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Hedge funds and the long-dated option…

Seems like Martin Wolf of the FT has re-discovered the story of hedge funds selling long-dated options to enhance returns:

http://www.ft.com/cms/s/0/c8941ad4-f503-11dc-a21b-000077b07658.html

I thought this had been around as a story for a fair while in academia, but the points he makes on trying to understand whether the manager is adding value to the investment process are good. He also discusses hedge fund fee structures and adds them into the current debate on city bonuses – getting shareholder value aligned with trading desk profits looks less simple than at first glance.

He also mentions the the "Taleb distribution", where an investment strategy has a high probability of a modest gain but a low probability of huge losses in a given period. I hadn’t heard it called this before, but certainly sounds descriptive of what is/has gone on in credit.

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https://www.xenomorph.com/wp-content/uploads/2019/07/logo-xeno.png 0 0 Brian Sentance https://www.xenomorph.com/wp-content/uploads/2019/07/logo-xeno.png Brian Sentance2008-03-19 13:18:112019-07-03 10:23:42Hedge funds and the long-dated option…

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