The Derivative

Latest Episodes:

Is there room for a VIX competitor, SPIKES founder Simon Ho sure thinks so. Oct 06, 2022

Show notes

How do you create a new futures contract? You need an exchange. And you need something that changes in price, like a commodity market – or a financial index. This week we're diving deep into crafting an index with T3 Index's founder and CEO, Simon Ho. Simon is no stranger to the vol space, and he has worked in the options industry for over 20 years in trading, product innovation, and risk management roles.

In this episode, Simon and Jeff touch base on the various unique index products at T3, like YLD Vol, ETH Vol, and the VIX competitor SPIKES. They talk through just how SPIKES differs from the VIX, the unusual behavior currently playing out in stock index volatility, the futures, options and ETFs based on SPIKES, and so much more. Plus, Simon gives his hottest takes. Will you be tuning in? SEND IT!

Chapters:

00:00-02:05 = Intro

02:06-11:05 = A robust background to crafting a robust index

11:06-15:53 = Helping hedge funds generate alpha & Tail risk events

15:54-25:38 = It's Coke - Here's Pepsi: Improving on VIX with SPIKES

25:39-35:37 = The unusual behavior of the current state of volatility

35:38-43:41 = T3 Index, MIAX & skew indexes

43:42-55:03 = SPIKES stress test, the creation of the VOL index & Hottest take

Show Notes:

Follow along with Simon on Twitter @t3index and for more information on T3 Index visit t3index.com and check out MIAX at miaxoptions.com

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Hurricanes, Cat Bonds, and the Billions at Risk with Dr. Jeff Masters and Chris McKeown Sep 29, 2022

Show notes

Otherworldly forces can affect the market and hurt it just as much. Hurricane Ian continues to bring surges, winds, and flooding to Florida, and we have our own hurricane swirling around the set. That's right, we're bringing two forces together this week in a mashup of two previous pods with Hurricane Hunter Dr. Jeff Masters and Re-Insurance pro Chris Mckeown. We're revisiting what Dr. Jeff has to say on hurricanes and how you can track them, and we're also talking catastrophe bonds with Chris McKeown.

You'll want to add this special episode to your playlist to learn more about; building weather models, the financial impacts of a storm, fat tails outside of financial markets… yes they are there too (let's just say it's a complex system), off-loading risk via reinsurance, CAT bonds, structural issues in an upside market, and so much more — SEND IT!

Chapters:

00:00-01:58 = Intro

01:59-20:41 = Hurricane Hunting, “The Final Flight”, & Weather Underground

20:42-32:10 = Building Weather Models w/ 15km Global Grids

32:11-46:47 = Storm Financial Impacts, Catastrophe Bonds & Fat Tails ( It’s a complex system)

46:48-50:57 = Favorite Hurricane

50:58-51:22 = *** break ***

51:23-01:06:00 = Off-loading Risk via Reinsurance, Capital Deployment & Investor portfolio protection

01:06:01-01:13:14 = Cat Bonds & Structural Issues in an Upside Down Market

From the episode:

Check out Dr. Jeff Masters on Yale Climate Connections blog Eye on the Storm, follow him on Twitter @DrJeffMasters, and visit wunderground.com

Visit VantageRisk.com for more information on Re-Insurance, Chris McKeown and his team

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

The Game of Trading with SIG Alums Kris A, Tina L, & Steiner Sep 22, 2022

Show notes

We have a little saying over here on The Derivative, The More, The Merrier, and on this week's episode of The Derivative, we're not chatting with one guest, but THREE! Class may no longer be in session, but we are taking a trip down the SIG/Susquehanna memory lane and having our own class reunion with Kris Abdelmessih, Michael Steiner, and Tina Lindstrom.

If you're interested in learning how big trading firms find and teach their traders, hold on to your seat because these three give you the answer key! Kris, Tina, and Michael are in session with Jeff and discussing competing with peers, finding an option’s fair value, making markets, and being in the game of trading, educating kids with board games, and of course Steiner’s new trading board game: Stock Slam! Discover how the game works and how you can join up with these three in NYC for a live session in this three-of-a-kind episode — SEND IT!

Chapters:

00:00-2:06 = Intro

02:07-21:10 = Competing with peers & if you are teachable?

