Options Market Maker Algorithm: Volatility Arbitrage System

💰 Overview

A proprietary algorithmic trading system that identifies and exploits pricing inefficiencies in options markets. By acting as a systematic market maker, the algorithm achieves consistent 10-15% monthly returns through volatility arbitrage across multiple underlying assets.

🎯 Trading Strategy

The system operates on a market-making principle:

Data Collection & Analysis

• Real-time scraping of broker option chains
• Monitoring of implied volatility surfaces
• Detection of mispricings across strikes and expirations

Arbitrage Opportunities

• Volatility Skew Arbitrage: Capitalizing on inconsistent volatility pricing across strikes
• Calendar Spread Misalignments: Exploiting term structure discrepancies
• Butterfly/Condor Strategies: Executing defined-risk positions when pricing deviates from theoretical values

Risk-Managed Execution

• Position sizing based on volatility exposure
• Strict stop-loss and profit-taking rules
• Portfolio-level risk constraints

📊 Performance Metrics

• Average Monthly Return: 10-15%
• Strategy: Market-making/volatility arbitrage
• Primary Instruments: Options (butterflies, spreads, condors)
• Holding Period: Intraday to several days
• Win Rate: Consistently profitable over 9+ months

🏗️ Technical Architecture

Broker Data Feeds → [Real-time Scraping] → [Pricing Model] → [Arbitrage Detection] → [Order Execution] → [Risk Management]

Core Components:

• Data Layer: Direct broker API integration and web scraping
• Analysis Engine: Volatility surface modeling and mispricing detection
• Execution System: Automated trade entry/exit with slippage control
• Risk Management: Real-time position monitoring and adjustment

🔧 Technical Stack

• Python: pandas, numpy, scikit-learn for analysis
• Web Automation: Selenium/BeautifulSoup for data scraping
• Broker APIs: Direct integration for execution
• Database: Trade journaling and performance tracking

⚠️ Risk Disclosure

This is a proprietary trading system with inherent risks. Past performance does not guarantee future results. Options trading involves substantial risk of loss and is not suitable for all investors.

🚀 Business Impact

• Consistent Profit Generation: Demonstrated ability to generate alpha in competitive markets
• Full Automation: Requires minimal manual intervention once deployed
• Scalable Architecture: Can be extended to additional markets and instruments
• Proven Track Record: 9+ months of verified profitability

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Part of a portfolio demonstrating advanced quantitative trading capabilities and real-world financial engineering.