Our Investment Philosophy
At DG Capital Management, we leverage multiple small edges to create a powerful and consistent edge over the long term.
Backtesting
Stress Testing Our Strategies Under Different Market Scenarios
Deploy Capital
Scaling Into Our Positions Gradually Rather Than Deploying in Full
Manage Positions
Monitor And Adjust Our Positions Constantly As The Market Fluctuates
Balance Portfolio
Track And Optimize Our Capital Usage, Position Size, Risk, And Hedging Power
Stacking Up Edges
Raising Expectancy by Stacking Many Small Edges.
Selling Options
We Profit from Time Decay and Volatility Reduction. As time passes, the option loses value due to time decay.
Additionally, if the volatility of the underlying asset decreases, the option price will also decrease.
Selling Puts
Puts typically have higher premiums than calls, because they reflect the market’s fear of downside risk. By selling puts, we take advantage of this fear and collect higher premiums.
Sell Far Out of The Money Puts
By selling far out of the money puts, we minimize our risk and maximize our probability of success for two reasons:
Our positions are very safe because the underlying asset price has to fall a lot before we incur any loss.These options decay faster as they have a high probability of expiring worthless because they are far away from the money.
Delta Balance
We adopt a delta-neutral strategy, which means that we neutralize our sensitivity to market fluctuations and preserve a stable net value of our income positions
Scale In
We diversify our positions across different strikes and expirations, which means that we mitigate the impact of volatility and skew as the market changes
Layer In
Layer into different strikes and expirations so as the market shifts we reduce the effects of volatility and skew.
Backtesting Our Options Structures
Stress Testing Our Structures.
Through Backtesting we simulate our trade structures under various market scenarios and evaluate their performance. We use data-driven backtests to fine-tune our strategies based on historical data and then optimize them for the current market conditions.
Deploy Capital
We Scale into our Positions to Diversify Over Strikes And Time.
By scaling into our positions, we reduce our market exposure and enhance our risk-adjusted returns. By diversifying over strikes and time, we capture the market dynamics and mitigate the volatility and skew effects.
Manage Positions
Balance Positions and Hedges
We monitor our capital usage, position size, risk, and hedging power.
This is to ensure the entire portfolio is performing as planned with adequate hedging.
Balance Portfolio
Stress Testing Our Structures.
Through Backtesting we simulate our trade structures under various market scenarios and evaluate their performance. We use data-driven backtests to fine-tune our strategies based on historical data and then optimize them for the current market conditions.
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