Then they form an opinion on this value based on implied vs realized volatility considerations.
This approach is suboptimal on two counts :
- First, it disregards a huge amount of available data such as trade activity,
similar
stock
behaviour, earning release schedule, etc.
- Also, it is based on simple implicit assumptions of volatility mean reversion
pattern or
term structure smoothness.
These assumptions make sense, but they need to be put in a wider context through rigorous quantitative analysis thanks to machine learning.
Canari.dev does all the heavy lifting for you and computes live AI generated indicators delivered in a simple, ready to use format.
- Intro
Canari.dev is a web based platform aiming to bring the power of Machine Learning to all options traders.
It is based on Deutsche Boerse's A7 platform which offers a simple interface to access all Deutsche Boerse's tick by tick data.
- Indicators
Canari uses Artificial Intelligence to track patterns in screen trades, cross underlying volatility spreads, term structure shapes and much more.
- Pre trade, you can use Canari.dev's dashboard in order to select which stocks are the best pick to buy or sell volatility.
For example, by looking at the stocks with the highest CSA indicator on a given maturity, you can identify which have the highest implied vol relative to their expected realized vol.
- Once you have selected an option, you can use our enhanced pricer which provides you a 'canari price' next to the market price.
This canari price includes all our indicators and helps you better negotiate options and strategies without having to rely simply on screen prices which can be deceptive.
- For portfolio management, Canari can send you alerts when a forecast indicator reaches a certain threshold which signals a trading opportunity.
These detailed charts explain what triggered the alert and track the forecast until it reaches its horizon to check if it was accurate.
- In order to demonstrate the power of the indicators, we have built live paper trading strategies based on individual or combinations of indicators. You can follow the composition and performance of these virtual portfolios.
- Robot Advisor
The signals are also used in a second layer of AI to generate bespoke strategies.
For example, Canari.dev proposes a listed option alternative to OTC-volswaps based dispersion trades.
It relies on our AI driven predictive signals, and is entirely geared towards achieving maximum performance, not rebalancing Liquidity Providers’s books.
In this instance, Canari.dev pushes ideas with all supporting material (backtests, spread history…) but also associated Margin Requirements. It also allows for a customization of the strategy.
As a result, our Robot Advisor offers the advantage to be:
- based on the latest research material
- non conflicted
- using an appealing user interface.
- Broker
Our users are offered the possibility to request quotes to registered Liquidity Providers with a simple click. These Liquidity Providers will include banks, but also smaller Market Makers.
As a technology company, Canari.dev will only be a conduit for indicative prices. The actual trade will take place directly between both parties.
Liquidity Providers will thus get access to a large base of clients with standardized requests potentially directly channeled in their trading system. They will also be given access to some sections of the canari.dev website to push their own trading ideas.
In conclusion, Canari.dev will make strategy generation and trading on listed equity derivatives more efficient, easy and transparent.
- What we bring to markets
Canari.dev has already started spreading best practices.
Our short articles displayed on LinkedIn share advice about how to compute an intraday volatility, measure how expensive the smile is, take earnings publications into account, and optimize listed dispersion strike levels…
These topics are a simplified take on our research aiming at finding the right price for the volatility. Being transparent is in our DNA and also a necessity for Canari.dev as we need to show you that both our data compilation and Machine Learning processes are complementary or superior to your existing approach in order to gain acceptance. There is no black box.
- Conclusion
Canari wants to reinvent the workflow for volatility trades that don't belong in the orderbook by making it cheaper and more transparent.
ISDA-OTC transactions have no place in this new framework as trading, even complex strategies, will become cheaper and just as convenient in the listed market.
You can sign up for free at Canari.dev in order to put all the power of Deutsche Boerse’s tick data and Machine Learning on your side and make your trading cheaper and more efficient.
