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Futures & Options
at 2Cents Capital
Turning volatility into opportunity, leveraging antifragile strategies that thrive in chaos.
What We Do
At 2cents capital we specialize in leveraging the full spectrum of derivatives strategies
Speculation:
We specialize in generating consistent returns across all market scenarios by employing dynamic and adaptive strategies that thrive in volatility, capitalize on stability, and embrace market fluctuations. Each market condition presents unique opportunities, and our innovative approach is designed to seize them with precision. Explore the strategies we deploy to stay ahead, no matter how the markets move:
- Implied volatility rank
- Risk reversal permia
- Stag gamma scalping
- Capture vol spread
- Implied volatility slope
- Call / put skew
- volatility skew crossover
- CMP vs model paris
- Implied volatility - historical volatility pairs
- Open interest buildups
- 0 dte strategies
- USDJPY condor
- Events based calendars
- Long term calendars
- International volatility arbitrage
- All basic strategies vs all symbols consistently overftted
Hedging
Our Hedging strategies safeguard portfolios against adverse market movements without compromising growth potential. By employing customized derivatives instruments, we mitigate risk like fluctuation in market. Interest rates change and events. This approach ensures maximum protection while persuing upside opportunity, giving our portfolio a competitive edge.
Some of our ground breaking hedging strategies are based on:
- Vix- Vvix relation
- Delta- Gamma Movement
- GARCH – based predicted probability
- Optimal Long put Strategy
- Neutralization of delta of various speculation strategies
Arbitrage
We capitalize on pricing inefficiencies across markets and instruments to deliver consistent, risk-free returns. Using sophisticated algorithms and cross-market analysis, our arbitrage strategies identify opportunities in real-time—whether it's exploiting mispriced options, cross-asset arbitrage, or taking advantage of time decay mismatches.
How We Do
At 2Cents, We define success through meticulous five phased approach, that ensures presession, scalability and innovation in trading. Each phase represents a cornerstone of our systematic and data driven strategy developnment
Research
We not only focused on foundational research, but also leveraged our expertise in derivatives, portfolio management, and operations. This phase involved deep analysis of market trends, strategy development, and aligning our infrastructure with cutting-edge trading systems. This rigorous groundwork ensured our strategies were robust, data-driven, and ready for further development.
Backtesting
The research phase was followed by conducting extensive backtesting to validate the performance of our strategies using historical market data. We refined and optimized our models, ensuring they were not only statistically sound but also adaptable to a wide range of market conditions. This phase provided critical insights into the potential strengths and weaknesses of our approaches.
Forward Testing
The next phase in the sequence was forward testing, where strategies were evaluated using simulated real-time data. This phase allowed us to assess performance in a controlled environment, refine risk parameters, and test adaptability to live market dynamics without deploying capital. It was a crucial step in fine-tuning our strategies for real-world application.
Paper Trading
In the subsequent phase, we transitioned to paper trading, replicating live trading conditions without actual capital at risk. During this period, we tested our execution systems, risk management frameworks, and reporting processes in a live-like environment. This phase provided confidence in the operational readiness of our systems and ensured seamless integration with live trading platforms.
Live Execution
Finally, we launched our strategies in live markets, marking the culmination of our efforts. We scaled our operations globally, enabling access to diverse geographies and asset classes. Advanced research and execution capabilities were integrated to enhance strategic decision-making and trade execution. End-to-end automation streamlined workflows, minimized manual intervention, and ensured operational efficiency. Our trading scope now spans all frequencies, from low to medium, including market-making activities.
This structured, methodical approach—spanning research to live execution—has not only elevated our capabilities but also created a resilient and innovative platform. Today, we are well-equipped to navigate the complexities of global markets and drive sustained growth and success in the trading industry.
Through these phases, we aim to build not just a trading desk but a best-in-class trading ecosystem.
Options Trading
- Focus on leveraging options contracts (calls and puts) to profit from price movements, volatility, and hedging.
- Strategies include covered calls, protective puts, straddles, and spreads to optimize risk/reward profiles.
- Target high-volatility assets and market events to capture substantial returns.
Futures Contracts
- Use futures contracts to gain exposure to underlying assets such as commodities, indices, and interest rates.
- Employ strategies like hedging, speculation, and arbitrage to profit from price discrepancies or to manage risk.
- Provide liquidity and help with portfolio diversification across multiple asset classes.
Swaps
- Engage in interest rate swaps, currency swaps, and commodity swaps to manage exposure to fluctuations in interest rates, foreign currencies, and commodity prices.
- Customize contracts to match specific risk profiles and optimize capital efficiency.
- Target industries and markets with significant price volatility or interest rate movements.
Volatility Products
- Trade volatility-based derivatives such as VIX options and futures to hedge or profit from market volatility.
- Take advantage of volatility arbitrage and employ strategies to benefit from price movements in implied volatility.
- Suitable for managing systemic risk or capturing returns in turbulent market conditions.
