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Quastic new series: Options and Trading of Inefficient ETFs

2 Nov 2017,

Dear friends and Quastic visitors. My name is Jan Kaška, I am a member of the investment committee of the Charles Bridge GMF hedge fund, the author of many investment strategies – working mainly with options and structured products – and a long-time investor in the financial markets.


 New series about trading inefficient ETFs with the help of the options

I have prepared for you the series about trading options which are linked to the ETF/ETN, and which are also characterized by certain inefficiency. In my articles, I would like to teach you how to use this inefficiency for your advantage. You will just need to understand certain details:

  • how these ETF funds work, respectively, on what basis they are built
  • how and based on what their value develops over time
  • how to take the potential opportunity with adequate reduction of the risk
  • my point of view on what kind of money-management and trade management is ideal for this type of investment

I would like to present the entire series in following steps:

  • what is alpha and what are the types of approaches to generate alpha
  • why I consider the option trading of inefficient ETFs/ETNs as the best alpha source
  • what is contango and backwardation
  • how to find out if the market is in contango, what methods use for it
  • how to use contango in your favor
  • introduction to ETF/ETN – why I consider them as ideal candidates for long-term short position
  • contango and its influence on ETF funds
  • practical examples of the inefficiency
  • ETF comparison based on contango
  • leveraged ETF and its use
  • trading strategies suitable also for small accounts – I will analyze individual strategies (pure short, naked options, vertical spreads and advantages and disadvantages associated with them)
  • entry signals – when and in what situations it is appropriate to open the trade
  • position management
  • methods of closing the trade
  • more advanced trading methods – especially the analysis of inverse ETFs, trading pairs

You do not have to worry about anything …

Some of you may find some of the terms in the series difficult – but you do not have to worry about understanding the matter. I’ll always explain the topic on specific examples, including resources where you can find the most up-to-date information you need.

All the information are based on my long time experience with trading these strategies, which I consider to be very robust, basically suitable for any market environment and available also for smaller investors. But I will not forget to mention also the limitations and risks that are associated with this type of trading.

Personally, I believe you have something to look forward.

P.S.: Of course I will be very glad to hear your comments and suggestions, which you can put down in the post below.

Option report

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