Typhon Capital Management, LLC : Tauros Livestock Strategy

Summary

The Tauros Livestock Strategy is managed by the manager of the Plutus Grain Strategy, and combines fundamental analysis with technical entries and exits. The Tauros Livestock Strategy is predominantly a livestock spread scalping strategy, but it also periodically incorporates seasonal and momentum trades. It also may hedge its livestock positions using grains, financials, or other commodities and occasionally incorporates long options and spreads. It is never net short option premium. The majority of the trades are not held overnight, but it will sometimes take seasonal spread positions overnight from a few days to a few weeks. Performance is proprietary pro forma for fees.

Investment Strategy

Tauros is primarily a livestock futures trading strategy with a small grain and treasury component. It also will employ energy, soft commodities, and options on occasion. Tauros mostly uses scalping strategies to exploit short-term market aberrations, in addition to some seasonal and momentum trades. Tauros uses fundamental analysis for trade conceptualization coupled with technical analysis to determine entry and exit points. Exit levels are determined before the trade is entered. The Program aims to "hit and run," taking small chunks from the market many times, only when there are readily defined trading opportunities with high probability of profit. The holding period for seasonal spread strategies ranges from a few days to a few weeks with hold times in excess of a month being rare. Flat price trades are typically entered and exited intraday, with the occasional overnight hold usually lasting less than 4 days.

Risk Management

Tauros sets entry and exit points with clearly defined risk before a trade is entered. Often, the Program initially enters a trade with a partial position, then adds exposure as the trade progresses. Much of Tauros’s trading is intraday scalping, meaning the Program is not in the market for a long period of time. The risk/reward on these trades are usually not as high as those of longer-term trades, but Tauros executes only the highest probability trades to try and maximize the win rate. Tauros is also frequently flat ahead of major fundamental reports, and subsequently makes momentum trades following the reports. This greatly reduces the substantial risk of a unfavorable gap against the Program that could occur due to a surprise, adverse report. Tauros is never a net seller of options.