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Devin Anderson - Exploiting Behavioral Biases
Devin Anderson, CEO and co-founder of Convexitas, stops by The Business Brew to discuss his firm's approach to risk management via options strategies. In short, Convexitas seeks to exploit structural options mispricing resulting from market participant's biases. What does that mean in plain English? Well, there are people that sell financial yield strategies that involve selling puts and selling covered calls. If enough of the market does that there is a chance the front month option pricing is not high enough. In that case, Convexitas might consider purchasing some of those options.
Why is Devin worth listening to?
Before Convexitas, he was at Deutsche Bank for 15 years where he most recently was Managing Director and Head of Solutions in the Americas leading the structuring and sales teams which designed and distributed the risk premia, retail structured product, and the fund derivative businesses. His Deutsche Bank experience also includes covering institutional clients for listed options and OTC derivatives. Prior to the financial services industry, Devin had a previous career in technology where he held both engineering and sales roles at two early stage internet service & datacenter hosting providers, and former search engine Lycos. He holds a Bachelor of Finance from the University of Pittsburgh and an MBA from Carnegie Mellon, where he also guest lectures on options and option market micro-structure.
In short, the guy is smart and you can learn something.
Enjoy the episode. Hope you enjoyed this show note!
This episode is sponsored by Stratosphere.io. Stratosphere.io is a web based terminal that has financial data, KPIs, links to filings, hedge fund letters, etc. A key differentiator is Stratosphere.io’s segment data and KPIs, which are triple checked for accuracy. Stratosphere saves users time, enables easy comparisons between companies, and offers company specific metrics such as subscriber counts, numbers of locations, etc.
Head over to Stratosphere.io for a free trial. Should you want to sign up for a paid offering please use the promo code BREW for 15% off.
Thank you to the team at thepodcastconsultant.com for producing the show.
Detailed Show Notes -
2:00 - Devin's background
6:25 - Convexitas is a very risk focused firm
12:00 - The decision to reduce risk vs. manage risk
15:15 - What Convexitas is very good at
19:40 - Why an options thesis should start with the behavioral biases of the options market
24:50 - An options position should be better than a resized cash position
27:30 - If at any time short options strategies are changing your lifestyle then you should probably do less of it
35:00 - What about options counterparty risk?
37:30 - A discussion of one day options and why they exist (hint: they are a great business for market makers)
41:50 - How was Convexitas started?
45:10 - Does AI help Convexitas and/or is it a risk?
53:00 - It's not actually the risk, but how you manage to the risk
57:40 - The difference between financial products and investment products
1:01:25 - Performance under pressure and mindfulness
View all episodes
By Bill Brewster
4.7
242242 ratings
Devin Anderson, CEO and co-founder of Convexitas, stops by The Business Brew to discuss his firm's approach to risk management via options strategies. In short, Convexitas seeks to exploit structural options mispricing resulting from market participant's biases. What does that mean in plain English? Well, there are people that sell financial yield strategies that involve selling puts and selling covered calls. If enough of the market does that there is a chance the front month option pricing is not high enough. In that case, Convexitas might consider purchasing some of those options.
Why is Devin worth listening to?
Before Convexitas, he was at Deutsche Bank for 15 years where he most recently was Managing Director and Head of Solutions in the Americas leading the structuring and sales teams which designed and distributed the risk premia, retail structured product, and the fund derivative businesses. His Deutsche Bank experience also includes covering institutional clients for listed options and OTC derivatives. Prior to the financial services industry, Devin had a previous career in technology where he held both engineering and sales roles at two early stage internet service & datacenter hosting providers, and former search engine Lycos. He holds a Bachelor of Finance from the University of Pittsburgh and an MBA from Carnegie Mellon, where he also guest lectures on options and option market micro-structure.
In short, the guy is smart and you can learn something.
Enjoy the episode. Hope you enjoyed this show note!
This episode is sponsored by Stratosphere.io. Stratosphere.io is a web based terminal that has financial data, KPIs, links to filings, hedge fund letters, etc. A key differentiator is Stratosphere.io’s segment data and KPIs, which are triple checked for accuracy. Stratosphere saves users time, enables easy comparisons between companies, and offers company specific metrics such as subscriber counts, numbers of locations, etc.
Head over to Stratosphere.io for a free trial. Should you want to sign up for a paid offering please use the promo code BREW for 15% off.
Thank you to the team at thepodcastconsultant.com for producing the show.
Detailed Show Notes -
2:00 - Devin's background
6:25 - Convexitas is a very risk focused firm
12:00 - The decision to reduce risk vs. manage risk
15:15 - What Convexitas is very good at
19:40 - Why an options thesis should start with the behavioral biases of the options market
24:50 - An options position should be better than a resized cash position
27:30 - If at any time short options strategies are changing your lifestyle then you should probably do less of it
35:00 - What about options counterparty risk?
37:30 - A discussion of one day options and why they exist (hint: they are a great business for market makers)
41:50 - How was Convexitas started?
45:10 - Does AI help Convexitas and/or is it a risk?
53:00 - It's not actually the risk, but how you manage to the risk
57:40 - The difference between financial products and investment products
1:01:25 - Performance under pressure and mindfulness
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