Premium Sellers vs. Option Buyers

Discussion in 'Options' started by Squilly_D, Aug 14, 2013.

  1. #171     Aug 28, 2013
  2. newwurldmn

    newwurldmn

    Spitznagel was at Empirca as well.

    They have a 4% stop loss each year. Customer puts 4% of the notional investment in the fund. That's all they get to play with. Several years at Empirica with 4% losses and eventually everyone got tired of it.

    At Universa they seem to have gotten the formula right because they are doing very well.
     
    #172     Aug 28, 2013
  3. newwurldmn

    newwurldmn

    Not just down markets. THey were long convexity in commodities and made a lot of money (like 20%).

    They find efficient ways to be long the wings. They aren't just blindly buying 20% OTM puts.
     
    #173     Aug 28, 2013
  4. Maverick74

    Maverick74

    Must be doing something right. They are managing 6 billion. Want to get in the fund? They have a 50 million dollar minimum. LOL. Not to worry, most their investors are sovereign wealth funds.
     
    #174     Aug 28, 2013
  5. That means only 12 investors in total! Why mostly sovereign wealth funds? Any particular reasons?
     
    #175     Aug 28, 2013
  6. Interesting website.

    http://www.universa.net

    Edited: Arrive at landing page
     
    #176     Aug 28, 2013
  7. newwurldmn

    newwurldmn

    Yeah. They are definitely killing it especially when you see that so many copycats have failed or are meandering.
     
    #177     Aug 28, 2013
  8. Interesting!

    "
    http://en.wikipedia.org/wiki/Mark_Spitznagel

    The Wall Street Journal alleged that a large purchase of put options by Spitznagel in the minutes leading up to the 2010 Flash Crash (when the Dow lost over 9% of its value during the day) was among its primary triggers[24][25] (and for which Spitznagel was subpoenaed by the U.S. Securities and Exchange Commission[6]).

    "

     
    #178     Aug 28, 2013
  9. NNT: Exactly. When they pay off, [the reward] is huge. But when you’re selling options, you need a lot of traders. For example, two or three traders can trade long out-of-the-money options on 500 instruments, but when you’re using long and short strategies, two or three traders can only monitor 50 or 60 positions. We invest in traders who sell at-the-money options, and we concentrate on just buying the “wings” (the out-of-themoney puts and calls of the butterfly position).

    http://www.fxtsp.com/education/fx-t...ew-with-top-trader-nassim-nicholas-taleb.html
     
    #179     Aug 28, 2013
  10. Universa was generally structured in long downside calendars. Dunno why Taleb didn't take a piece of Universa with some of his wife's cash, but he didn't. The kid wanted to buy CDS but was considered too much of a style drift/charter issue and he was worried about netting and counter-party risks. They're likely done in terms of homeruns and I expect he'll close shop and run his family office {Dao}.
     
    #180     Aug 28, 2013