At Terramatris, we are still an early-stage crypto hedge fund. Our core strategy leans toward directional exposure—going long on assets we believe in and applying quantitative options strategies to generate income. Specifically, we sell puts and calls on assets like Ethereum and Solana, capturing option premiums while managing risk.
This allows us to grow the fund more aggressively, as we participate directly in upside movements while securing steady cash flow from option sales.
However, as outside capital gradually flows into the fund, we are also introducing arbitrage strategies alongside our directional and options trades. These arbitrage trades are not designed to rapidly grow a small fund, but they add balance, protection, and consistency to our overall portfolio.
Why Arbitrage Matters
Arbitrage trades offer a delta-neutral position, meaning the overall market direction doesn’t affect the outcome. Instead, returns are locked in by capturing spreads between different markets or instruments. While these trades may seem modest in terms of short-term profit, they provide peace of mind and stability for investors who value risk-adjusted returns over volatility.
From a more classical investment perspective, arbitrage can be very lucrative. Some of our strategies—like those in Solana markets—can reach annualized yields of around 9%, which is a strong, consistent return profile compared to many traditional asset classes.
Our Preferred Arbitrage Trade: Solana Spot vs. Futures
One specific trade we enjoy is:
- Long spot SOL (holding Solana directly)
- Shorting Solana futures with a set expiry
This structure allows us to lock in the spread between spot and futures prices, effectively hedging away price movements while securing a predictable yield.
Such trades don’t move the needle much when working with small amounts of capital, but with larger inflows they become a reliable way to enhance the fund’s stability and protect against sharp market swings.
Where We Use These Trades
Currently, arbitrage plays an important role in our Solana Covered Call Growth Fund, where they complement both our long positions and our quantitative options strategies. Looking ahead, we may consider launching a dedicated arbitrage fund. However, that approach would be more capital-intensive—since arbitrage yields scale best with size—and at this stage, our focus is still on growing assets under management.
Conclusion
At Terramatris, we believe in combining growth-oriented directional trades, quantitative options strategies, and risk-managed arbitrage trades. This blended approach allows us to capture market upside while offering investors stability and reliable returns. As our fund grows, we expect arbitrage to play an even more prominent role, potentially shaping entire fund structures dedicated to such strategies.