What Are the Primary Defense Mechanisms against Latency-Based Attacks in Options Trading?

In options trading, defenses against latency attacks focus on both technology and strategy. Firms use co-located servers in the same data centers as exchanges to minimize network delay.

They also employ sophisticated algorithms that can detect and react to predatory trading patterns in microseconds. Another key defense is using complex order types, such as "fill-or-kill" or iceberg orders, which are harder for attackers to detect and exploit.

Finally, trading platforms use randomized order processing or frequent batch auctions to neutralize speed advantages.