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Online trading broker day
An online automated trading system that automatically executes a trade of an option order based solely on the price of the underlying security. When executing the trade, the system acts as a proxy on behalf of the trader in executing the trade via an online brokerage account established through an online brokerage provider. Furthermore to execute a trade, pre-configured information regarding a number, sequence and content of web pages to effectuate a trade with the online brokerage provider and information regarding at least one online brokerage account with the online brokerage provider are used to effectuate a trade online through the World-Wide-Web.
The present invention relates to e-trading systems and methods and, more particularly, to an options automated trading system OATS that tracks current market prices for given United States US equity securities, and when a particular price condition defined on such a security is fulfilled, automatically executes a corresponding predefined option order pertaining to the given security.
Currently, when trading equity securities, the trader places a limit order based on the price of the option itself. Since the trader is cognizant of the potential profit of trading options, the trader is better able to take advantage of trigger conditions to make profits. However, the current restriction in placing limit orders frequently subjects a trader to losses or missed gains due to various inefficiencies which may lead to a delayed or missed execution of that order.
The equity options traders are faced with several problems which can diminish gains. For example, one problem the traders face is the inability to submit an order, whether by phone or by electronic means, to buy or sell various types of equity options based on a price condition defined on the underlying security. This problem stems from a lack of systems capable of executing such orders automatically, at the market price of the equity option based solely on the underlying securities.
In view of the forgoing, there is a continuing need for a system capable of executing such orders automatically, at the market price of the equity option based solely on conditions related to the underlying securities without human intervention or interaction.
As will be seen more fully below, the present invention is substantially different in structure, methodology and approach from that of the prior e-trading systems and methods. The present invention contemplates an options automated trading system OATS and method of automated options trading that tracks current market prices for given United States US equity securities, and when a particular price condition defined on such a security is fulfilled, automatically executes a corresponding predefined option order pertaining to the given security.
Accordingly, execution is based solely on the price of the underlying security. The OATS is intended primarily to provide the unattended, automatic execution of option trades based on price conditions related to each specific equity security underlying the specific option at issue in a trade transaction.
The present invention further contemplates an OATS that acts as a proxy on behalf of the trader in executing the trade via online brokerage providers having accounts established for the trader. When executing a trade, the OATS programmatically performs those operations that would result if the trader accessed the online brokerage account of the provider via a web browser.
The above and other objects of the present invention will become apparent from the drawings, the description given herein and the appended claims. Ask price, inside—the lowest price advertised at which there are sellers of a stock.
Bid price, inside—the highest price advertised at which there are buyers for a stock. Data import—reading in data from external files which may have been generated by other applications. Data export—writing data to external files which may be used by other applications. Date, expiration—The end of the life of an options or futures contract.
Derivative—security derivative—a monetary instrument derived from one or more underlying securities, whose price is determined by some formula based on the underlying securities. Equity—a particular type of security which assigns to the holder ownership in a share of the profits of the issuer.
Execution—of order— 1 the processing and fulfillment of a trading order; 2 the record of information describing 1. Icon—a graphical symbol, typically a part of a graphical user interface, which denotes a particular function or access to particular information.
IP—Internet Protocol—version 4 unless otherwise specified. Market data— 1 information received from specialized service provider regarding the status of securities trading on a market exchange; 2 specific information on securities including but not limited to securities trading status, trading volume, bid and ask prices, time and sales.
Market data feed—a service which provides a computer-accessible source of market data, typically delivered in a serial stream of information packets each containing the latest information on happenings in the securities market. Market data provider—a commercial vendor who operates a market data feed service. Market price—the price at which a security or security derivative will trade on a market exchange may alternately denote inside bid or inside ask price, depending on context.
NULL—a distinguished value indicating the contents of a particular data field are empty or do not apply to certain processing. Option— 1 the right, but not the obligation, to buy or sell a stock or other security for a specified price on or before a specific date; 2 a security carrying such rights as in 1 , which can be traded on an exchange.
Option class—all options of one type put or call that have the same underlying stock. Option series—all the options in one class with the same strike price.
Option, put—The buyer of a put option has purchased the right to sell shares of the underlying stock at the contracted exercise price. Option, call—The buyer of an equity call option has purchased the right to buy shares of the underlying stock at the stated exercise price. Options, listed—Listed options are those options traded on the U. Order— 1 a description of a particular trade that a trader would like to execute; 2 the record containing all data fields describing 1 3 a binding request to execute a trade.
Order, limit—an order to buy or sell stock with a price limit attached to it. Order, stop loss—An order placed with a broker to buy or sell when a certain price is reached. It is designed to limit an investor's loss on a security position, sometimes called stop market order.
