A great options market data provider is not solely defined by the strength of its product and service offering, but also by the experience of its staff. A qualified market data provider should have a team of experts with trading, technology, and quantitative modeling experience to supplement your team’s knowledge and expertise. The provider should also have a rapid response time and the capacity to handle fast markets, particularly as the market becomes ever-more volatile. Additionally, a qualified options market data provider should be certified in Trust Services Criteria (SOC 2 compliant) which is an audit of internal controls for organizations that store and process information on behalf of other organizations. Learn more about SOC 2 compliance here. In short, there is enough risk inherent in options trading without adding vendor risk as well.
There are a variety of skill sets and approaches for trading volatility, trading on price, using machine learning, and conducting strategy analysis and backtesting. You should enlist a partner than has the options expertise and experience in areas that match your needs. This is particularly true for building analytical options models. Different market data providers have different approaches, and finding the right focus is essential to your success.
The difference in market data providers is most noticeable in how a provider approaches options analytics in its data. Put another way, all of the options data acquired by an organization is only effective if it can be converted into an edge. Providers that can convert that data into information—and understand what information an organization really needs—offer far more value than simply providing broad infrastructure that connects your organization to live market data feeds. This type of customized approach will make the biggest difference in your results.
Likewise, historical options analytics provide an edge by expanding modeling from moment-to-moment risk analysis to empowering traders to develop a real sense of longer-term trendlines. Does the provider know the difference and how to provide historical options analytics to fit your purpose?
SpiderRock offers highly specialized project management teams who are on call to answer not only technical issues but provide real analytical support to empower traders and fund managers to convert data into information. Our team supports you from start to finish with market data, options analytics, and infrastructure to protect your trading edge. For more information, click here.