Silvan Herriger, former director and equity index trader at Deutsche Bank in London, has launched a global volatility fund. Dubbed octa capital--for eight, representing limitless possibilities and upside--it started up Friday. Herriger said it will close at USD250 million.
octa will initially focus on equity indices, Herriger's area at Deutsche Bank, and will use listed and over-the-counter options as well as more structured trades such as dividend swaps and variance swaps. Following several months of rising volatility and panicked equity markets, Herriger noted, "In a volatility fund, the more panic there is the more opportunities there are if you have a slightly cooler head than the rest." He added the benefit of volatility trading is, "In any type of market conditions you can make money."
Joining Herriger as assistant trader is Greg Small, previously a v.p. trading high-yield and industrial credit-default swaps at Bear Stearns. While the first phase of the fund's development will concentrate on index trading, Herriger said it will likely expand to single-stock trading and then on to some relative-value plays, perhaps looking at credit versus skew, for example. The expansion of the strategy would be tied in to the expansion of the fund, he added.
Simon Clowes, a former global head of proprietary trading at Commerzbank, is marketing manager and backup trader. Clowes is capital manager at VCM, which handles middle and back office operations for octa. Herriger said this was important because many investors, while satisfied with his trading experience, wanted reassurance the operational side of the business would be handled by an experienced firm or individual.
The prime broker is Goldman Sachs and minimum investment is USD100,000 or EUR100,000.
