Strategy Overview

​

Our Approach

Tori generates yield through market-neutral trading strategies - the same approaches that hedge funds and proprietary trading firms have used to generate consistent returns for decades. These strategies are fundamentally different from speculating on whether markets go up or down. Instead, they capture returns from market inefficiencies - predictable price relationships that temporarily go out of line. Why market-neutral? Traditional yield sources are often correlated with market performance. When markets crash, yields typically compress or disappear just when you need them most. Market-neutral strategies aim to generate returns regardless of market direction. Whether markets rise, fall, or move sideways, the objective remains constant: deliver consistent, risk-adjusted returns by systematically capturing pricing inefficiencies rather than betting on market movements.

​

Strategy Types

Tori deploys capital across multiple complementary strategies. As market conditions evolve, we may expand our strategy set to capture new opportunities while maintaining our market-neutral approach.

​

Futures Arbitrage

How Futures Arbitrage Works

The opportunity: Futures contracts often trade at a premium or discount to spot prices. This difference (called “basis”) is predictable and can be captured as yield.How it’s captured:

1. When futures trade at a premium to spot, buy the asset in the spot market
2. Simultaneously sell the equivalent futures contract
3. Hold both positions until the futures contract expires
4. At expiration, the prices converge and the spread is captured

Example scenario:

• AAPL spot price: $200
• AAPL futures: $200.30 (0.15% premium)
• Buy spot, sell futures
• Minutes to hours later, when the basis compresses, both positions are closed
• Capture 0.10% (~$0.20 per share) on this single trade
• By executing hundreds of these trades daily, small gains compound into meaningful returns

Note: This is a simplified example. Actual execution involves additional considerations like funding rates and margin requirements.Why it’s market-neutral: The long spot position and short futures position offset each other. If AAPL goes up or down, gains on one side are offset by losses on the other. Returns come solely from the basis.

​

Calendar Spreads

How Calendar Spreads Work

The opportunity: The price relationship between futures contracts with different expiration dates sometimes deviates from fair value.How it’s captured:

1. Identify when near-term and far-term contracts are mispriced relative to each other
2. Buy one contract long and sell another short
3. Monitor the relationship as it normalizes
4. Close both positions for a profit

Example scenario:

• March AAPL futures: $200
• June AAPL futures: $204 (2% spread)
• Historical fair value spread: 1%
• Buy March, sell June
• When spread normalizes to 1%, the excess is captured

Why it’s market-neutral: The position profits from the relationship between two contracts, not from the direction of AAPL itself.

​

Options Strategies

How Options Strategies Work

The opportunity: Options markets exhibit structural pricing inefficiencies arising from fragmented liquidity across exchanges, violations of no-arbitrage conditions, and temporary dislocations in synthetic replication relationships.How it’s captured:

• Identify and exploit no-arbitrage violations like put-call parity
• Capture cross-exchange price discrepancies simultaneously
• Construct offsetting positions where all outcomes lock in at execution

Example scenario (Put-Call Parity Arbitrage, heavily simplified):

• AAPL spot: $200
• AAPL $200 call:$10
• AAPL $200 put:$11
• Put-call parity violation: Call - Put should equal $0, but equals -$1
• Buy the call, sell the put, short the stock simultaneously
• At expiration: All positions offset perfectly regardless of AAPL’s price
• Profit: The $1 mispricing, locked in at execution

Why it’s market-neutral: The three positions create an offset where price movements cancel out. Profit is locked in at execution.Additional arbitrage opportunities:

• Cross-exchange arbitrage (same option priced differently on CBOE vs. ISE)
• Box spreads (risk-free interest rate arbitrage using four options)
• Conversion/reversal arbitrage (exploiting synthetic stock mispricing)
• Volatility arbitrage (delta-hedged positions capturing implied vs. realized vol differences)
• Strike arbitrage (exploiting violations in option pricing across strikes)
• Calendar arbitrage (capturing mispricing between different expiration dates)

​

Money Markets

How Money Market Strategies Work

The opportunity: Access to institutional-grade short-term lending rates that typically aren’t available to retail participants.How it’s captured:

• Deploy capital into high-quality, short-duration instruments
• Access wholesale rates across global markets
• Hedge currency risk at optimal rates through institutional reach and scale
• Maintain high liquidity and low duration risk

Why it’s market-neutral: Money market instruments have minimal price sensitivity and provide stable, predictable returns. Any non-USD exposure is hedged to eliminate currency risk.

​

The Market-Neutral Principle

All of Tori’s strategies share a common design philosophy:

​

What This Means in Practice

​

Risk Management

Sophisticated risk management is fundamental to our strategy execution:

​

Position-Level Controls

​

Portfolio-Level Controls

​

Operational Controls

​

What We Aim to Avoid

Our strategy design explicitly seeks to minimize exposure to:

​

Transparency & Verification

Everything we do is designed to be transparent and verifiable: Current yield rates are displayed in the app and updated regularly.

​

Understanding Strategy Behavior

​

Temporary Drawdowns Are Normal

Delta-neutral strategies may show temporary paper losses before positions converge. This is expected behavior:

• Positions are designed to offset each other
• Market movements may temporarily affect one side more than another
• As positions converge, these fluctuations resolve
• This is not a permanent loss - it’s normal strategy operation

​

Risk Considerations

Our risk management works to reduce and manage risk systematically. See Risk Disclosures for complete information.

​

Next Steps