Why SIG Tells Traders Not to Hedge! - Ex-SIG Trader and Moontower Founder, Kris Abdelmessih

Dec 27, 2025

Kris Abdelmessih, a former trader at Susquehanna (SIG) and now founder of Moon Tower, shares his unique insights on trading and market strategies. He discusses why SIG advised against hedging, emphasizing the importance of capturing positive expected value. Kris reveals how early experiences in options pits taught him about market-making edges. He explains the significance of centralized risk and aggressive position sizing, and offers wisdom on navigating market shifts, advocating for compounding small daily advantages in both trading and life.

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INSIGHT

Edge Is The Core Of Trading

Kris Abdelmessih defines trading as a game of expected value: small edge per trial compounds across many trials.
If you have edge and avoid ruin, you will eventually make a lot of money.

INSIGHT

Markets Demand Humility And Labor

Markets are mostly efficient and inefficiency is hard to find without deep, focused labor.
Traders must be humble because customer bids often contain informed signals.

ANECDOTE

SIG's Early Education Flywheel

SIG stood out by recruiting top talent and investing heavily in trader education.
That training program created a self-reinforcing flywheel of skill and performance.

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How do top hedge funds actually hedge trades? At SIG, traders were often told not to hedge. Most assume elite trading firms hedge every position, but Susquehanna (SIG) built its edge by avoiding hedging when trades had positive expected value (EV). Kris Abdelmessih—who later moved into portfolio management roles in energy-derivatives trading outside SIG—explains the firm’s model: centralized risk, large position size, and no hedging unless residual exposure distorted EV or created excessive P&L variance. He shows how this framework let SIG capture options market making edge, tighten spreads, and outcompete firms that hedged mechanically.This episode is definitely a new treat for viewers, linking options pricing, trade sizing, and execution to concepts used in algorithmic trading, alpha generation, portfolio optimization, multi-strategy hedge funds, pod shops, and even sports betting edge.We also discuss...How early exposure to the Amex options pits revealed structural options market making edge from wide bid-ask spreads and fragmented exchanges.Why observing senior traders shaped his understanding of expected value (EV), risk of ruin, and edge compounding in proprietary trading.How late-1990s retail flow and weak market microstructure created abnormal options edge before competition increased.The shift from easy trading to tougher environments as order flow toxicity rose and spreads tightened.Why measuring growth in trading comes from recognizing past mistakes, skill vs. luck, and the paradox of skill.SIG’s belief that markets are mostly efficient and why uncovering inefficiency requires serious labor, pattern recognition, and deliberate practice.Why traders must assume customer order flow is informed, reinforcing humility and disciplined risk models.How SIG’s structured recruiting and education flywheel accelerated mastery of options pricing and liquidity provision.Lessons from working with elite performers like Jason McCarthy and seeing extreme competitive drive and work capacity.Why outlier PMs excel across domains, linking athletic intensity to portfolio management and hedge fund strategies.How choosing between discretionary and systematic trading requires understanding personal strengths and cognitive style.Why young traders must tune out status games in high-prestige quant trading, pod shops, and multi-strategy hedge funds.How moving from SIG to a Chicago prop trading firm introduced him to backer models, P&L splits, and strict risk budgets.Managing natural gas options risk through inventory risk, vega exposure, and shifting volatility regimes.How designing options-themed games for his kids teaches expected value, open outcry trading, and real-world decision-making.