Derivatives (forwards, futures, options & swaps) are the source of most financial product structuring & financial engineering. Each derivative instrument has its own mechanism and purpose. Options amongst the derivatives occupies the maximum market mass. Trading strategies using Basic Options & Advanced Option are very potent tools be it for hedging financial risk or speculating on views or exploiting arbitrage opportunities arising out of market inefficiencies. However the caveat remains that such trading strategies developed using knowledge in options must be structured well and with utmost discipline else the leverage with such trading strategies using options or advanced options is enough to challenge the very solvency of the trader, arbitrager or business person / house.
Advanced Options Trading Training Module - DERPO Trading
A Brief on Options & Advanced Options Trading
Derpo Trading - Building Trades using Strategies in Futures & Options
Traditionally diversification via combining asset classes and /or securities loosely correlated with each other has been the mainstream of the asset management industry( Mutual fund and PMS). However they suffer from the flaw that the entire portfolio so created is having positive beta exposure and falls when the market falls…so we do not enjoy diversification benefit when it is most needed. After spending decades in observing markets both practically and academically via rich financial literature, we have come to recognize that the only solution to this problem lies in DERPO – a portfolio of derivative (futures & options) securities (equity, commodity, currency) with varied strategies designed to exploit one anomaly at a time while shielding the strategy from other exposures.
The concept of DERPO Trading is not at all averse to investing directly in underlying assets like equity or debt but it’s just that we intend to devote less fund towards the same and only where we find that derivatives are not efficiently available and /or there is high conviction based on our factor based models that there would be sound alpha generation through passive buy and hold strategy in a certain time horizon which is compatible with our funds investment horizon and we can with significant confidence identify the catalyst which will spur convergence between price vs intrinsic value. In-fact such buy and hold strategies will be optimized by smart timing decisions offered by our proprietary models focused on Technical, Quants as well as behavioral finance.
Sneak peek into some Options Trading Strategies
Option strategies with the intent of exploiting near term market inefficiency through strategies like delta gamma neutral portfolio may be constructed to bet on rise in implied volatility. Similarly trading
strategies using advanced knowledge of options like building a skew trading strategy to trade on flattening or steepening of the volatility skew while once again being neutral with respect to other Greeks. Such strategies typically are chasing uncorrelated sources of alpha and in doing so, they offer efficient and smart diversification. Some more popular strategies aim at capitalizing on moves on expiry day popularly known as expiry day trading strategy using options. Sometimes trades do go wrong, options in such cases do play a handy role in creating positions which lead to minimizing exposure. These trades are known as Trade Adjustment strategies.
DERPO TRADING - Training Module in Options Trading Strategies
We strictly believe that markets provide pockets of inefficiency in the short term on account of regulatory constraints, liquidity concerns, herd behavior and smart money influenced media rhetoric causing retail investors to keep on pumping money in overpriced markets or sectors on account of greed or selling in extremely depressed prices on account of fear. These inefficiencies can be exploited by deep research using big data analytics and artificial intelligence-the so called heuristics can be discovered to spot such inefficiencies and we deploy derivatives to exploit those efficiently knowing fully well that these will correct in the medium to long term and generate alpha. We know that research of this kind is a continuous process and fresh heuristic have to be discovered and existing heuristics re-calibrated and optimized in such a dynamic and evolving market. DERPO Trading Training Module is an exhaustive Options Trading Course which aims to integrate knowledge of Options and Advanced Options including Greeks (Delta, Rho, Gama, Vega, Theta) into building trading strategies which depending upon the philosophy aims at building hedging risk emanating of open positions or speculation or exploiting market inefficiencies to create leverage and wealth opportunities. This options training module is spread across
~ 8 sessions and ~16 hours encompassing simple vanilla strategies to complex trading strategies using knowledge of Advanced Options.
To know more about DERPO Trading – Training Module in Options & Advanced Options, do connect with us on :