Terrorist hackers? Could have been a real Black Swan event for the options guys had it lasted much longer.
dont be absurd, never blame on malice what can be explained by mere incompetence. Im glad I didnt have any positions on, now i need to grab historical data on this so I can analyze what to do when this situation recurs. what did VIX disseminate during this period? recent outages during October, the last one was about half as long Cboe US Options Exchange System Status Resolved - OPRA Processing Issue October 19, 2023 12:27:57 Cboe US Options Exchanges have reconnected to OPRA and resumed trading of multilist options following failover of OPRA systems to their secondary site. All Cboe Exchange systems are operating normally. Cboe Trade Desk +1.913.815.7001 tradedesk@cboe.com Cboe US Options Exchange System Status Update - OPRA Processing Issue October 19, 2023 12:13:16 Cboe US Options Exchanges have identified an OPRA processing issue impacting Cboe's ability to submit quotes to OPRA. All other Cboe Exchange systems are operating normally. Cboe Trade Desk +1.913.815.7001 tradedesk@cboe.com Update – Cboe Options Exchange SPXW Matching Engine Process Fail-over Software Patch October 12, 2023 15:25:05 Cboe Software Engineering has identified the software defect responsible for the SPXW Matching Engine failure and subsequent failover to the secondary Matching Engine on Thursday, September 21, 2023 and Monday, October 2, 2023. A corrective software patch has been deployed to the Cboe Options Certification environment and is scheduled to be deployed to the Cboe Options Exchange Production environment to be effective Monday, October 16, 2023, following additional internal testing. All Cboe systems are currently operating normally. Cboe Trade Desk 913.815.7001 tradedesk@cboe.com Post Mortem: Cboe Options Exchange SPXW Matching Engine Process Failover October 02, 2023 16:48:10 Post Mortem: Cboe Options Exchange SPXW Matching Engine Process Failover Incident Description: Major System Disruption and Compliance event On Monday, October 2, 2023 at 10:39:55ET, the SPXW Matching Engine experienced a software-related failure after which the secondary SPXW Matching Engine took over automatically and was online and available for trading as of 10:41:27 ET. Cboe Software Engineering has determined today's event is the result of a previously undiscovered software defect relating to the early termination of auctions. The system became more likely to encounter this defect as a result of the corrective software patch applied following the edge case software event noted on Thursday, September 21, 2023. Following successful recovery to the secondary Matching Engine, SPXW auctions conducted on the secondary Matching Engine utilized Matching Engine timestamps, as opposed to NIC timestamps, to determine eligibility for auction participation, in violation of Cboe Options Exchange Rule 5.25(c). Members Affected: Between 6-50 Members on Cboe Options Exchange regularly trade SPXW options products. Corrective Action: At system restart today, Cboe will rollback the software patch which increased the likelihood of encountering the software defect responsible for today's event. A new patch is being developed, and the Cboe Trade Desk will communicate the availability of the patch as soon as possible. Also during the restart, a configuration change will be made to use NIC timestamps in auction processing on the secondary Matching Engine in the event of a future failover. Cboe Trade Desk 913.815.7001 tradedesk@cboe.com Cboe C1 Options Exchange System Status Update (Issue Affected Trading in Series SPXW) October 02, 2023 10:47:40 Please be advised that due to a system issue, matching on the Cboe C1 Options Exchange order book in SPXW was unavailable between 10:39:55 ET and 10:41:27 ET. All open quotes in the affected range during the outage were cancelled. Open orders would have also been cancelled unless requested to be kept live based on port configuration. Matching in the affected range has been restored and all systems are now operating normally. Cboe Trade Desk 913.815.7001 tradedesk@cboe.com
^^^^^Given the numbers of guys who are trading those 0DTE nowadays this could have been a disaster had the outage lasted much longer. I dont trade options myself but the option guys in a couple of chat rooms I visit were freaking out. Wouldn't surprise me one bit if it turns out it was hackers.
