Big News Creates a Big Opportunity
- Posted by Michael Bigger
- on September 8th, 2011
Check out the trade we did at 8:30 am last Friday as the employment data news hit the tape.
We bought the spread 8 * $SPY – 13 * $IWM at a level of $33.94 which was about $10 below the level it was trading just before the release. I am talking about a fraction of a second.
Our ability to make money in this situation depended on the following three components:
- Major news that can move the market big time.
- Fast technology to capture a very short term liquidity gap that was almost invisible to the naked eye. Fast computers are great. Embrace them.
- The appropriate low delta spread. You wouldn’t want to trade this with an open delta.
We wish we could have done more of this but it was just too fast.
Have you ever taken advantage of a situation like this one?
Written by Michael Bigger. Follow me on Twitter and StockTwits.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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Michael Bigger is an investor and a trader who has been involved with trading technologies for more than twenty years. In 1992, Michael joined Citibank as head trader of U.S. single-stock derivatives, where he managed a $5 billion portfolio of equity derivatives. In 1998, he joined D.E. Shaw & Co., L.P. to trade the U.S. equity derivatives portfolio. (More) -
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