VOL07: Participate & Protect ft. Dave Dredge

Jan 12, 2022

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Hari Krishnan is joined today by Dave Dredge, to discuss how long-volatility strategies can improve on the traditional 60/40 portfolio, the concept of ‘participate and protect’, the importance of understanding why compounding is the ultimate goal, the ‘always good weather’ portfolio, trading Bitcoin volatility, being a ‘value buyer’ of volatility, mechanisms for taking profits, and how to size portfolio allocations properly.

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In this episode, we discuss:

How to improve on the traditional 60/40 portfolio
Dave’s concept of ‘participate and protect’
The importance of compounding
Dave’s ‘always good weather’ portfolio
Long-volatility Bitcoin strategies
Value investing in the volatility space
Methods for taking profits
Sizing portfolio allocations

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Episode TimeStamps:

00:00 - Intro

02:01 - How did you end up in the long-volatility sector?

04:55 - How options used to be considered as a redundant trading method

07:53 - Do you have any idea why the Bitcoin skew is so high and flat?

08:56 - What does it mean when you say you consider yourself a value-buyer of volatility?

10:15 - Do you have any notion how to mix the various positions you warehouse?

15:46 - How do you source good ideas, and has living in Singapore given you an edge for this?

27:12 - Can you talk about the Taliban’s use of the ‘Sandpile Theory’?

33:13 - Are there more opportunities for you globally now, then there used to be?

40:51 - What are your mechanisms for taking profits?

47:19 - What’s your view on paying for convexity in your positions?

51:13 - Do you engage in skew trades?

52:41 - How do you think about low-vol?

55:49 - How do you size allocations to your long-vol strategy?

01:01:49 - Closing thoughts from Dave?

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