
- aianus 11y agoNo, the suggestion is to buy AA before all the index funds tracking the S&P 500 are obligated to buy it at the same time after it's officially added to the index.