To hedge fund manager Shiliang Tang, the biggest crypto story this year is taking place in the shadows: An options market that’s booming and shaking up digital-currency trading along the way.
At his $130 million fund LedgerPrime, filled with Wall Street converts from the likes of Virtu Financial Inc. and Cantor Fitzgerald LP, Tang is minting money trading derivatives on virtual tokens.
The Bank of America Corp. and UBS Group AG alum is making markets in options and running systematic strategies like price arbitrage and momentum across exchanges. The reward: a 78% return this year in his flagship fund.
“The opportunity seemed larger given the inefficiencies,” said the chief investment officer in an interview from Miami. “There’s so much innovation and new products being launched in crypto.”
Fed by relentless demand for leverage and hedging strategies, the crypto derivatives complex is getting bigger, ever-more liquid and increasingly influential. With Bitcoin still up around 250% over the past year despite heart-stopping swings and the recent downslide, new venues of speculation from decentralized finance to futures contracts have exploded to meet the insatiable appetite to trade.