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Bailey McCann, Opalesque New York: Florida seems to be on the verge of becoming a hedge fund hotspot. In April, David Tepper made news when it was confirmed that his Appaloosa Management had left New Jersey for Miami. Other hedge funds including Skybridge Capital and RWC Partners also have satellite offices there and it's not just the billion dollar club making the move. When Hanming Rao decided to start his own hedge fund firm in 2009 he chose Boca Raton. He recently sat down with Matthias Knab on Opalesque TV to discuss getting started as a new hedge fund manager.
"I was invited by the Palm Beach investment group, and the organizer convinced me that this was the best play to grow my business," Rao said of the decision to set up shop in Florida. Rao started $300 million Global Sigma Group in 2009. The firm trades weekly expiry options on the S&P500, using a model-driven, high-turnover approach.
Rao decided to start the firm after working at several hedge funds including Ellington Management, SAC Capital, and Millennium Partners. At those firms, Rao developed a skill set that included trading global macro and quantitative programs. From there he developed his own model that informs his S&P500 options strategy. Now, Global Sigma Group is one of the largest traders of weekly expiry options.
"In general, short-dated options are overpriced," Rao explains. "We trade frequently and are able to make money each trade. Those returns accumulate over time and provid...................... To view our full article Click here
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