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

1. How Investors Can Make
Money from Volatility
Interview with: Edgar Nava -
President and Head Trader, Orlando
Sthory - Managing Director &
Leonardo Bracho - Option Strategies
Director, Grove Wealth Management
“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 Manage-
ment.
Grove Wealth Management is an
investment advisory firm at the marcus
evans Latin Private Wealth Manage-
ment 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 accesso-
ries (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 Forma-
tion, 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 invest-
ment 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 technol-
ogy 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 continu-
ously 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.
We have identified
entry points that
make the trade
safer and increase
the odds of success

2. The Investment Network –
marcus evans Summits group
delivers peer-to-peer information
on strategic matters, professional
t r e n d s a n d b r e a k t h r o u g h
innovations.
Please note that the Summit is a
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number of participants strictly
limited.
The Latin Private 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.
http://latinpwm.marcusevans-summits.com
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.
www.grovewm.com
About marcus evans Summits
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For more information, please visit: www.marcusevans.com
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http://events.marcusevans-events.com/latinpwm2018-nava-sthory-bracho
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