Other People's Money with Max Wiethe When the Market Crashes… They Profit | Wayne Himelsein on Logica Capital’s Long Volatility Playbook
Apr 9, 2025
Wayne Himelsein, CIO and founder of Logica Capital Advisors, discusses innovative strategies for profiting during market volatility. He shares how his hedge fund navigates the challenges of maintaining long volatility exposure without draining resources through ineffective hedges. The conversation covers the evolution of volatility trading since 2015 and emphasizes the need for a deep understanding of market dynamics. Himelsein also highlights the importance of adaptability and continuous research in developing successful trading strategies.
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Counter-Thesis Trading
- Wayne Himelsein questions the common practice of shorting volatility to fund long volatility positions.
- He believes it creates a counter-thesis trade, hindering potential payoffs.
Belly and Tail Spread Risks
- Himelsein explains how shorting the belly and longing the tail can hurt returns during smaller corrections.
- This is because the short position suffers more losses while the long tail hasn't activated yet.
Logica's Early Investors and Success
- Logica's early investors were arbitrage-based managers seeking to hedge against negative skew.
- Their initial success involved offsetting drawdowns in these strategies during market corrections in 2015 and 2016.