After learning options trading from his mentor in the early 1990s, Scott Kimple, the founder and Portfolio Manager of Warrington, sought out a more consistent, conservative approach than traditional premium selling.  Ratio spread trading capitalizes on the benefits of premium selling while reducing the inherent volatility from selling options alone.  With the ability to be either long or short volatility at any given time depending on the manager’s market opinion, Warrington’s flexibility is a cornerstone of its investment philosophy. Preemptive risk management is formulated side-by-side with trade ideas to ensure proper risk/reward evaluation prior to each investment.

Trading Methodology

  • Warrington uses both technical and fundamental analysis to analyze markets, taking the best research insights from each discipline.
  • The firm’s trading uses many technical indicators in formulating a market opinion, but all trading is strictly discretionary.
  • Capitalizing on the mathematical tendencies of options, Warrington typically initiates positions three to four weeks prior to expiration to best take advantage of the acceleration of time decay.

Risk Management

  • Real time portfolio risk analysis using a custom technology platform devised over many years and is constantly updated
  • Prior to the initiation of each trade, a risk management protocol is codified and strictly adhered to.
  • Global macro analysis imputes a “fundamental overlay” to allow for such non-quantifiable influences to factor in to the investment thesis.