Curious how Jane Street made $40 billion last year with few negative days? Here’s one example: - Between 1990-2000, there was only one exchange-listed product to trade natural gas: the NYMEX (now CME) physically-settled futures contract - In 2000, ICE realized there was demand for a financially settled (swap) futures contract and introduced it - CME countered and listed their own swap future At this point, the products were primarily for institutional and sophisticated individuals with a commodities account. But as commodities boomed in the 2000s, exchanges created new contracts to increase access and appeal to retail traders. - the NYSE introduced an ETF (UNG) that followed natural gas prices in 2007 - More ETFs followed that offered ability to bet on a price decline and to get 2x or 3x leverage - CME introduced a mini contract that was 1/4th the size of the original The next evolution was to appeal to the pure speculator by expanding the market to less regulated exchanges, widening access globally, increasing leverage, and creating daily bets. - ICE introduced mini same day settlement contracts - CME introduced the micro contract that is 1/10th the size of the original - CME and ICE introduced contracts that expire each trading day - Hyperliquid and Binance offer unregulated, on-chain, high leverage, perpetual nat gas contracts for non-US uses - Kalshi offers same day binary contracts. Other prediction markets are moving forward as well. Now add other iterations on settlement days for the contracts and options on everything listed above. Note that all of these contracts settle (perps notwithstanding) against the original CME physical futures contract. But instead of one way to trade the product, there are dozens. This creates an opportunity to make markets across all of these surfaces and arbitrage among them. And that's what Jane Street and other similar HFT shops do (among many, many other things). Nat gas for delivery at Henry Hub, Louisiana is just one product. Take all the ways to trade equities, currencies, commodities, crypto, interest rates, etc across all the different exchanges in all the jurisdictions and the opportunity of making $50 here and $1000 there adds up to an enormous, low-risk money making machine. This opportunity originates from the large variety of ways people desire to trade random financial instruments and the various products designed for them. This creates a hugely profitable opportunity for the HFTs. They provide a valuable service of creating liquidity for those seeking to trade. Whether that trading is smart and profitable for the average punter on the other side is a different story.