Ex-Capstone Investment Trading Head Yashar to Start Volatility Hedge Fund

Date: Tuesday, September 21, 2010
Author: Saijel Kishan and Jeff Kearns, Bloomberg

Stephen Yashar, the former global head of trading at New York-based Capstone Investment Advisors LLC, plans to start a hedge fund focusing on options contracts.

Cosyne Capital Management LP, based in Stamford, Connecticut, will begin trading next month, Yashar said today in an interview. The hedge fund will use options to bet that stock price swings will increase or decrease, he said.

“There are a lot of idiosyncratic opportunities in the single-stock space, especially with the increase in activity in corporate mergers and acquisitions and special situations,” said Yashar, 45. He declined to say how much money the firm will have at the start.

U.S. equity options volume is headed for a seventh straight annual record, according to data from the Chicago-based Options Clearing Corp., which clears and settles all trading of exchange-listed contracts. Volume for contracts linked to stocks and exchange-traded funds totaled 2.36 billion this year through August, up 5 percent from the year before.

Cosyne Capital will also make statistical-arbitrage trades, or bets that securities prices will hold to a historical trend, and wager on special situations such as corporate restructurings, Yashar said.

Yashar is opening the fund with Frank Erven, 39, who also worked at Capstone, and Hamid Zanganeh, 50, who worked at Gladius Investment Group and Pardus Capital Management LP.

Yashar left Capstone in May after working at the hedge-fund firm for three years. Before that he worked at Nomura Holdings Inc. in its equity proprietary trading group, and Bankers Trust.

Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility will rise or fall.

To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net