There is a rapidly growing consensus in capital markets that rigorously analyzed information derived originally from social media can be a very valuable input in identifying trading opportunities. Nowhere was this more evident than in what happened to Altera shares on Friday, March 27th. Once news broke at 3:32 PM EDT in a Tweet by a respected Wall Street Journal reporter that Intel was in talks to buy Altera, share prices began to skyrocket…so much so that trading in Altera was halted after only three minutes at 3:35 PM. The story was highlighted in a number of places including The New York Post and CNBC: http://nypost.com/2015/04/02/wall-street-trader-makes-2-4m-thanks-to-a-tweet/ http://www.cnbc.com/id/102545580 But within that very short window a savvy options trader was able to put in a bid for 300,000 options on Altera at $36 per share. At the closing bell that Altera’s price was $44.39. The trader cleared just over $2.4 Million…not bad for an afternoon’s work. It is not clear what the exact mechanism was that enabled this trader to pull off such a spectacular trade….perhaps just great timing, perhaps using some sort of sophisticated model that incorporates input derived from conventional news sources and/or social media. But, what we know at Social Market Analytics (SMA) is that our analysis tracked this spectacular deal perfectly. SMA clients use our Sentiment (or S-) Factors as key inputs into the trading models they use. The graphic below illustrates what SMA analytics predicted what would happen. Tweet time is central time. Chart is based on Eastern time. Our signal reacted well before the price move.
The below chart overlays the SMA signal and price. Our SMA S-Score reacted significantly before the price changed happened. Definitely time for SMA customers to act!
This functionality is only available through SMA - Contact us for more details. Thanks, Joe