Credit Derivatives
- Use credit default swaps (CDS) and collateralized debt obligations (CDOs) to manage credit risk and gain exposure to debt markets.
- Employ strategies like credit hedging, speculation, and risk transfer to protect against defaults or to profit from credit market movements.
- Target emerging markets or sectors with significant credit risk.
Currency Derivatives
- Utilize foreign exchange options, futures, and forwards to hedge or speculate on currency fluctuations.
- Manage exposure to foreign exchange risk for multinational portfolios and optimize returns through currency arbitrage.
- Employ strategies based on macroeconomic trends and geopolitical events that influence currency markets.
Crypto Derivatives
- Trade derivatives based on cryptocurrencies, including futures, options, and perpetual swaps, to gain exposure to the volatility of digital assets like Bitcoin, Ethereum, and other altcoins.
- Employ strategies such as hedging, speculation, and arbitrage to capitalize on price movements and manage exposure to the crypto market's unique risks.
- Use leverage and short-selling techniques to enhance returns while managing risk in an evolving and highly volatile market.
- Suitable for investors seeking to profit from the growing crypto market or mitigate risks associated with digital asset investments.
Comprehensive Due Diligence
- Conduct thorough assessments of underlying assets, market conditions, and derivative instruments.
- Implement scenario analysis, stress testing, and sensitivity analysis to understand potential vulnerabilities and market shifts.
- Analyze Greeks (Delta, Gamma, Vega, Theta, Rho) to assess the impact of price, volatility, time decay, and interest rates on derivative positions.
Portfolio Diversification
- Allocate derivative positions across multiple asset classes, sectors, and geographies to reduce concentration risk.
- Use a variety of derivative products (options, futures, swaps) to create diversified hedging and speculative positions, enhancing risk-adjusted returns.
Liquidity Management
- Monitor and balance exposure to liquid and illiquid derivative instruments to ensure the flexibility to manage margin requirements, collateral, and redemptions.
- Incorporate liquid instruments like futures and exchange-traded options to maintain liquidity while using less liquid instruments for long-term positions or tailored strategies.
Valuation Discipline
- Regularly assess the fair value of derivatives positions using up-to-date pricing models, market data, and real-time risk metrics.
- Apply adjustments to account for market conditions, volatility shifts, and changes in the Greeks to maintain accurate portfolio valuations.
Global Macro Risk Monitoring
- Continuously track geopolitical events, economic trends, and central bank policies to adjust derivative exposures proactively.
- Use derivatives to hedge against macroeconomic risks such as interest rate changes, inflation, or currency fluctuations, leveraging instruments like interest rate swaps, currency forwards, and commodity futures.
- Analyze the potential impact of these macroeconomic shifts on the Greeks to optimize portfolio positioning.
Enhanced Diversification
- Use derivatives to gain exposure to a variety of asset classes, sectors, and geographies, reducing portfolio volatility and improving risk-adjusted returns.
Access to High-Growth Opportunities
- Leverage derivatives to access emerging markets, niche sectors, and high-growth opportunities, enabling investors to capitalize on market movements and trends not readily available through traditional investments.
Resilient and Consistent Returns:
- Implement sophisticated hedging strategies to protect against downside risk, ensuring consistent performance and mitigating the impact of market volatility on the portfolio.
Inflation and Volatility Hedge
- Utilize inflation-linked derivatives and volatility products (e.g., VIX futures, options) to hedge against inflationary pressures and market fluctuations, providing protection during periods of economic uncertainty.
Tailored Investment Solutions
- Design customized derivative strategies that align with investors' specific goals, risk profiles, and liquidity needs, allowing for precise control over exposure and enhanced flexibility in portfolio management.
Frequently Asked Questions
Derivatives are financial instruments whose value is derived from the performance of an underlying asset, such as stocks, commodities, or interest rates. Unlike traditional investments like stocks and bonds, derivatives offer enhanced flexibility for hedging, speculation, and gaining exposure to multiple asset classes with reduced capital outlay.
Investors looking to manage risk, enhance portfolio returns, or gain exposure to specific market opportunities can benefit from derivatives. They are ideal for those with a higher risk tolerance, a deep understanding of market movements, and a focus on risk-adjusted returns over a medium to long-term investment
We employ a comprehensive risk management approach that includes detailed due diligence, portfolio diversification, liquidity management, and dynamic hedging strategies using options, futures, and swaps. We also monitor Greeks (Delta, Gamma, Vega, Theta) to manage the risk exposure of derivative positions effectively.
The time horizon for derivatives strategies varies based on the strategy employed. Short-term strategies like options trading may have a horizon of days to months, while longer-term strategies such as futures contracts or swaps may extend from several months to years, depending on market conditions and objectives.
Derivatives strategies provide low-correlation assets that can mitigate risk, hedge against adverse price movements, and enhance returns. They offer flexibility to adjust exposure to various market conditions, adding an additional layer of risk management and opportunities for growth in both stable and volatile market environments