21:11-35:18 = Options, WhenTech, Fair value & Being in the game

35:19-46:09 = Are board games for fun or for learning?

46:10-57:38 = Stock Slam: Bridging to real-world concepts

57:39-01:16:24 = The components of the game & meet up in NYC

01:16:25-01:20:10 = Last thoughts

From the episode:

NYC meet-up application for StockSlam Sessions

Check out Moontower Weekly by Kris Abdelmessih

Follow Kris on Twitter @KrisAbdelmessih and Tina on Twitter @moreproteinbars

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

Trends, Inflation Protection, & Getting Investors to the Finish Line with Eric Crittenden of Standpoint Sep 15, 2022

Show notes

In the chaotic world we’ve endured since 2020, it turns out all you needed was an outlier-loving strategy to get you through the storm. We’re talking managed futures and trend following in particular, which tend to thrive in periods of turmoil. But how can you effectively prepare for a wide range of market environments while still producing returns that allow for the investor to stick with the investment. Eric Crittenden, Founder and Chief Investment Officer of Standpoint, sits down with Jeff to discuss the ever-changing trends and providing the right formula for surviving the chaos.

In this episode, Eric and Jeff take a closer look into what has changed since they last chatted on the pod in 2020; needing a healthy investor/advisor/asset manager triangle, the sweet sound of directional volatility, Trend as an inflation hedge, being short bonds(good or bad), the thankless job of a trend follower, if trend following’s long grain positions were war profiteering, and so much more! Plus, get Eric's hot take on the LME; did they do the right thing? Find out here — SEND IT!

Chapters:

00:00-01:58 = Intro

01:59-07:54 = What's changed since 2020

07:55-28:10 = Wants vs Needs, a Healthy Triangle & Directional volatility

28:11-38:17 = Trend as inflation protection, not a hedge & an All-weather video walkthrough

38:18-57:19 = Being short bonds: good or bad, the Nat Gas widow maker & the Max capacity program

57:20-01:17:21 = Foreign equities, the Nickel Mess & Trend followers are not evil

01:17:22-01:23:27 = Hot take: LME did the right thing

From the Episode:

Check out: A Story: Standpoint vs. Equities - June 2022

Eric's previous episode on the Derivative: BLNDX(ING) Trend Following and Global Equity with Standpoint's Eric Crittenden

See Eric featured in our latest Trend Following Guide

Follow along with Standpoint on Twitter @StandpointFunds and for more information on Eric and his team at Standpoint visit their website at standpointfunds.com

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

Nobody is prepared for a 2nd leg down, with Ari Bergmann of Penso Advisors Sep 08, 2022

Show notes

It's not every day you get to sit down with a Volatility veteran with over 30 years of experience…..Well, maybe it’s a bit more common here on the Derivative than elsewhere, but we’ve got a special treat with Ari Bergmann(@AriBergmann) joining Jeff on this week's Derivative episode. Listen in as they dive into where to find convexity, why that’s not the same thing as buying lottery tickets, how there’s a difference between a low price and a value, and the processes needed to maintain portfolios of convex instruments. Ari is the Founder and Managing Principal/CIO at Penso Advisors, where he leads the firm's investment committee and manages various Penso funds and clients' mandates.

Ari and Jeff are sorting through all of the Volatility mumbo jumbo and taking a closer look at the practical limits of cheap convexity, where imbalances come from in residuals and structured notes; how the ignorance of the possibility of a second leg down formed and still exists, trading complex options vs. vanilla options, the importance of monetization, and so much more! Plus, Ari is giving his hottest take on gold and why it's crucial to keep your personal life private — SEND IT!

