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Alternative Market Briefing

No other crypto hedge fund is doing volatility trading

Tuesday, September 25, 2018

Brian Koralewski
B. G., Opalesque Geneva for New Managers:

According to fund manager Brian Koralewski, his is the only digital asset fund that does volatility trading.

Austere Fund, a volatility arbitrage hedge fund that invests in digital assets started trading in mid-June this year. It is managed out of Austere Capital, which opened its doors in midtown Manhattan, New York in December 2017.

"In terms of funds getting into the space, I know a bunch of crypto funds do market-making on Bitmax for futures," he says. "In terms of doing options market making on Deribit, there is only one other private fund that I know of."

Deribit, a European options and futures trading platform that he uses for volatility trading, has about $40 or $50 million in flows each day.

"The market is wide open for funds to take advantage of," he continues. "There isn't much expertise. The inefficiencies are even greater because no one is essentially trading volatility, most people are trading directional. It is like, if you thought Facebook will have good earnings next quarter, you would buy a call or a call spread. No one is actually trading volatility like we are."

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