The Cryptic Use of Quantitative Models in Cryptocurrency Trading

By Patrick Tan on ALTCOIN MAGAZINE

James Eaden smooths his silk Hermes tie with satisfaction. “A little reward for last month’s work,” he thinks to himself. As a luxury car dealer in the mid-1990s in the decidedly Tory neighborhood of Greenwich, Connecticut, Eaden has been doing a brisk business with his new neighbors.

Tucked away in a quiet business park in Greenwich, the new occupants of a nondescript office block have been making salesman such as Eaden and the other purveyors of luxury products in the Greenwich area very rich.

But unbeknownst to Eaden, the people he was selling Porsches, Ferraris and Lamborghinis to inside One East Weaver were, in the mid-1990s, becoming rich beyond the dreams of avarice.

Founders of Long Term Capital Management and men who would like to speak with you about when you had your last prostate exam, Robert Merton and Myron Scholes

For the better part of the 1990s, Greenwich was the stomping ground of an (ultimately unfortunately named) hedge fund called Long Term Capital Management (LTCM). The fund, which was helmed by two future Nobel laureates had developed (what they believed at the time) to be an ingenious mathematical formula to appropriately price options.