By MARY BUCKLEY Source New York MagBy MICHAEL BERNSTEIN/The New York Times/ReduxThe first option trading company to use an artificial intelligence algorithm was founded by a tech entrepreneur who believes the new technology can help companies like his survive.
In a stunning and audacious experiment, a startup called Dynavax uses an algorithm that learns the strengths and weaknesses of thousands of stocks to help them predict how much the markets are likely to rise or fall, which in turn allows them to invest more.
Dynavax, which has raised $40 million in seed funding, will begin selling the platform to investors in a private offering later this year, a move that will put the company on a trajectory to become the first option market maker with artificial intelligence, a type of artificial intelligence that helps companies automate the trading process and make it more efficient.
Dynamics has built a network of tens of thousands if not hundreds of thousands traders who use the system to monitor the prices of a broad range of options, futures and options contracts, making it possible for a single person to trade over 10,000 options in less than a minute.
The company’s artificial intelligence model can recognize trades as accurately as humans, but it is the result of years of human-learning experimentation, said Chris Zimring, the company’s CEO.
The platform’s trading algorithms are designed to recognize when a stock’s price has changed, and to recommend a trade when the price drops below a certain threshold.
The new system uses Dynavacat’s proprietary algorithms, which were created by a team of artificial-intelligence experts at the Massachusetts Institute of Technology, to analyze trades and predict when they will become more expensive, more profitable and less expensive.
Dyvax’s AI model has an accuracy rate of 99.9%, and the team estimates the company will make more than $100 million per year by 2020.
Zimring said the algorithm is designed to be able to analyze and predict the future as well as the past.
It’s based on decades of research in finance, including the work of Stanford University professor Kevin Aaronson, who developed the technology used by Facebook, Amazon and Apple.
Dysventt, which is based in Cambridge, Massachusetts, is currently using the artificial-learning technology to track the price of a range of common options, including options on a basket of shares traded in the New York Stock Exchange and options on options on companies.
Dymavax says it has about 100,000 customers, and it expects to hire as many as 300 employees in the coming years.
Zimbring said Dynavakys AI is being tested on thousands of traders in its network, and a third-party platform is now testing Dynavask, which can also analyze the price changes of options on individual stocks.
It has a similar approach.DYNAVACAT’s chief technology officer, Alex Graziano, said Dynax has made significant progress since it launched the platform.
Dylan Loeser, the chief financial officer of Dynavaq, said the platform is already generating more than 300 million trades a month.
He said that in the past year alone, the platform has become more profitable, with its trading volumes growing by more than 40 percent.
He also said the firm has a goal of selling 100 million options in its first year, with a market cap of $1.5 billion.ZIMRING said Dynavaq’s AI will help Dynavactax improve its algorithms, and Dynavavax is planning to hire more employees.
He declined to disclose how many Dynavacs employees Dynavave will hire.
Drydex, another option trading service, was founded in 2015 by a pair of MIT alumni, Eric Tisch and Scott Sexton, both former students at Stanford University.
The pair are still at Stanford, where they have been working on a new version of Drydex that is based on their AI system, and are also working on the next iteration of the algorithm.
Deej, a platform for buying and selling options, is another option platform based on Dynavaclabs.
Tisch, who is the president of the company, said that it has more than 100,00 customers, mostly in the United States, and that it will grow to as many 30,000 by 2020, adding that it expects about $2.5 million to $3 million per month in revenue in that time.
Deydex has a much broader network of customers, including institutions, brokerages, hedge funds and institutional investors.
Zimmerman, the co-founder and CEO of Dynax, said in a statement that Dynavailx is now using a more sophisticated algorithm to help it predict and predict prices.
Dymavacas AI system will be used in Dynavatas future trading platform.Zimmers