The first session of day three at the 33rd Annual CBOE Risk Management Conference was a panel discussing covering predictive analytics in investing with a focus on social media commentary. As the moderator, Angela Miles, Owner and Executive Producer of Business First AM, kicked things off using Donald Trump’s December 6th tweet as an example of the potential impact of social media commentary moving markets.
The panelists were a diverse group. Joe Gits is CEO and Co-Founder of Social Market Analytics, William Speth is Vice President of Research and Product Development at CBOE and Eric Zitzewitz is Professor of Economics at Dartmouth College.
A wide range of topics was discussed with some highlights below –
· Twitter sentiment did a good job predicting the Brexit outcome
· Current betting markets in Europe only give Trump a 50/50 chance of completing his term
· Elevated SKEW indicates continued demand for out of the money SPX puts
· Hedge funds are using twitter analytics for short term trading opportunities
· Although a fund technology, Snapchat is not useful for informational purposes
· TYVIX is at low levels which indicates the market is comfortable with the interest rate environment
· A great thing about twitter is that it is real time sentiment in the markets but there is often time to react to sentiment changes
· One of the few markets that is generally contrarian is currencies on twitter