Chapters:

00:00-01:53 = Intro

01:54-14:38 = Confusion de Confusiones & the start of Penso

14:39-24:48 = Approaching the limits of cheap convexity, residuals & structured notes

24:49-34:45 = Ignorance and Opportunities for a Second leg down

34:46-42:51 = Dual digital, complex options vs vanilla options & the importance of Monetization

42:52-52:19 = Always rebalance your portfolio

52:20-56:32 = Hottest take: Gold is good & Keep your personal life private

From the Episode:

Check out and read Confusion de Confusiones

Follow along with Ari on Twitter @AriBergmann and for more information on Ari and his team at Penso Advisors visit their website at www.penso.com

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

The Business of Staying Wealthy with Homer Smith of Konvergent Wealth Sep 01, 2022

Show notes

For those lucky few who’ve sold a business, inherited wealth, or otherwise find themselves in the enviable position of staying wealthy, not getting wealthy – the investment game can be more about playing defense than going on offense. But how do you go about that, who do you partner with to figure out complex tax and estate issues. This week, Jeff is sitting down with Homer Smith(@HomerSmith_KWP), the founder of Konvergent Wealth Management, to dig into just how investment advisors like him go about solving the complex financial challenges end investors face.

Homer and Jeff dive into a variety of topics, including how allocating to managers differs from being an asset manager, how to add DEFENCE to build an all-weather portfolio, the benefits of return stacking (Be sure to check out this WP on Return Stacking), how to navigate and scale an investment firm, and take a closer look into the future of wealth service. Plus, we're playing two truths and a lie with Homer; tune in to see if he really is Matt Damon's stunt double — SEND IT!

Chapters:

00:00-01:13 = Intro

01:14-11:51 = Flipping the Script: How Picking the Managers differs from Being the Manager

11:52-28:34 = Adding DEFENCE to make an all-weather portfolio

28:35-37:23 = Return Stacking, Leverage & Wealth destruction in the Tech Wreck

37:24-58:56 = The RIA: Then vs Now, helping navigate life, scaling your firm & the Future of Wealth Services

58:57-01:05:06 = Two Truths and a Lie: Matt Damon's Stunt double?

Follow along with Homer on Twitter @HomerSmith_KWP and also Konvergent Wealth @KonvergentWP and for more information check out Konvergentwealth.com

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

There’s no Stupid Options questions, just Stupid Options Courses, SurgiFi attends Benn Eifert’s Class Aug 23, 2022

Show notes

Summer’s nearly over and class is definitely back in session for this episode, as we're about to get schooled on options and trying to separate the scams from the science. This week we're delivering the long-awaited episode with Dr. Benn Eifert, a Derivative appointed Jedi of Volatility from QVR Advisors, and Dr. David Rhoiney, who overcame being homeless to become a robotic surgeon who is learning the financial ropes and sharing his journey on Twitter from Surgifi.

David has questions: what do you do with all the Greeks, can’t you tell a trend is starting by analyzing options volume, what about skew? And Benn has the answers in this entertaining 70-minute lively back and forth. They touch on being an independent thinker like David to come to your own investing conclusions, whether the options courses out there are knowingly selling lies, or more innocently peddling luck and lottery tickets. Why Black Scholes doesn’t really do anything except normalize prices…meaning there’s no secret math that lets you ‘figure out’ options. How trend following only works 25% of the time, Nancy Pelosi’s high fee LEAPS trades, Nassim Taleb’s tail hedges, why it counter-intuitively makes sense to add a losing asset to your portfolio, and so much more! Plus, we discuss should retail investors walk away from options and how not to get caught up in the index funds cult — SEND IT!

Chapters:

00:00-01:54 = Intro

01:55-21:52 = Greeks, Bid/Ask, a Tech Stack… where do you even get started?

21:53-39:36 = Implied Volatility doesn’t tell you anything about what to do

39:37-58:36 = Someone selling you a trade based on skew = run the other way

58:37-01:12:15 = Pelosi’s LEAPS? Taleb’s Tail Hedges? Why add a losing asset?

01:12:16-01:17:22 = Hottest takes: just walk away from Options, steak is overrated, and the Devil’s nipples

From the episode:

Benn Eifert's Tweet on adding Tail Risk

Surgifi's newsletter

Follow along with Benn Eifert on Twitter @bennpeifert and David Rhoiney on Twitter @FiSurgi. For more information on QVR Advisors check out their website www.qvradvisors.com and for more on Surgifi visit surgifi.com

Don't forget to subscribe to The Derivative, follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

Using the Laws of Trading to find our edge with Agustin Lebron Aug 11, 2022

Show notes

We’re breaking the law...the laws of trading, that is! On this episode of the Derivative, we're joined by Agustin Lebron, who started his career as an engineer and turned prop trader (you'd be surprised how common of a story and skill set that is) before writing his book The Laws of Trading: A Trader's Guide to Better Decision-Making for Everyone Today, Agustin is the co-founder and manager of Esselin Research, where he helps growing tech companies make better decisions using his trading knowledge.

