6 ms·

My bet is insider trading with someone writing a simple bot to make the trade once they see the trigger words made public.

clord 11y ago
That was my first thought too. Since sometimes these are sub-second trades, it'd be interesting to look at whether they're physically possible (i.e. whether speed of light is respected.) Would explain stuff like [0]. [0]: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/traders-may-have-gotten-last-weeks-fed-news-7-milliseconds-early/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/t...
- hueving 11y ago
  Well if it doesn't respect the speed of light then they didn't wait for it to become public. What your parent was inferring was waiting for the news to actually hit the wire so it does look legitimate.
onewaystreet 11y ago
It's no longer insider trading if the information has been made public. There would be no advantage to doing this either. There are thousands of firms and individuals running keyword based trading bots. You would be competing with all of them.
- liquidcool 11y ago
  You may be much better educated than I on insider trading, but as I understand it courts have ruled that insiders have to wait a reasonable amount of time for the public to absorb that information. "Reasonable amount" seems to have changed over the years (first read about it in Business Adventures, Buffet and Gates' favorite biz book), but I note that most trading firms today state you must wait until the 3rd business day to act on that information. Another issue is whether you know this is fact, but the public only knows it as rumor. Of course, you'll want to consult a lawyer about all this.
  - giarc 11y ago
    >wait until the 3rd business day to act on that information? Definitely no. Just watch the news and see that the stock price of any company changes after pretty much any news.
    - dannnn 11y ago
      That's because of the NON-insiders trading.
      - giarc 11y ago
        Sorry, I didn't catch that part. I thought the commenter was referring to anyone.
- robzyb 11y ago
  It might not be insider trading in a legal sense, but in a moral sense it kinda is.
- x0054 11y ago
  Well, it's still insider trading if these trades were not disclosed by the people who had inside knowledge and did make these trades. Also, I wonder if it even has to be all that complicated as some kind of computer program monitors keywords. For all we know, it's just a guy sitting in his living room with with 2 Chrome windows opened, continuously refreshing the Dow Jones Newswire, with the trade all setup and ready to go in the other window.
- golergka 11y ago
  It is insider trading, if you use the insider information to write a very simple tweet parsing rule instead of having to write a complicated AI algorithm to parse this information before any prior knowledge. Also, if I understood the article correctly, this trade involved to transactions: first, purchasing the options, and then, purchasing actual stock using those options. And (once again, correct me if I'm wrong), the options themselves were purchased before the information was made public, so this transaction may have been the direct result of insider information.
  - gregschlom 11y ago
    > And (once again, correct me if I'm wrong), the options themselves were purchased before the information was made public No, according to the article, the options were purchased one second after the information first became public in some news wire headline. The fact that it was also 19 second before a journalist's tweet was apparently irrelevant, since there was that headline before the tweet.
    - golergka 11y ago
      I must have misunderstood. Thanks for correction!
    - bigiain 11y ago
      It seems to me that the information leading to the journo's tweet probably also preceded the news wire headline. I guess it's _possible_ the the tweet we written by somebody who saw the news wire headline as it hit the web, and they read it, understood it's importance, wrote and posted their tweet – all within 19 seconds (not _impossible_), but I'd be curious to know where the information for the news wire post came from. Somebody knew long enough before that headline got onto the web to have time to write it (and the article).
- vannevar 11y ago
  Those competitors would likely have protections built in to filter false rumors---more than one source, some kind of scoring algorithm, etc. An insider wouldn't need any of that since he knows the rumor is true.
giarc 11y ago
Then that's not insider trading. The news was made public, your bot just acted on that public knowledge before anyone else could. It's a matter of speed not knowledge.

clord 11y ago

That was my first thought too. Since sometimes these are sub-second trades, it'd be interesting to look at whether they're physically possible (i.e. whether speed of light is respected.) Would explain stuff like [0]. [0]: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/traders-may-have-gotten-last-weeks-fed-news-7-milliseconds-early/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/t...

hueving 11y ago
Well if it doesn't respect the speed of light then they didn't wait for it to become public. What your parent was inferring was waiting for the news to actually hit the wire so it does look legitimate.

onewaystreet 11y ago

It's no longer insider trading if the information has been made public. There would be no advantage to doing this either. There are thousands of firms and individuals running keyword based trading bots. You would be competing with all of them.

liquidcool 11y ago
You may be much better educated than I on insider trading, but as I understand it courts have ruled that insiders have to wait a reasonable amount of time for the public to absorb that information. "Reasonable amount" seems to have changed over the years (first read about it in Business Adventures, Buffet and Gates' favorite biz book), but I note that most trading firms today state you must wait until the 3rd business day to act on that information. Another issue is whether you know this is fact, but the public only knows it as rumor. Of course, you'll want to consult a lawyer about all this.
- giarc 11y ago
  >wait until the 3rd business day to act on that information? Definitely no. Just watch the news and see that the stock price of any company changes after pretty much any news.
  - dannnn 11y ago
    That's because of the NON-insiders trading.
    - giarc 11y ago
      Sorry, I didn't catch that part. I thought the commenter was referring to anyone.
robzyb 11y ago
It might not be insider trading in a legal sense, but in a moral sense it kinda is.
x0054 11y ago
Well, it's still insider trading if these trades were not disclosed by the people who had inside knowledge and did make these trades. Also, I wonder if it even has to be all that complicated as some kind of computer program monitors keywords. For all we know, it's just a guy sitting in his living room with with 2 Chrome windows opened, continuously refreshing the Dow Jones Newswire, with the trade all setup and ready to go in the other window.
golergka 11y ago
It is insider trading, if you use the insider information to write a very simple tweet parsing rule instead of having to write a complicated AI algorithm to parse this information before any prior knowledge. Also, if I understood the article correctly, this trade involved to transactions: first, purchasing the options, and then, purchasing actual stock using those options. And (once again, correct me if I'm wrong), the options themselves were purchased before the information was made public, so this transaction may have been the direct result of insider information.
- gregschlom 11y ago
  > And (once again, correct me if I'm wrong), the options themselves were purchased before the information was made public No, according to the article, the options were purchased one second after the information first became public in some news wire headline. The fact that it was also 19 second before a journalist's tweet was apparently irrelevant, since there was that headline before the tweet.
  - golergka 11y ago
    I must have misunderstood. Thanks for correction!
  - bigiain 11y ago
    It seems to me that the information leading to the journo's tweet probably also preceded the news wire headline. I guess it's _possible_ the the tweet we written by somebody who saw the news wire headline as it hit the web, and they read it, understood it's importance, wrote and posted their tweet – all within 19 seconds (not _impossible_), but I'd be curious to know where the information for the news wire post came from. Somebody knew long enough before that headline got onto the web to have time to write it (and the article).
vannevar 11y ago
Those competitors would likely have protections built in to filter false rumors---more than one source, some kind of scoring algorithm, etc. An insider wouldn't need any of that since he knows the rumor is true.

giarc 11y ago

Then that's not insider trading. The news was made public, your bot just acted on that public knowledge before anyone else could. It's a matter of speed not knowledge.