Sword
Sword
Sword is our aggressive portfolio, however aggressive does not mean risky. In Sword we use three main quantitative trading strategies through derivatives: trend-following, mean-reversion and short-volatility.
Trend-following is a well known trading strategy characterized by a high payoff and consequently high mathematical expectation. With the exposure through options in strategies like LEAPs, Bull/Bear debit spreads among others. The only con of trend-following is when the market ranges, however when this happens our other strategies shine.
Mean-reversion are strategies that bet against the trend. Although this looks silly without a context, it is a common behaviour of markets to exaggerate in both up and down movements. Our algorithms capture extreme oversold and overbought situations so we can profit using strategies that benefit from a correction or a sideways price.
Short-volatility strategies are grounded on the fact that implied volatility is overrated. Although this risk-premium cannot be captured through long or short stock positions, with the use of options we benefit from market stress situations like earnings and news to earn this premium without being necessarily exposed to directional movements. Strategies like broken-wing-butterfly, iron-fly among other delta hedged alternatives are used to sell volatility premium to the desperate buyers who are afraid of the movement.