Order, market—An order placed with a broker to buy or sell at whatever price the market will set. Order, GTC—Good 'Till Canceled An order which will remain in a broker's system indefinitely until it is filled or canceled by the party who submitted it. Order, daily—Also Day Order. An order which will remain in a broker's system only until the end of trading on the day on which the order was placed.
It will either be filled before the end of the day, or deleted from the system at the end of the day. Strike price—The stated price per share for which underlying stock may be purchased for a call or sold for a put by the option holder upon exercise of the option contract.
Trade—A synonym of order. A particular buy or sell transaction, execution or order. Transaction, trade— 1 a business exchange involving a security between two or more parties; 2 a record of all data describing 1. With reference to FIG. In general, an OATS application is implemented on a computing device 20 to provide a tool for traders who wish to trade Listed Equity Options or the like based on conditions defined on the underlying security price.
This tool provides traders with a means to guarantee execution of a trade at the market price on the underlying security price of an option, rather than accepting the current status quo, which involves placing a limit order based on the price of the option itself.
Accordingly, since the trader is cognizant of the potential profit of trading options, the trader is better able to take advantage of trigger conditions to make profits which they might have missed without such a tool. Moreover, the trader is no longer hampered by the current restriction of limit orders which frequently subjects a trader to losses or missed gains due to various inefficiencies which may lead to a delayed or missed execution of that order.
The OATS 10 provides a means for the trader to receive and monitor any market data, real-time or otherwise, enter trade orders, and execute such orders wherein execution of the order is automatic and requires no intervention or interaction by the trader. Referring still to FIGS. Among these are one or more market data feeds 50 on lines 58 ; one or more online trading accounts 60 , via remote online brokerage providers, accessible through the world wide web 70 on lines 68 ; a relational database system 45 ; and a computing device 20 , such as a personal computer, which processes the OATS application The computing device 20 includes memory 22 , CPU 24 and operating system The computing device 20 also supports a keyboard 40 , a mouse 42 , printer 44 and display Preferably, the OATS application supports a completely mouse-less mode of operation wherein the trader can execute operations such as, without limitation, Resume and Suspend, described in detail below more quickly through memorized use of special keys or key-combinations on the keyboard Since there are numerous possible key-combinations, to describe such key-combinations is prohibitive.
The OATS application is configured with a variety of information, which is derived either directly from the trader, or through a combination of data from its market data feeds 50 on line 58 and the input of the trader. Accordingly, the OATS application interfaces with the following systems: The computing device 20 is connected to one or more real-time market data feeds 50 , which provide pricing and status information on the securities the trader is interested in trading options for, as well as general market status.
Referring also to FIG. The market data feed configuration is setup during the configuration mode of the market data feed FIG. Some of the data entry fields may be populated by the trader or by the OATS It relates all events types 56 having a particular value to the source of the event.
The user ID 53 identifies the licensed user of the market data feed The user authentication 54 may be a token such as a password which authenticates the user ID 53 to the remote market data feed With regard to Security identifiers and symbols 55 , the OATS 10 stores data related to individual securities configured by the trader, for use in deciding when and if to execute trades represented by orders entered into OATS 10 by the trader.
The OATS 10 receives as input from one or more market data feeds 50 , market data events A market data event record 80 represents a change in information relating to a market or a security in which the trader is interested in trading.
Referring now to FIG. The market time 81 represents the time according to a particular market exchange. It is used to synchronize operations of all participants which may be in various local time zones. The market time 81 may be an 8 character field, containing the time format HH: SS, in military time. AM times are PM times are The local time 82 is the time according to the computing device Local time 82 may be used for any purpose deemed necessary in the design of OATS For example, the local time 82 is particularly useful for distinguishing events temporally.
It relates all events having a particular value to the source of the event. The Security Symbol 55 indicates the security to which the event type 56 pertains. It relates the event to a particular security, and relates the event to any order for the same security. The event type 56 distinguishes various events of interest to OATS The status 83 in input to OATS 10 from a market data feed 50 , upon receipt of information a market data event pertaining to the security identifier or symbol It is undefined when the security status status 83 has any other value.
The value of this field in input to OATS 10 from a market data feed 50 , upon receipt of information a market data event pertaining to the security symbol The value of this field in input to OATS from a market data feed 50 , upon receipt of information a market data event pertaining to the security symbol The value of this field in input to OATS 10 from the market data feed 50 , upon receipt of information a market data event pertaining to the security symbol In view of the forgoing, the OATS 10 keeps track of the securities underlying Listed Equity Options using data received from market data feeds Such market data feeds 50 may be purchased from third party vendors, typically for a monthly fee, and although previously delivered via dedicated lines, are usually available over the Internet via the World-Wide-Web As a result of the processing of these incoming events, the OATS application generates records in its various files, particularly those representing activity logs and system state.
In particular, the activity logs are entered into spreadsheets using spreadsheet applications