Cavenagh Capital believes that profit is derived from good trade construction together with effective on-going risk management. We strive to construct trades with an asymmetric payoff via derivatives and options. The focus is on the changing probability of an outcome rather than the outcome itself. We look for events which are either underpriced or overpriced by the respective instruments in the market place.

“People tend to underestimate low probability events when they haven’t happened recently, and overestimate them when they have.” Warren Buffett