Hoffman and Cetusic: A Happy Hybrid

With their extensive backgrounds in software and finance, it was a natural fit for Zoran Cetusic and Jantz Hoffman to team up and create their own trading business. Their company, Delta Capital LLC, launched in February 2009 and includes a forex program and a futures-forex hybrid model, and has recorded steady returns over the past year.

Hoffman and Cetusic took different paths into the trading world. Hoffman began his career as a financial salesperson for a currency trader after college. “When I first took it, it was more of a job, [but then] I learned from the head trader and was interested in learning more, so that really inspired me,” Hoffman says. From there, Hoffman joined Elsworth Berg FX, where he was director of forex trading. At Elsworth Berg, Hoffman met Cetusic, a software engineer.

In 1997, Cetusic joined a small startup company, Interactive Intelligence, where he worked his way up to lead software engineer. Interactive Intelligence went public in 2000 during the dot-com boom. “I earned a decent chunk of money from the IPO and ended up promptly losing it in the 2001 crash. At that point, I decided to apply my software engineering skills to the market to find myself a niche,” Cetusic says. “I worked on various automated trading models with derivatives and stock options. It [was] a part-time hobby of mine for about four years.” In 2005, he started working with Elsworth Berg in software development, engineering and trading, where he developed a number of automated trading strategies and platforms on which to execute them.

In November 2008, Hoffman and Cetusic left Elsworth Berg and started Delta Capital LLC in February 2009. In February 2010, Delta Capital added a third partner, John Burnside, who began his career in finance as a market maker at the Chicago Board Options Exchange in 1986 and has held positions with Merrill Lynch, Susquehanna Investment Group and TD Securities.

Delta Capital features both a futures/forex hybrid model and an automated forex trading system, Delta FX Blue, which trades six currency pairs, EUR/USD, GBP/USD, AUD/USD, USD/CHF, USD/JPY and USD/CAD. Delta FX Blue employs “a trend-following strategy that uses digital signal processing to do some filtering on the time period. We’ll look for interesting opportunities in six different pairs,” Cetusic explains. Delta FX Blue has a 20.25% return from its launch in February 2009 through January 2010.

“Everything that we do is strictly automated and based on systematic trading. We’re a reversion to the mean/trend-tracking system,” Cetusic says. Despite the apparent contradiction, Delta’s approach was produced strong profits in its first year. “We exploit inefficiencies in the market, based on our indicators. When we see the market has gone too far one specific way, we’re hoping to profit from it correcting itself,” Cetusic adds.

The Delta Hybrid model trades futures and forex against each other. For the hybrid model, Cetusic and Hoffman take related asset classes, such as the S&P 500 index vs. the Australian dollar, or oil vs. Canadian dollar; pairs that are very closely related to each other that seem to be behaving very similarly, and then look to exploit mathematical opportunities that exist in these relationships.

For Hoffman, the most interesting thing about trading is seeing the concepts that he and Cetusic develop come to fruition. “A lot of this stuff Zoran and I will think about conceptually — things we see, ideas we want to try, how we think we can measure certain aspects of the market— and then Zoran will program [them]. To see the concepts that we were talking about and the relationships that we viewed created into a working system is the most exciting part,” he says.

Cetusic agrees. “Being right and finding that underlying mathematical relationship in the market and having that actually validated through actual returns is very exciting.”

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