Securities Trade Demo

Securities Trade demonstration for Choreology Cohesions

This demonstration shows how Choreology Cohesions enables a typical scenario found in financial trading strategies. Many trades are composed of several underlying financial instruments. For example, an investor wishes to buy stock in company A in the belief that the stock price will rise, but at the same time wishes to 'insure' the investment against an unexpected drop in the stock price.

This hedging strategy can be achieved by buying the stock in company A and at the same time paying a premium to purchase an option to sell the stock at an agreed price (a 'put' option). Prices may vary from exchange to exchange and from broker to broker for many reasons, including differing transaction costs, broker spreads and option valuation models. The 'value' of such a strategy requires the successful purchase of each component of the trade at a certain price and at the same time.

If the stock price rises the return for the investor is the price gain less the premium paid for the option. If the price falls unexpectedly, the investor exercises the option to sell the stock and limits the loss. The investor can request quotes, choose between them to maximize price advantage, and atomically execute the 'legs' of the trade.

Within a single BTP cohesive business transaction ('cohesion'), the investor gathers guaranteed quotes for the stock and the option from a variety of exchanges and brokers (market makers). Each quote lapses after a market maker-specified time. The stock and option quotes are sorted according to some defined business rule (in this case, best price). The investor selects the desired quotes and executes the cross-instrument trade. The rejected quotes are cancelled as the business transaction completes.

For more detailed information on this demonstration, please read the Securities Trade Demonstration User Guide.