How We Categorize Our Trades in 3 Buckets
Every great portfolio has balance, not in asset class diversification, but in trade type.
At CI Volatility, we like to think of our trades as falling into three buckets:
High-Winrate Income Trades, Convex Trades, and Special Situation Trades.
Each has a different purpose, time horizon, and risk profile.
1. High-Winrate Income Trades
These are the trades that “pay the bills.”
They don’t need to be home runs, they’re the steady, repeatable setups that compound small edges. Examples are short-dated mean-reversion strategies or option premium capture under low-volatility regimes.
Their goal is to generate consistent cash flow and keep your equity curve rising smoothly.
2. Convex Trades
Convex trades are the trades that don’t pay off often, but when they do, they pay big.
Buying volatility and other tail-risk hedges fall into this group.
Their goal is to capture outsized moves.
3. Special Situation Trades
Every so often, the market gifts us something unique such as temporary mispricings, structural dislocation, or behavioral overreaction such as an overreaction to a news report.
These are your special situations.
These setups often have a clear catalyst and finite window. They require timing but the payoff profile can be exceptional.
Putting It All Together
The goal isn’t to load up one bucket and ignore the rest.
It’s to have balance:
Income trades provide day-to-day stability.
Convex trades provide big upsides and add asymmetry.
Special situations provide opportunistic bursts of alpha.
Together, they form a resilient portfolio that can survive volatility, adapt to regime shifts, and still compound capital.
At CI Volatility, we view this three-bucket structure as the foundation of our portfolio construction.
It ensures that whether volatility expands or contracts, there’s always at least one part of our book working for us.