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“Volatility is always present in the market and creates opportunities in both ways: big returns or big losses. Investors can make money on the pricing and volatility of volatility itself,” according to Edgar Nava, President and Head Trader, Grove Wealth Management.

Grove Wealth Management is an investment advisory firm at the marcus evans Latin Private Wealth Management Summit Fall 2018 taking place at Bahia Grand Panama, October 8-9.  

How can investors take advantage of volatility variations? 

Nava: Volatility is the degree of variation in price of securities along time. It is always present in the market and creates opportunities in both ways: big returns or big losses. Volatility is generated by the unpredictability of events and the repercussion on the markets, that makes people swing between optimism (the bulls) and pessimism (the bears), moving prices accordingly. Investors can benefit from volatility by trying to predict big movements in price and betting on securities accordingly (long or short). The bigger the movement (therefore the bigger the volatility), the bigger the profit. But you can also make money on the pricing and volatility of the volatility itself. We have developed techniques of investing in volatility that back-tested show consistent results because they increase the odds in our favor.

Can you tell us more about that? 

Sthory: The techniques are based on human investment behaviors and have been back-tested to determine degree of success. They behave well under many scenarios and phases of the market cycle, but of course we have also developed additional supra strategies or rules to adapt them to the changes of scenarios. It is like making basic clothes (pants and shirts) that work pretty well under any weather condition, but then you need accessories (sweaters, raincoats, coats, etc) to make them more efficient under tougher conditions (rain, cold, etc).

What are your investment criteria?

Nava: If we are only talking about volatility, the critical strategy is to be mostly short and avoid being long for extended periods of time. Common human perception is that the current time is the worst ever and the end of the world is coming soon. You can find this kind of sentiment and comments from World War I, World War II, tense episodes during the Cold War and even today with the terrorist attacks; and yet the human race has progressed and succeeded. This overly negative perception of the future makes volatility generally overpriced. Then being short in volatility pays off because most people are averse to volatility, paying too much to hedge it, and in financial markets this is a window of opportunity. But of course, financial black swan events and bear markets occur repeatedly. The key is to avoid or mitigate them.

What risk management strategies would you suggest?

Bracho: In our strategy Tactical Short in Volatility (VIX), we are not permanently short in VIX. There are periods of time we are in cash, and just occasionally long. We have identified entry points that make the trade safer and increase the odds of success. In Trade Formation, we mitigate risk by using a stochastic approach and the Law of Large Numbers. We place many small short option trades in a variety of different indexes and securities, and then exit the trade when the residual premium is not worth the risk. It is like an insurance company that insures many different cars. Some of them will generate claims but thanks to the Law of Large Numbers on average you will obtain a profit. On top of that, we reduce risks by closing a position before expiration, if the desired profitability is reached.

How do you use technology? What specialized tools optimize investment strategies?

Sthory: We believe in using technology to monitor, identify, evaluate, execute and organize trades. That is why we have developed a series of proprietary software platforms that allow investors to execute the trading strategies we have developed, for many accounts, in a homogeneous way. Not using technology for trading in the financial markets is to give an unfair advantage to your competition.

For example, our sentinel software scans the market evaluating several features of the securities. The App generates candidates, then selects the contracts that best meet your dynamic criteria. Once target criteria are met, the software automatically opens a new position. The Auto-Pilot app continuously monitors the performance of the positions by comparing the position’s market value vs the expected one, i.e. algorithmically calculated daily value. If the performance meets your defined criteria, the software will perform - automatically - the exit trade and close the position.

Ahead of the marcus evans Latin Private Wealth Management Summit Fall 2018, 
read here an interview with Edgar Nava, Orlando Sthory and Leonardo Bracho 

discussing how investors can take advantage of volatility

Edgar Nava - President and Head Trader

Orlando Sthory - Managing Director

Leonardo Bracho - Option Strategies Director

Grove Wealth Management

How Investors Can Make Money from Volatility

Recent Delegates
  • CEO, Arellano Family Office
  • Director, Batis Corporation
  • Managing Director, Blue Line Investments
  • CFO, Fundacion Pies Descalzos
  • CIO, Grupo Pantaleon
  • CEO, Proaltus Family Group
  • CEO, Skipper Capital Family Office
  • Director, Ventura Family Office
  • Managing Partner, Wealth Solutions

     and more…

About the Latin Wealth Management Summit Fall 2018

The Latin Private Wealth Management Summit is the premium forum bringing leaders from Latin America’s leading single, multi-family offices, holdings and service providers together. The Summit offers service providers and executives from single and multi-family offices an intimate environment for a focused discussion of key new drivers shaping the future of the industry. Taking place at Bahia Grand Panama, October 8-9, the Summit includes presentations on the strengths, opportunities, weaknesses and threats facing family offices and financial advisors in Latam, investment opportunities, structuring succession, and how investment trends are affected by the 4th industrial revolution.

Copyright © 2018 Marcus Evans. All rights reserved.

Summit Speakers
  • Antonio Gastelum, President, Antonio Gastelum
  • Andreas Eggenberg, Director, VIVA Trust
  • Francisco Laguardia Ahued, Partner, NSC Asesores
  • Jerónimo Rodriguez Zubicarai, Partner, NSC Asesores
  • Stuart Dunn, Chairman, Holdun Family Offices
  • Maggie Dunphy, CFO, Holdun Family Office
  • Dante de Lucia, Director, cLegacy
  • Juan Pablo Martínez-Blat, Partner, SAAGA
  • Emiliana Velutini, Chairman of the Board and CEO, Fundación Grupo Velutini

     and more...

October 8-9, 2018

Bahia Grand Panama

For more information, please contact:
Sarin Kouyoumdjian-Gurunlian

About Grove Wealth Management 

Grove Wealth Management is a Registered Investment Advisor (RIA) located in Miami (USA). The Partners of the Firm have a long experience in the US and Latin American markets, acquired by managing their own investment club. After many years of investment success, the partners decided to share the knowledge to a selected group of individuals and professional investors. This is how Grove WM started. Now as a RIA firm, we are focused on managing traditional investment portfolios and alternative investment strategies based on volatility. Our investment philosophy is to have the odds on our side for every investment. We achieve this by using our technological tools, statistical approach and a deep understanding of markets.

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