Blog Posts

Quantitative value trading is a strategy that combines quantitative analysis techniques with traditional value investing principles to identify undervalued stocks and assets and achieve superior returns. This approach leverages mathematical models, statistical methods, and computational power to enhance decision-making and optimize trading performance.   Key Takeaways – Quantitative Value Trading Data-Driven Analysis Quantitative value trading […]

Geographic arbitrage is a trading strategy that exploits price discrepancies of financial instruments, commodities, or assets in different geographical markets. This approach finds inefficiencies in pricing due to various factors such as time zones, market regulations, and economic conditions.   Key Takeaways – Geographic Arbitrage Trading Strategy Geographic arbitrage exploits price differences for the same […]

Synthetic arbitrage is a trading strategy that exploits price discrepancies between synthetic and actual assets. In financial markets, synthetic positions are created using derivatives such as options and futures to replicate the payoff of an actual asset. The essence of synthetic arbitrage is to capitalize on the mispricing between the synthetic and the underlying real […]

Options are heavily priced off the expected volatility of the underlying asset. Options of the same maturity would normally be expected to have the same implied volatility irrespective of the strike price. Nonetheless, in practice, the implied volatility can vary materially depending on the strike. This is called the volatility skew.   Key Takeaways – […]

Exploiting fat tails in trading is a statistical approach used in financial markets to identify and exploit anomalies in the distribution of asset returns. It focuses on the concept of kurtosis, a statistical measure that describes the shape of the distribution’s tails in relation to its overall shape.   Key Takeaways – Fat Tails in […]

While equities and practically all financial assets were battered between February 19 and March 23, 2020, those who were long volatility, and put options in particular, either hedged well against losses or even made money. Those with convex exposure to downside protection reaped remarkable returns in some cases. This ignited debate over the use of […]

Statistical Moment Trading is a quantitative trading strategy that leverages the mathematical concept of moments to analyze and predict market behavior. It involves the use of various statistical moments to understand the distribution and characteristics of asset prices, which in turn helps traders make better decisions. Mean-variance optimization is a classic approach to finance, but […]

The butterfly spread is an options trading strategy designed to profit from minimal price movement in the underlying asset. This strategy is popular among traders looking to capitalize on low volatility environments. It’s part of the spread trading family of trading strategies.   Key Takeaways – Butterfly Spread Trading Strategy Risk Management The butterfly spread […]

Fixed Income Liquidity Premium Capture is a strategy that focuses on earning extra returns by trading fixed-income securities that offer a higher yield due to their lower liquidity. This premium compensates traders for the additional risk and potential difficulty in trading these securities.   Key Takeaways – Fixed Income Liquidity Premium Capture Strategy Yield Spread […]

Rebalancing premium capture refers to the potential financial gains traders can achieve by anticipating and acting on the changes in the composition of stock indexes, such as the S&P 500. This strategy relies on understanding how and when these indexes will be rebalanced, including the addition and removal of companies.   Key Takeaways – Rebalancing […]