Trading

Folks like Melvin Capital and Citron Research think that GameStop is a dying business. The general public is optimistic though, be it for fundamental reasons (e.g. Ryan Cohen (chewy.com) will help GameStop can re-invent itself in the online space ), or for personal amusement, or FOMO. In particular, /r/wallstreetbets members are buying lots of call options . Or maybe it’s rage against the financial machine.

Maximizing the Value for Shareholders

Suing a company for not following its code of ethics and therefore misleading investors doesn’t fly, but Signet Jewelers settled for $240m . Signet’s 70k female employees sued for discrimination, but the class action is yet to be resolved.

The Trade of the Century: When George Soros Broke the British Pound. Rohin Dhar. priceonomics.com . Jun 17, 2016.

Before the EU, Europe had the ERM to fix their exchange rates with the Deutschmark within 6% of the agreed upon rate.

Keeping the exchange rate fixed requires governments to nudge the rate, e.g.

• Use reserves of foreign currency to buy up their own currency
• Set high interest rates to entice lenders to buy their currency

Margaret Thatcher (PM) opposed the fixed exchange rates but lost the vote to Major, an ERM proponent.

Short Selling

Say $A shares are selling at $100, but I think they’re overpriced. So I borrow 10 shares, pay my brokerage interest and post some collateral. I then sell the shares for $1,000.

Objectives: low latency, high throughput & high reliability.

The messages are quite brief, e.g. the ITCH protocol uses 32 bytes per message.

Trading firm listens to broadcasts on buys, sells, deletes on ITCH broadcasts. Online sorting to identify profitable trades.

Matching engine operates on a first-come-first-served basis. Earlier orders with better price get traded first.

Markets run at 50 microsecond scales.

Single market peaks at 10Gbps. Peaks are correlated, e.g. “Shit! TSLA is burning. Sell!”