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518 points bwfan123 | 3 comments | | HN request time: 0.698s | source
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cs702 ◴[] No.44483909[source]
According to Indian regulators, every trading day Jane Street would:

1) buy large volumes of stocks and/or stock futures that are part of an index tracking India’s banking sector, early in the day,

2) subsequently place large options trades, betting that the index would decline or volatility would spike later in the day, and

3) later in the day, cash out of the large long positions, dragging the index lower, making far more money on the options trades than on the long positions.

Jane Street can and likely will claim the firm was only arbitraging away pricing inefficiencies, nothing more, nothing less. It was just business as usual, etc., etc.

However, given the scale of the operation, Jane Street's actions sure look like textbook market manipulation. Calling it like I see it.

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naveen99 ◴[] No.44484082[source]
Ok, but what moron was selling them the puts , and not seeing the pattern after a couple of days of this ? Sebi logic seems questionable.
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pclmulqdq ◴[] No.44484626[source]
I assume the moron in question was using Black-Scholes or some similar formula to price those options, and refused to update their prior when they lost money day after day. This happens quite a bit in derivatives markets.
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fn-mote ◴[] No.44486986[source]
> and refused to update their prior when they lost money day after day

The market takes money from people with incorrect beliefs about economics and gives it to people with correct beliefs. ~~What is the problem here?~~

On second read, I think the parent was just intending a factual statement, which I am willing to agree with.

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1. cyanydeez ◴[] No.44495011[source]
The market takes money like a bully most of the time. Any other belief is as theoretical as communism vs practice.
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2. Dylan16807 ◴[] No.44495749[source]
If you're selling millions of dollars of options you're taking an extremely willing risk, not getting bullied.

Edit: Reading more about this, it looks like the counterparty is often a bunch of retail investors doing quick trades hoping the stock swings one way or the other, and that's not bullying that's gambling.

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3. nativeit ◴[] No.44496215[source]
I agree with your edited point, and in response to sentiments I saw earlier in the thread—even gamblers deserve nominal assurances against cheating. My two cents, which I personally will be investing in wishes via my local wishing well, to which I’ve connected a dedicated fiber link to power my high-frequency algorithmic wish arbitrage desk.