VOLATILITY TRADING
Shorting on the peaks. Buying ...
HEADS OF TRADING at proprietary              RISK MANAGERS at proprietary              ...
BUSINESS LOGIC                                       quote volumes et...
HEAD OF TRADING AT AN INVESTMENT BANK                                  ...
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Orc Trading For Volatility Trading


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Orc Trading For Volatility Trading

  1. 1. ORC TRADING FOR VOLATILITY TRADING KNOW WHEN TO BUY AND SELL OPTIONS Shorting on the peaks. Buying on the lows. Market participant interest in volatility trading has never been greater. Proprietary trading firms and bank trading desks are seeking to profit amid the most unpredictable automated market climate witnessed. Traders are attempting to take advantage of differences in implied volatility and future forecasts for real- ized volatility of the option underlyings and generate real returns for their desks. Orc Software’s volatility trading tools are increasingly being called on by these firms in all major global markets to increase profits and provide extensive real-time pricing & risk analytics, order validation & limits, multi-market liquidity access for trading exchange listed options (predominantly equity options and interest rate options) and hedging with cash and futures. ORC TRADING FOR VOLATILITY TRADING GIVES FIRMS: • Scalable trading system • Auto trading functionality • Pricing models / API for all traded products & asset classes • Volatility models / API for all traded products & asset classes • Portfolio reports & simulation tools • Order validation & limits • Auto hedging • Flexible risk analytics • Multi-market access • Flexible, open Orc Protocol ORC TRADING TAKE ADVANTAGE
  2. 2. WHO NEEDS VOLATILITY TRADING EDGE? HEADS OF TRADING at proprietary RISK MANAGERS at proprietary TRADERS at proprietary trading firms trading firms and banking trading trading firms and banks that need to and banks that need volatility man- desks that need to grow their business, view market risk with real-time risk agement tools for providing access to increase profits and identify market analytics, and control risk with real-time implied market volatilities. opportunities. implemented trading controls. • When there are movements in the • Would it create greater trading and • When monitoring market exposure, market would the ability to adjust cost efficiencies if your front office would visibility be improved if you volatility using an easy and compre- trading system and volatility / risk could easily access an extensive suite hensive volatility management tool management solutions were of reports and simulation scenarios to be advantageous? integrated on a single platform? view, in a few mouse clicks, individual or consolidated risk across trading • When defining your volatility surface • To increase profits, when looking for desks and markets in real time? values, would you benefit from a com- short-lived mis-pricings in the market, plete, single screen view of implied would it benefit your business if you • When executing directly on exchanges, volatilities? could configure your trading system would operational risk be reduced if to automatically execute or receive you could restrict trading activity by Orc Solution → Orc Trading for alerts for opportunities based on defining rule-based position limits? Volatility Trading offers easy-to-use, user-defined inputs? fast volatility surface updates, with • Would the ability to report and connections to major worldwide • During changeable market conditions consolidate global trading activi- derivatives exchanges, and market would trading efficiencies increase if ties (extracting data for aggregated data used to calculate real-time your traders had real-time fair values reports from distributed trading implied volatility. automatically updating to accurately desk systems in real-time over the reflect the market? Orc Protocol) into one single system increase efficiency and minimize risk Orc Solution → Orc Trading for Volatil- on a global position? ity Trading offers a scalable trading system with auto trading, pricing and Orc Solution → Orc Trading for volatility models / API for all traded Volatility Trading offers portfolio More information on products & asset classes, and excel- reports, order validation & limits, www.orcsoftware.com lent market access. and the Orc Protocol. “ With the ever increasing requirements for maintaining Sequoia’s screen presence in the markets, more sophisticated volatility modeling has gained significant importance for us. Orc enabling us to run our own models through the API has resulted in Sequoia achieving our goal for an intuitive, fast and easy-to-use trader solution that requires ” minimal updating when the market environment changes. Trading benefits for Sequoia Capital using Orc’s volatility model API. Douglas Garistina, Managing Partner, Sequoia Capital
  3. 3. ORC TRADING FOR VOLATILITY TRADING SOLUTION FEATURES BUSINESS LOGIC quote volumes etc) in Orc Trader or Orc FAST, UNMATCHED MARKET ACCESS Liquidator client • Trading engine - External application on top of Orc Proto- • Connectivity to all major derivatives - Manual trading engine based on click col/Orc Liquidator protocol for pricing markets including market data trading in Orc Trader and/or trading parameters • Low latency connectivity to cash and - Automated trading engine in Orc Trader • Pricing futures markets for hedging directly - Customizable automatic trading engine - Orc pricing and volatility models in or via brokers based on Orc Liquidator Orc Trader/Orc Liquidator • Profit & loss and risk management - Custom pricing and volatility models in PROVEN TECHNICAL PERFORMANCE - Risk sensitivities, scenario analysis and P&L Orc Trader/Orc Liquidator analysis in Orc Trader to protect against risk - External application using Orc Protocol to • Java-enabled, server-based algorithmic exposure and wrong market views feed critical, real-time pricing data to trading engine - External risk system using positions Orc Trader/Orc Liquidator • Reliable (and potentially more) from Orc Protocol • Hedging engine • Scalable • Parameter management - Click trading in Orc Trader • Robust - Pricing parameters (vols, dividends, yield - Trade/portfolio hedging in Orc Trader curves, etc.) in Orc Trader - Custom trade/portfolio hedging in - Trading parameters (refills on trades, Orc Liquidator 1 Trade options, futures, and cash products on multiple exchanges 2 Post-trade risk and position information to support trading 1 3 Manage volatility for accurate pricing 4 Create user-defined combinations across instruments and exchanges 3 2 4
  4. 4. ORC TRADING FOR VOLATILITY TRADING SUCCESS STORIES HEAD OF TRADING AT AN INVESTMENT BANK CTO AT A BROKER FIRM The head of trading at an investment bank wanted to add The CTO at a high-end, full service broker firm was looking a volatility trader to his existing and profitable directional to support discretionary option trading strategies such as proprietary trading desk. He hired a highly qualified trader those found at hedge funds. The firm hired a volatility trader and wanted to get him up and running fast with trading to set up a trading service that would employ volatility trading technology capable of translating his strategies to an auto- while capping risk. Using Orc Trading for Volatility Trading the mated formula. Using Orc Trading for Volatility Trading the trader was able to quickly deploy a new trading service that bank was able to achieve its goals economically and avoided would support complex calculations with rigorous caps on introducing additional IT complexity. risk taken in each position. As the trades required both order state management and portfolio allocation to individual accounts, they used a FIX application to message between the firms OMS. ORC TRADING More information on TAKE ADVANTAGE www.orcsoftware.com Take Advantage Orc is a leading global provider of technology for advanced derivatives trading and connectivity. Customers include leading banks, Orc Trading is used by leading financial firms worldwide for enhanced trading and market-making firms, exchanges, brokerage houses, trading, pricing and risk management on electronically traded derivatives. institutional investors, hedge funds and software vendors. Orc Trading provides the competitive edge to trade from a single platform, on any listed instrument, across all asset classes, on 100+ markets. sales@orcsoftware.com Orc Trading comprises market leading applications including among www.orcsoftware.com others Orc Trading for Algorithmic Trading, Orc Trading for Arbitrage, Orc Trading for Market Making, Orc Trading for Risk Management and Amsterdam, Chicago, Frankfurt, Hong Kong, London, Milan, Orc Trading for Volatility Trading. Moscow, New York, Paris, Stockholm, Sydney, Vienna