Tidan Capital’s evolution into a multi-strategy platform reflects a broader effort to deliver complementary sources of alpha, with its NOVA strategy serving as a foundational component within its product range. The strategy targets structural inefficiencies in options markets driven by persistent demand for downside protection. As investors consistently pay up for hedging, NOVA seeks to systematically capture this imbalance through a relative-value, market-neutral approach.
Most investors do not approach options as directional instruments but as tools for risk transfer. Options markets are shaped less by return-seeking behavior and more by structural hedging demand. Most equity portfolios require protection, mandates impose constraints, and downside risk must be managed, often irrespective of cost. “Most investors don’t trade options because they want to,” says Magnus Linder, Head of Volatility and Options Arbitrage at Tidan Capital. “They trade them because they have to.”
“Investors are price-insensitive when it comes to protection. They need it, so they pay for it.”
Serge Houles, CEO of Tidan Capital.
As Serge Houles, CEO of Tidan Capital, points out, “Investors are price-insensitive when it comes to protection. They need it, so they pay for it.” The result is a structural skew: downside insurance, typically expressed through put options, trades at elevated implied volatility, while calls tend to remain comparatively cheap. This imbalance is not episodic or confined to stressed markets; it is a consistent feature across cycles. “It’s more expensive to buy puts and cheaper to sell calls, not just in distressed markets. That’s almost always the case,” Linder explains.
From Market Observation to Strategy Design
While widely understood, this inefficiency is far more difficult to capture systematically. Doing so requires not only identifying the mispricing, but structuring trades that can monetize it across different market regimes without simply replacing one form of risk with another. This challenge sits at the core of Tidan Capital’s NOVA strategy.
Linder’s approach is rooted in decades of experience across the derivatives ecosystem. Early in his career, he worked closely with institutional investors, advising pension funds and asset managers on how to use options in portfolio construction. That role provided a clear view into how and why derivatives are used in practice. “You sit across from clients every day and you see the same behavior,” he recalls. “They are long equities, they need protection, and they are willing to pay for it.” He later spent more than twenty years on the sell side as a trader and market maker, where he observed the same imbalance from the opposite side of the market. “You see the flows, how prices are set, how risk is managed, and how that same imbalance shows up again and again.”
“The essence of the strategy is that puts are more expensive than calls; it’s largely a theta and vega game.”
Magnus Linder, Head of Volatility and Options Arbitrage at Tidan Capital.
At its core, NOVA is a relative-value volatility strategy designed to harvest the structural premium embedded in downside protection. The strategy expresses this through a structured combination of short-term downside risk premia and longer-dated convex exposures, while maintaining tight control of directional risk through active hedging. This structure allows the portfolio to monetize elevated implied volatility in near-term puts, driven by persistent hedging demand, while maintaining convex upside exposure. As Linder describes it, “the essence of the strategy is that puts are more expensive than calls; it’s largely a theta and vega game.”
Engineered Payoff Across Market Regimes
The payoff profile is deliberately engineered to behave differently across market regimes. Rising Markets: In rising markets, the strategy is positioned to participate in the upside, benefiting from both directional moves and convexity. “If the market is going up, we earn on the delta, and the delta is accelerating with the gamma,” explains Magnus Linder. In simple terms, delta reflects how much the position benefits from a move in the underlying, while gamma captures how that sensitivity can increase as markets move higher. As rallies develop, exposure naturally adjusts, allowing the strategy to participate more meaningfully in sustained upward trends.
Declining Markets: In declining markets, the payoff profile shifts in a more defensive direction. As markets fall, losses from certain positions are partially offset by dynamic hedging and the broader structure of the portfolio. At the same time, changes in volatility provide an additional buffer. While drawdowns can occur in a sell-off, the overall construction is designed to contain them and preserve convexity in stressed environments.
“Everyone wants convexity, but nobody wants to pay for it. Most convex strategies lose money when nothing happens, we’ve structured the NOVA program to have both convexity and positive carry.”
Magnus Linder, Head of Volatility and Options Arbitrage at Tidan Capital.
Sideways Markets: In more stable or range-bound markets, the strategy relies more on carry than direction. The portfolio is structured to benefit from the passage of time, generating steady income even in the absence of significant market movement. “If nothing is happening, we are actually earning money because of positive theta in the total structure,” says Linder. This is a notable departure from traditional convex strategies, which typically incur a cost in such environments. “Everyone wants convexity, but nobody wants to pay for it,” he adds. “Most convex strategies lose money when nothing happens, we’ve structured the NOVA program to have both convexity and positive carry.”
A Fully Discretionary Approach to Combining Convexity and Carry
This combination of convexity and carry is central to the strategy’s differentiation. Traditional long-volatility or tail-hedging approaches tend to “bleed” in normal conditions, relying on episodic volatility spikes to generate returns. “In general, long-volatility strategies suffer because they bleed all the time,” notes Houles. “The uniqueness of what we do is to have convexity when you need it, while maintaining a substantial positive carry.” While traditional tail hedges often deliver sharp performance spikes during market sell-offs, driven by short-term volatility surges, they tend to give back those gains as volatility normalizes. By contrast, the NOVA strategy is designed to monetize volatility more consistently, capturing dislocations without relying on one-off stress events.
Despite the use of quantitative tools for screening opportunities, implementation remains fundamentally discretionary. Models help identify relative value across markets, but they do not dictate positioning. “It’s really about screening, the rest is 100 percent discretionary,” says Houles. This reflects the path-dependent nature of options markets, where exposures evolve continuously with changes in spot, volatility, and time. “If you look at the Greeks at different volatility levels, it’s a completely different situation. You have to adapt in real time,” he adds. As a result, key decisions, from strike selection to hedge calibration, are driven by experience rather than rigid models.
From Standalone Strategy to Portable Alpha
Following its launch in late 2024, the NOVA strategy has delivered a strong performance, gaining 13.3 percent in 2025 and a further 8.2 percent in the first quarter of 2026. Building on this strong initial momentum, Tidan Capital introduced Tidan Global Equity Enhanced, a portable alpha strategy designed to combine NOVA’s return profile with traditional equity exposure. “If you’re looking at portable alpha, it’s a very efficient structure. It gives you equity exposure with a built-in hedge component and downside convexity,” says Linder.
“If you’re looking at portable alpha, it’s a very efficient structure. It gives you equity exposure with a built-in hedge component and downside convexity.”
Magnus Linder, Head of Volatility and Options Arbitrage at Tidan Capital.
The concept emerged both from internal analysis and client demand for maintaining equity exposure while improving risk-adjusted returns. By pairing low-cost equity exposure with NOVA as the alpha engine, the strategy enhances returns in rising markets while introducing a degree of protection in downturns. As Houles notes, “the beauty of NOVA is that it was effectively designed this way from the beginning, it naturally fits into a portable alpha framework.”
Ultimately, how NOVA and its portable alpha extension are deployed depends more on portfolio construction than on investor type. “It’s really a function of size and how the portfolio is structured,” says Houles. For larger institutional allocators, NOVA fits naturally within hedge fund allocations as a relative value or absolute return strategy, offering diversification and convexity. By contrast, the portable alpha version is more relevant for investors seeking to enhance equity portfolios without sacrificing beta exposure. Taken together, the two approaches offer a flexible toolkit: one as a standalone source of convex, carry-driven returns, the other as an overlay designed to improve equity portfolios.
