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ABOUT US

Trading
Philosophy

Dorian Trader’s trading philosophy is rooted in principles originally adopted from the Volatility Hedge Fund known as The Dorian Fund. This philosophy emphasizes generating consistent monthly income through trading, which can supplement or serve as a primary source of income, while also enhancing retirement investments.

Core Strategy

The principal investment strategy, derived from The Dorian Fund, employs a top-down macroeconomic approach to allocate capital across stock indices, commodities, currencies, and futures markets. Once market opportunities are identified, Dorian Trader’s methodology utilizes options strategies to capitalize on these possibilities.

Advanced Options Strategies

The advanced options strategies employed by Dorian Trader are built on probabilities, akin to how insurance companies write car insurance policies. For example:

Insurance companies calculate the probability of a policy expiring without a claim using factors such as age, driving record, prior coverage, and geography. They profit when policies expire without a claim exceeding the premium collected.

Similarly, Dorian Trader evaluates probabilities for options contracts expiring worthless, factoring in option delta, implied volatility, standard deviations, and duration.

By selling options, Dorian Trader generates income from premiums, aiming for contracts to expire worthless or to be bought back at a reduced cost. The philosophy prioritizes hedging at both the instrument and portfolio levels to minimize risk.

The Dorian Trader Process

1. Market Research + Evaluation

Proprietary quantitative and qualitative evaluators identify global markets to invest in.

Investments focus primarily on U.S. dollar-denominated products, including equities, commodities, currencies, and volatility instruments, all qualifying as 1256 contracts.

2. Position Determination

Once a target product is identified, positions are established using advanced options selling strategies.

Most trades are placed around two standard deviations from the underlying trading price, as determined by implied volatility.

3. Trade Execution and Management

Options positions are typically initiated with 30 to 60 days until expiration.

Positions are closed when they can be bought back at 25%, 50%, or 75% of the premium initially received. A small portion (≤1%) is held to expiration for full premium collection.

Futures contracts and purchased options are used to hedge individual positions or the portfolio as a whole.

Capital is distributed across multiple small trades, and a portion of the portfolio is always maintained in cash.

Bell Curve Trading Approach

Dorian Trader’s strategies leverage standard deviation principles to define trading ranges. For example, if an index is trading at 0 on a standard bell curve, Dorian Trader typically sells put spreads at -2 standard deviations to establish long positions and sells call spreads at +2 standard deviations to establish short positions.

This structured and probabilistic approach ensures that trading decisions are data-driven and risk-managed, providing the best opportunity to generate income regardless of market direction.

By adhering to these principles, Dorian Trader aims to help traders build a sustainable and profitable trading practice.

trading club

Learn how to make money with options in Dorian Trader's interactive Trading Club.
Rules

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