Along the shores of beautiful Lake Geneva, a stone’s throw from the world-famous Swiss Federal Institute of Technology in Lausanne (EPFL), the VisualStructure team is hard at work revolutionizing the way investors trade options. The team, led by renowned financial mathematician and EPFL Professor Semyon Malamud and co-founded together with Katalysen & Partners, has spent the last few years leveraging the latest advances in machine learning and algorithms to develop a platform that makes options trading infinitely more simple, interactive, and smart than is possible with current platform alternatives.
“Conventional wisdom suggests that traditional option strategies improve the risk-return tradeoff, whereby the achieved reduction in risk exceeds the respective loss in expected return,” explains Professor Malamud.
“However, extensive academic research (see, for example, “Pathetic Protection: The Elusive Benefits of Protective Puts”) shows that this naïve wisdom is completely wrong. Both of these simple strategies significantly worsen the risk-return tradeoff, and the loss in expected return is much higher than the reduction in risk. What this means is simple: Investors using these naïve option strategies will likely achieve worse outcomes than those investors who simply allocate their money between stocks and bonds. Clearly, the biggest obstacle for democratizing options markets is the absence of a reliable and robust technology for incorporating options into investors’ portfolios.”
The technology behind VisualStructure combines advanced mathematical algorithms with a unique set of visualization tools. It lets any options trader or investor quickly and easily create a unique “VisualStructure” of option positions in an interactive, transparent and risk-managed stack through a highly innovative game-like user experience. Proprietary, ultra-fast optimization algorithms ensure that the user gets immediate “robustified” feedback on every action. Despite the incredible complexity of the math behind it, the product is designed to make the analysis easy and accessible for any options trader, independent of their background and experience. VisualStructure represents a great example of the collaboration of Swiss academia with the larger fintech community, offering both new and advanced options traders a market unique combination of simplicity and access to modern technology.
The new year not only meant a well-deserved break for the VisualStructure team, but more excitingly also the celebration of a key milestone that was reached: VisualStructures proprietary search and optimisation algorithms were officially deployed on the 30th of December, supported by industry leading broker Tradier.
“We at Tradier want to enable innovative companies like VisualStructure to offer innovative trading experiences through our scalable and secure APIs. Companies like VisualStructure bring robust next- generation investing experiences to the market with their unique research-based approach. We are happy and delighted to be integrated with VisualStructure,” said Tradier CEO Dan Raju on the occasion.
The VisualStructure team consists of some of the industry’s brightest financial and data science minds, yet owes much of its success to the life-long research of Professor Malamud. Research, for which the professor has been well recognized: in addition to various honorary degrees and awards, Professor Malamud’s research received the joint INQUIRE Europe/UK research prize, and the Dauphine-Amundi prize in Asset Management. Katalysen has enjoyed a long relationship with Professor Malamud, and with several of Katalysen’s core members having deep experience of their own in the options trading industry the value of Professor Malamud’s research was quickly recognized. The multi-year research project was as a result spun out of EPFL, and VisualStructure was co-founded together with Katalysen.
“Being able to co-found VisualStructure with Professor Malamud, and co-invest alongside EPFL, is a great privilege. Katalysen builds financial infrastructure and digital services that foster innovation and catalyze growth, and it is with absolute certainty I say that VisualStructure will revolutionize the way in which retail and professional investors trade options,” said Katalysen partner Heiner Weber on VisualStructure’s success.
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