Executive Summary
Our primary objective is to develop an AI-driven options trading platform that leverages historical options data, news headlines, and sophisticated neural networks to facilitate intelligent trading of covered calls, diagonals, collars, and more. As we advance, we aim to expand into international markets.
Goals
Acquire extensive historical options data.
Implement AI training for trading options, especially strategies such as covered calls, diagonals, and collars.
Integrate news headline data to inform AI trading decisions.
Augment computational capacity and develop more intricate neural network models.
Expand trading capabilities to international markets and stocks.
Secure Series 7 and Series 63 licenses to facilitate direct asset management.
Implementation Steps
Data Acquisition and Processing:
Historical Options Data: Partner with financial data providers to obtain datasets. Prioritize data that provides comprehensive information on option prices, strike prices, underlying stock prices, expiration dates, and implied volatility.
News Headline Data: Collaborate with news API providers to gain access to historical and real-time headlines. Extract relevant financial news pertaining to stocks, global events, earnings, and macroeconomic indicators.
AI Training: Use the historical options data to train the initial AI model on popular trading strategies like covered calls, diagonals, and collars.
Incorporate the news headline data to teach the AI how external events may influence the market.
Continually retrain the AI model with fresh data to ensure up-to-date insights.
Infrastructure Enhancement:
Evaluate current computational capacity and project future needs.
Rent or purchase additional computational resources, emphasizing GPUs and TPUs for neural network training and inference.
Develop and design advanced neural network architectures tailored to the financial domain.
International Market Expansion:
Research regulatory requirements for trading in target international markets.
Secure data for international stocks and options.
Train the AI on the nuances of these new markets, accounting for factors like local news, economic conditions, and market dynamics.
Licensing for Direct Asset Management:
Prepare and apply for the Series 7 and Series 63 licenses, allowing the platform to directly handle and manage client assets.
Ensure adherence to the regulatory compliance and ethical standards these licenses demand.
Platform Development:
Develop a user-friendly interface that displays trading recommendations, historical data visualizations, news highlights, and performance metrics.
Implement robust security measures to safeguard user data and ensure compliance with financial regulations.
Offer a feedback system for users to report inaccuracies and improve AI performance.
Budget Estimation
Historical Options Data Acquisition: $50,000
News API Subscription: $25,000/year
Series 7 and Series 63 Licensing and Preparation: $50,000
Computational Infrastructure: $50,000 (depending on buy vs. rent decision)
Regulatory & Licensing Fees for International Markets: $75,000 (varies by market)
Platform Development and Maintenance: $300,000/year
Total Initial Budget: Approximately $550,000
Revenue Model
Subscription-based: Offer different tiers (basic, premium, professional) with varying levels of insights, number of trades, and advanced analytics.
Risk Assessment
Regulatory Challenges: Different countries have specific regulations for algorithmic trading.
Data Reliability: The accuracy of the AI model depends on the quality and completeness of the data.
Market Volatility: Unprecedented events can introduce unforeseen market dynamics that the model might not be prepared for.
Competitive Landscape: The FinTech space is rapidly evolving, and competitors might emerge with similar or better offerings.
Conclusion
With the surge in interest in AI-driven financial solutions, our platform promises to revolutionize options trading. By continuously enhancing our models, incorporating vast datasets, and expanding into international markets, we position ourselves at the forefront of the next wave of trading innovations.