Jeff and Agustin dive into his laws of trading, the book, and also chat on topics like; recognizing and nabbing players in small tech companies, applying the laws in a prop firm investing in crypto scenario, how and why trend following seems to break the law around having an edge, and so much more! Plus, tune in if you want to get Agustin's take on FinTwit’s stop order debate —SEND IT!

Chapters:

00:00-01:19 = Intro

01:20-12:33 = Why are engineers drawn to trading and markets?

12:34-23:49 = What is Toxic flow? And what is the edge for all these big players

23:50-37:12 = Recognizing & nabbing A players in small tech companies & Applying the Laws in Crypto

37:13-46:56 = Crypto Prop firm scenario part II: Execution, cost, automation & adaptation

46:57-50:58 = Is there any edge in Trend following?

50:59-58:25 = Hottest take: Stop orders & Leveraged ETFs

Follow along with Agustin on Twitter @AgustinLebron3 and for more information visit his website lawsoftrading.com and check out his book The Laws of Trading here.

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

It's not whether commodities keep going up, it's whether they remain distinct and volatile with Tim Pickering of Auspice Aug 04, 2022

Show notes

This week we're adding a different twist to our typical episode, and we're diving into WHY Commodities can be accretive in your portfolio with Tim Pickering (@AuspiceTim). Tim is the Founder, President, and CIO of Auspice Capital Advisors and leads the strategic decision-making and the vision for Auspice's diverse suite of award-winning rules-based quantitative investment strategies.

In this week's episode, Tim illustrates why the current environment could be very bullish commodities long-term, active tactical strategies, and dives into Trend following, non-correlation, CTAs ability to act as a return-enhancer, inflation protection, and much more!

Chapters:

00:00-01:52 = Intro

01:53-09:48 = Born from Canadian Commodity Country

09:49-20:08= Shell Oil and Tactical Active Strategies

20:09-29:19 = The Auspice Edge vs Buy and Hold Commodities

29:20-40:28 = The other 25%, an Agnostic approach & the Adaptive Volatility process

40:29-57:03 = Crisis Alpha Opportunities, Inflation hedges & Institutional products

Follow along with Tim Pickering on Twitter @AuspiceTim and Auspice @AuspiceCapital. And for more information on Auspice check out their website and research!

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

YOLO is BS, and Investing as just one Dimension of Wealth with Brian Portnoy of Shaping Wealth Jul 28, 2022

Show notes

Will the real Portnoy please stand up? This week's guest may not be rating pizzas worldwide in one bite, but he is an expert at simplifying the complex world of money — we're sitting down with the one and only Brian Portnoy, Ph.D., CFA. Brian(@brianportnoy) is the founder of Shaping Wealth, a coaching and content platform inspiring financial well-being globally. He also has multiple bestselling books on the psychology of money, most notably The Geometry of Wealth (which has been published in 8 different languages.)

For this interesting chat, Jeff and Brian dive into YOLOers needing to take some form of agency, where Crypto falls in the 7 dimensions of money life, behavioral conversations (rich vs. wealthy), Financial literacy, the happiness equation, investment expectations, and so much more! Plus, we get exclusive insight into how Brian is "Shaping Wealth" — SEND IT!

Chapters:

00:00-01:49 = Intro

01:50-08:00 = The Real Portnoy

08:01-20:06 = Taking some form of Agency & Does Crypto fall into the 7 Dimensions of money life?

20:07-36:36 = Behavioral conversations, Rich vs Wealthy: the Geometry of Wealth & Achieving funded contentment

36:37-46:59 = Youth financial literacy & Behavioral bias with institutional investors

47:00-01:02:10 = The happiness equation, Investment expectations & Offense vs Defense investing

01:02:11-01:08:43 = Behavioral framework

Follow along with Brian on Twitter @brianportnoy and for more information on Shaping Wealth, please visit shapingwealth.com

Check out Brian's book, The Geometry of Wealth

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest.

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