Automated Options Trading System Using Flattened Spread Analysis
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Solution Overview
Problem
The complexity of options trading makes it intimidating for average investors, who often make costly decisions based on unfamiliar financial jargon and dynamic market data without access to appropriate analysis tools, leading to a costly trial-and-error process.
Innovation Solution
A trading platform that transforms and filters dynamic market data to generate a flattened trading spread, providing users with a probability of success, measure of return, and measure of risk, using a user-friendly interface and narrative questions to aid decision-making, and enabling execution of trades.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If options trading uses detailed financial models and complex variables, then measurement precision is improved, but device complexity increases
Solution Approach 1:
The patent segments the complex options trading analysis into distinct functional modules: a data reception module that receives market data, a processing module that applies financial models, and an output module that displays results. This segmentation allows each module to handle specific tasks, maintaining high measurement precision while reducing overall system complexity through modular design
Solution Approach 2:
The patent introduces an intermediary processing layer that translates complex financial model outputs into simplified, intuitive displays for users. This intermediary module acts as a mediator between the complex analysis engine and the user interface, preserving analytical precision while presenting information in an accessible format that reduces perceived system complexity
2Measurement precision
If options trading provides comprehensive market data, then measurement precision is improved, but ease of operation deteriorates
Solution Approach 1:
The patent applies local quality by providing different information densities to different user needs. The system offers comprehensive detailed data for users who require it, while simultaneously providing simplified summaries and key metrics for users who prefer concise information. This localized approach to information presentation maintains data accuracy while improving ease of operation for different user segments
Solution Approach 2:
The patent implements dynamic adaptability in the user interface, allowing users to adjust the level of detail and complexity displayed according to their preferences and experience levels. The system dynamically adjusts between comprehensive data views and simplified presentations, maintaining measurement precision while optimizing ease of operation based on individual user requirements
3Productivity
If options trading uses real-time market data, then productivity is improved, but device complexity increases
Solution Approach 1:
The patent applies preliminary action by pre-configuring and storing multiple financial models and analysis algorithms before trading sessions begin. The system pre-processes data structures and prepares computational frameworks in advance, enabling rapid real-time analysis without requiring complex processing arrangements during active trading, thus improving productivity while managing device complexity
Data Source
AI summary
Disclosed herein are system, method, and computer program product embodiments for generating a flattened trading spread. An embodiment operates by receiving one or more inputs indicating criteria for a potential trade including a stock, a predicted direction for the stock, a predicted duration for the predicted direction, a tolerable probability of success, and a tolerable percentage of potential loss from an account. A scan on the stock within the predicted duration is executed against a database containing real-time quotes and associated trading data. Results returned from the executing are processed to determine if each result accords with one or more strategies determined to meet the criteria. For each result determined from the processing to accord with a strategy, a flattened spread is calculated based on the criteria, the flattened spread comprising: a probability of success, a measure of return, and a measure of risk.