Hedge Funds Hunt Commodity Volatility Traders Amid Global Market Swings

Traders who rake in profits from betting on volatility in commodity markets are finding their services increasingly in demand as trade wars and military conflicts spur wild swings in prices of raw materials. 

Hedge funds like Eisler Capital and quantitative trading firms such as Squarepoint Capital in particular have stepped up hires of traders who can generate profits across choppy markets, recruiters and market participants said.

Commodities from energy to metals and coffee have whipsawed this year as US President Donald Trump imposed tariffs on key trading partners, clouding the global economic outlook. The conflict between Israel and Iran also pushed several volatility gauges to yearly highs, and efforts to arrange peace talks between Russia and Ukraine are now injecting fresh uncertainty into energy markets.

The result is that one measure of commodities volatility surged in July to the highest since early 2023, when markets were still dealing with the aftermath of Russia’s invasion of Ukraine. This year’s turbulent environment has spurred a significant jump in demand for cross-commodities and volatility portfolio managers and traders compared with last year, said Ross Gregory, head of global commodities at executive search firm Omerta Group.

“Commodity volatility trading desks are now delivering real returns as geopolitical events on a daily basis surge,” said Gregory, who joined Omerta, a Kingsley Gate company, to lead the global commodities business in June.

Among the notable personnel moves, Eisler hired cross commodities volatility trader Greg Bugaj from Gunvor this year, while Scott Harbert, also previously at Gunvor, started his own hedge fund called Crucible Commodities and added trader Thompson Ng.

Anthony Pears, a senior metals trader who spent more than a decade at merchant Trafigura, was hired by Squarepoint, and Dimitri Avramov, previously a cross-commodity volatility trader at Bank of America Corp., moved to Morgan Stanley last month, according to LinkedIn. Robert Bennett, head of commodities relative value at Garda Capital, is joining Capstone in New York.

Eisler didn’t respond to a request to comment, and Squarepoint didn’t comment immediately.

Volatility traders — who use options to bet on the size of future price swings rather than their direction — lean heavily on expertise in building pricing models and algorithms.

Eisler’s Bugaj, for example, uses an approach that combines game theory, quantitative and fundamental analysis to identify and capitalize on structural imbalances or pricing anomalies in options markets.

Demand for commodities quantitative researchers, who can code in Python and have a background in machine learning, has increased notably this year compared to 2024, Gregory said.

The hiring wave also underscores the increasingly blurring line between hedge funds and physical trading houses, which have traditionally operated in separate corners of the market. Bloomberg earlier reported that hedge funds Balyasny Asset Management and Qube Research & Technologies Ltd. started trading physical gas in Europe for the first time this year. Qube has since taken steps to expand its physical footprint in the US.

Still, even the most advanced models aren’t foolproof, especially in today’s trading environment. Several top oil trading desks reported that their second-quarter profits dipped compared with a year earlier, citing geopolitical shocks and unpredictable US trade policy. 

This article was provided by Bloomberg News.