Daily Archives: April 25, 2015

Running out of options

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Fascinating piece in Slate.

At 7.32pm on March 27, Dama Mattioli, a reporter on the Wall Street Journal, tweeted thus:

“Intel is in talks to buy Altera. Deal would be largest in Intel’s history. Scoop w/ @danacimilluca coming to http://WSJ.com $ALTR”

Seth Stevenson of Slate recounts what happened next:

Quicker than any human seemingly could have done it, someone—or rather something—bought $110,530 worth of cheap options on Altera, a company that makes digital circuits.* Over the next several minutes and until the end of the day, as humans digested Mattioli’s takeover rumor at human speed, Altera’s stock price rose. When all was said and done, those cheap options had resulted in a $2.4 million profit. Speculation immediately centered on the idea that an automated program (a “bot”) had scanned the tweet, interpreted its meaning, and instantly bought those options based on an algorithm. The robot had read the tweet and made a killing on it before anyone knew what was going on.

In fact a Reuters report found that the trade in question was made a full 19 seconds before the tweet appeared. In a way, though, that only makes the story even more interesting. The WSJ has a policy of putting news on its own newswire before it goes on Twitter and it turns out that the trades occurred a mere second after news of the possible deal appeared on Dow Jones Newswires, and before Altera’s shares were halted.

Yep. A second.

Which means — or at any rate suggests — that an algorithm ‘read’ the news headline and acted to buy short-term options on Altera shares. Which is yet another pointer to what it happening to stock exchanges.

By Royal appointment

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In her LRB review of Laura Thomson’s A Different Class of Murder: The Story of Lord Lucan, Rosemary Hill has an entertaining passage about two of Lord Lucan’s mates, Nicholas Luard and Dominick Elwes.

As the conventions of the 1950s loosened, hare-brained schemes were fashionable, though often doomed. The Establishment Club failed, taking Luard’s modest inheritance with it, and he and Elwes embarked on a succession of get-rich-quick enterprises. Their most entertaining failure was the retractable dog lead which Elwes patented. Since he and Luard were among the young men invited to dine (without wives) by Princess Margaret they thought she might be persuaded to use it when presenting prizes at Crufts to generate useful publicity. HRH agreed, but in front of curious photographers she put the spring-load on the wrong setting and all but strangled a chihuahua. Sales never recovered. Tellingly, the only Luard-Elwes venture to make money was their book, Refer to Drawer, a guide to confidence trickery.

That’s about par for the course for the rackety crowd of crooked or harebrained toffs who were Lucan’s playmates. In her review, Hill concludes that Lucan was not the murderer. I’m not convinced, and nor are some of the folks who have commented vigorously on the review.