Larry Richards, a trained jazz pianist and former phone-company executive, is an unlikely entrepreneur in the esoteric world of stock options. Just 3 years after taking an online course on equity derivatives, Richards, 53, set up his own company in 2013 to develop trading software for individual investors and small funds. At the end of 2016, he sold the firm to Wall Street hedge fund Gammon Capital and became that company’s chief technology officer.

“They say one in 10 startups succeeds,” Richards, who co-founded Iota Technologies Pte with 2 others, said by phone from his home in Fukushima, Japan, near the site of the 2011 nuclear disaster. “To be among the 10% is such a relief.”

When Richards took a course in options trading at a mentoring school set up by former CBOE market maker Dan Sheridan, he became convinced the tools available to smaller investors were too crude. Using coding skills he’d been teaching himself since high school, he created a program that allowed traders to back-test positions systematically before they put money at risk. Then, by adding a branch of machine learning called predictive modeling, he made the models more sophisticated.

Iota’s software caught the eye of derivatives-arbitrage trader Michael Mescher, the founder and CIO of New York-based Gammon. Mescher decided to buy the company so nobody else could get the benefits of its technology. The 2 signed the final paperwork on the deal in December, which took Richards and a team of 5 engineers to Gammon.

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