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Advanced Options Trading Training Module - DERPO Trading

ABOUT DERPO

Traditionally diversification via combing asset classes and /or securities loosely correlated with each other has been the mainstream of 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 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 securities( equity ,commodity , currency) with varied strategies designed to exploit one anomaly at a time while shielding the strategy from other exposures. Thus a delta gamma neutral portfolio may be constructed to bet on rise in implied volatility. Similarly a skew trading strategy may be implemented 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.

Of course, the concept of DERPO 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.

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.

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WHAT YOU’LL LEARN

  • Buying Options vs. Selling Options
  • Option Profit & Loss Diagrams
  • Reading an Options Pricing Table
  • Option Moneyness (ITM, OTM & ATM)
  • Options Pricing & The “Greeks”
  • Options Expiration & Assignment
  • What’s Our “Edge” Trading Options?
  • How Far Out Should I Place Trades?
  • Strike Price Anchoring with Probabilities
  • Correctly Pricing Your Options Strategies
  • 7 Step Options Trade Entry Checklist
  • Developing a Daily Trading Routine
  • How to Avoid “Black Swan” Events
  • Single vs. Multi-Leg Options Strategies
  • Technical Analysis Indicators & SIGNALS
  • Small Account Options Strategies
  • Exiting Options Trades Automatically
  • Options Strategies We Don’t Adjust (And Why)
  • Big Picture Options Trading Adjustment Strategy
  • Knowing When to Adjust an Options Trade or NOT
  • Complete Guide to Adjusting Straddles & Strangles
  • Complete Guide to Adjusting Credit Spreads, Iron Condors & Calendars
  • Applying Smarter Stop Loss Orders
  • Building a Diversified Options Portfolio
  • Rolling Options Trades for Duration & Premium
  • Options Expiration Week Position Checklist & Guide
  • Dealing With Stock Assignment & Dividends
  • How to Free Up Trading Margin & Cash
  • Running a Professional Options Trading Business

WE WILL LEARN TO USE FOLLOWING OPTIONS ANALYSIS TOOLS & SOFTWARES:

  1. Options analysis on Quantsapp
  2. Back testing on Fintester and Quantsapp
  3. Option chain analysis and IV tracking using Sensibull
  4. Use of technical analysis in options trading using Trading Veiw
  5. Case study using Trader Cockpit
  6. Virtual trade using Opstra Option & Sensibull
  7. Multi leg order execution and combined Strategy Traget & stop loss on algo software – Symphony Presto
  8. Using excel sheet for tracking , entering & exiting options strategies such as butterfly

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