@tomkat22 , logic isnt your strong suit is it? the outage could have been a disaster has nothing to do with a bunch of dumb bumblefucks from hell engaging in some thing which is just the latest acronym to get everyones panties in a twist
Agree, of all the possible causes hacking IMO would be low on the list of possibilities. In all my many, many years of trading there have been dozens of outages (a few a year though less and less over time), never once do I recall hacking being mentioned as a cause.
I was trading during the flash crash of 2010 so I admit I tend to get a bit spooked when stuff like this happens. Regardless of who or what caused it I would think CBOE needs to get their shit together so it stops happening. It's going to wind up causing a bunch of people to lose a bunch of money.
The flash crash I wasn't trading at the time but that was a hell of an event and I understood it after the fact and it's to be expected mandelbrot said this kind of thing would happen in the misbehavior of markets but everyone should be demanding that CBOE open source their code and processes because of security through obscurity is no security at all. The self exciting Hawks process model is a model I had studied prior to that event but I did not really make the link to critical processes on the boundary of stability and chaos which is what the almost unstable Hawks process limit is which converges to rough volatility in the macroscopic limit but anyway I digress it does allow for the potentiality of these sorts of things and representation of them in some sort of tail risk way.. moral of the story is you can't fight like speed at light speed you have to position yourself so that whatever way the cookie crumbles you're all right and so that's why you should have been hedged you're doing options or something like that trading anti-correlated or highly correlated instruments etc
October 26, 2023 To: OPRA Subscribers Subject: OPRA Processing issue OPRA Subscribers, On October 25, 2023, beginning at approximately 10:09:01 a.m., SIAC became aware that the input lines of a subset of OPRA Participants were disconnecting at the Local Data Center (“LDC”). SIAC attempted to resolve the issue by temporarily disabling Participant input lines at the LDC beginning at approximately 10:11 a.m. with the intent to re-enable them when the issue was resolved. The action did not resolve the issue, and SIAC then determined to failover OPRA to the Remote Data Center (“RDC”), which completed by approximately 10:39:18 a.m. SIAC believes the root cause of the event is related to flow control parameters within the OPRA system, which were adjusted for start-of- today to prevent recurrence of the issue. OPRA GTH was unaffected by the issue. OPRA is operating out of the LDC for the start of day October 26, 2023.
Here is what I meant to convey with regards to your comment about the flash crash: Question: Didnt Mandelbrot write about concentration and risk in fractals and scaling in finance? ChatGPT: Yes, Benoît B. Mandelbrot, known as the father of fractal geometry, made significant contributions to the understanding of financial markets through his work on fractals and scaling. Mandelbrot's insights challenged the classical financial theories that were predominant at the time. Some key points from Mandelbrot's work related to concentration, risk, and scaling in finance include: Levy Stable Distributions: Mandelbrot identified that financial returns don't always follow a normal (Gaussian) distribution, as was widely assumed in classical financial theories. Instead, he proposed that financial market returns might be better described by Lévy stable distributions. These distributions have "fat tails," meaning they assign a higher probability to extreme events (both positive and negative) than the normal distribution does. Scaling and Self-Similarity: Mandelbrot pointed out that financial data exhibit scaling properties. This means that patterns in price changes look similar regardless of the time scale you're examining, be it days, weeks, or months. This self-similarity over different time scales is a hallmark of fractals. Concentration of Risk: Mandelbrot argued that because of the fat-tailed nature of financial returns, risks are often concentrated in rare and extreme events (often referred to as "black swans"). This challenges the traditional diversification strategies, as these rare events can cause significant losses across various assets. Limits of Traditional Finance Theories: Mandelbrot was a critic of the Efficient Market Hypothesis (EMH) and other traditional financial theories. He believed that these theories were based on oversimplified assumptions and failed to account for the complex, chaotic nature of financial markets. Multifractals: Later in his career, Mandelbrot introduced the concept of multifractals to finance. Multifractals provide a more nuanced way to model financial data by considering multiple scaling exponents rather than a single one. Mandelbrot's work has been influential in shifting the perspective on risk and returns in financial markets. He emphasized the importance of understanding the complex, nonlinear dynamics of markets and the significant risks posed by rare, extreme events. His insights underscored the importance of a more holistic understanding of concentration and diversification in the context of these market dynamics.