In this episode of The Derivative, Jeff Malec sits down with Bernie Yu, co-founder and CIO of Patronus Capital, to dive deep into the world of options trading, market making, and the nuanced art of capturing convexity. Drawing from his experience at Optiver and his journey to founding Patronus, Bernie shares insights into how a four-person team competes in the hyper-competitive options market by focusing on S&P 500 volatility. The conversation explores Bernie's unique approach to trading, the importance of liquidity, and how understanding market flow can create strategic advantages. From his Australian roots to the trading floors of Chicago, Bernie offers a fascinating look into the mechanics of options trading, risk management, and the evolving landscape of derivatives markets. SEND IT!
Chapters:
00:00-00:54=Intro
00:55-06:14=Actuarial Science, Cricket, and the Trading Floor: Bernie's Multicultural Journey into Finance
06:15-21:40=Market Making Decoded: The Art of Liquidity and Convexity
21:41-31:58=The 0-DTE Dilemma: Navigating Options Market Inefficiencies
31:59-41:36=Competing with Giants: A Four-Person Team's Edge in Options Trading
41:37-50:35=Liquidity Dynamics: The Hidden Engine of Financial Markets
50:36-57:16=Future Horizons: Tax Advantages and Market Expansion Strategies
57:17-01:05:41= Market Time Machine: Lessons from Black Monday and Future Market Insights
From the Episode: MMI Index Blog post
Blast from the Past - How Futures saved Stocks
Follow along with Bernie on LinkedIn /Patronus Capital and check out the Patronus Capital website at www.patronus.capital!
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Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visitwww.rcmalternatives.com/disclaimer
