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Can Hacker SIGINT Help Buy-Side Firms Generate Alpha?

As buy-side firms increasingly consume alternative data to glean the next trading edge, options strategies that accurately predict the cyber-risk of investment targets could unleash a wave of alpha for short sellers, threat-intelligence experts say.

Short sellers, or investors that place bets on the price of an asset declining, trade by purchasing ‘put’ options or borrowing securities to sell ‘calls’ on margin. 

But while over a dozen studies have been conducted to examine the impact of cyber-events on corporate share prices, research into how investors might position themselves to profit from the anticipated disclosure of enterprise breaches is virtually non-existent on the surface web.

“…the data we uncover in very dark corners of the internet can be used as a tactical advantage by hedge funds and others.”

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Tim Lloyd

Tim Lloyd

Tim Lloyd is a risk analyst and threat-finance reporter at Shadow Banker Media, where he is also the CEO. He was previously a financial advisor at Morgan Stanley. Now, he writes about the private fund industry, AML compliance, and cyber-threat intelligence. He has reported on issues such as FBI concerns over laundering risks in private equity and hedge funds and emerging cyber-enabled financial crime risks for Thomson Reuters Regulatory Intelligence, Vice Motherboard, and many other media outlets.