Trying to understand why an algorithm made a trade at a certain price is practically impossible. Assuming that these algorithms are profit seeking (and not util

Trying to understand why an algorithm made a trade at a certain price is practically impossible. Assuming that these algorithms are profit seeking (and not utility seeking, as in trying to transfer risk), the short answer is: because they thought they had a statistical edge they could profit from in the future. Of course, this is a statistical edge. No algo is always right, or even near always right. The algos don't know who they're trading with. They see liquidity and they're willing to take it if they think it's a good price. Now, you might ask, what is the higher purpose of all this trading, if all of it is profit seeking? That's pretty simple also. These trades help to determine the fair market price of a contract. The algos that consistently make the "right" trade survive ("right" defined as predicting future market price), and the ones that don't eventually get shut down. So even when the trading is non-utilitarian, there still is a greater purpose. That purpose is price discovery.