Lucas Cavalieri

building @castle_tech_ | ex quant @ sig, math @ stanford

[Lucas Cavalieri @luki_cavalieri]

Excited to share what I’ve been working on at Castle.

On the trading floor, we priced and traded all sorts of geopolitical and regulatory risks. However, corporations across the globe are forced to keep large, discrete, risks on their balance sheet.

We are bridging this gap, leveraging prediction markets to provide coverage for uninsurable risks.

Read more about our Mission at https://t.co/tNoGfKgWk0

[Castle Technologies @castle_tech_]

Introducing Castle

A company, today, is an unintentional wrapper of macro events: an airline is an embedded oil trade, a solar developer is a tax-credit bet, and a data center is a wager on permits clearing before a moratorium lands. These exposures are intangible, lack historical data, and, therefore, remain unprotected on corporate balance sheets.

On the other hand, there are players who actively seek this risk. As quantitative traders, we modeled these events, and we craved more avenues to express our opinions and to provide liquidity.

Castle exists to bridge this gap. We leverage markets and models to cover the risks that insurers won’t, enabling businesses to focus solely on their execution.

Read about one of our recent trades, in collaboration with our friends at Susquehanna and @Kalshi , as a CNBC exclusive linked below.

We were quants, engineers, and hedge fund managers. Now, our Mission is to reprice one of the world’s oldest and largest markets.

Find out more about Castle’s Mission below

[Lucas Cavalieri @luki_cavalieri]

Wait until they start doing insurance…

[forward deployed ccp gf @FangYi11101]

Everyone does everything now. JS does L/S. HRT does venture. Two Sigma does market making. Nothing is sacred.

[Lucas Cavalieri @luki_cavalieri]

@shaurya_sinha7 Insane work!!

[Lucas Cavalieri @luki_cavalieri]

@BoringBiz_ @castle_tech_ 🚀🚀

[Lucas Cavalieri @luki_cavalieri]

@mansourtarek_ @ahall_research Thanks Tarek 🤝🚀

[Lucas Cavalieri @luki_cavalieri]

@victorcardenas @castle_tech_ Vamos 🚀🚀

[Lucas Cavalieri @luki_cavalieri]

@moritz_stephan @castle_tech_ Indeed!

[Lucas Cavalieri @luki_cavalieri]

@santiaghini Vamos Santi!!!

[Lucas Cavalieri @luki_cavalieri]

@BrianJMcGrath @junpunts Let's go 🚀

[Lucas Cavalieri @luki_cavalieri]

@JerLevine @castle_tech_ Thanks Jeremy🤝

[Lucas Cavalieri @luki_cavalieri]

🐐🏰🚀 @castle_tech_

[CNBC @CNBC]

Goat herding hedge: How Susquehanna and Kalshi are helping this company offset a change in California law https://t.co/4nJeNSvETH

[Matt Levine @matt_levine]

"I’m definitely a person,” I added in this newsletter. https://t.co/IVYeNa207A

[Lucas Cavalieri @luki_cavalieri]

Be like Tim. Hedge with @castle_tech_ 🏰

[Brandon Beckhardt @beckhardt]

Be Tim Arrowsmith
> Be goat herder in Redding, California
> Literally live in a place called "Poverty Flats" because the gold rush skipped it
> Region is prime wildfire territory
> Realize goats eat everything, including the dry brush that fuels fires
> Build a business renting out goats to clear land and stop wildfires
> Pay your herders $60k/year, feed your family, save California from burning
> Life is good
> 2023: California decides herders "on call" should get paid ag overtime
> $60k salaries become $240k overnight
> That's bankruptcy, fired employees, and goats sold to the slaughterhouse
> Go on the news circuit, fight like hell, win an extension to July 2026
> July 2026 arrives
> Back on the defensive
> Run the math: no exemption = $500k in costs
> This would ruin you
> 90% sure you'll win in Sacramento, but 90% isn't 100%
> Try to find insurance for "state legislature ruins my goat business"
> It doesn't exist
> Wall Street makes custom hedges like this every day... for clients worth millions
> You herd goats. Wall Street doesn't pick up
> Go to Kalshi instead
> Ask for a market on your own exemption
> Make a $50k trade AGAINST the exemption at 10% odds
> Win in Sacramento? $50k for peace of mind
> Lose? Kalshi pays out $500k and covers everything
> Either way: family fed, workers employed, goats alive
> The ultimate hedge

Be Tim Arrowsmith
Unruinable

[Lucas Cavalieri @luki_cavalieri]

@beckhardt 🤝

[Lucas Cavalieri @luki_cavalieri]

@HeroDividend @castle_tech_ hedging anything nowadays

[Lucas Cavalieri @luki_cavalieri]

@HeroDividend 🐐🐐🐐

[Lucas Cavalieri @luki_cavalieri]

@mansourtarek_ 🤝🤝🤝

[Lucas Cavalieri @luki_cavalieri]

Well said! @castle_tech_ leveraging prediction markets to cover these uninsured risks

[Tarek Mansour @mansourtarek_]

Esoteric or niche hedges are difficult through traditional insurers or re-insurers.

Competitive exchanges make it possible by matching those who have the risk but cannot bear it with those who do not have the risk but are actively looking for idiosyncratic returns.

[Lucas Cavalieri @luki_cavalieri]

@ClownWorld @castle_tech_ 🐐🏰

[Lucas Cavalieri @luki_cavalieri]

@RaghavRajSah @castle_tech_ hedging bespoke risks in size 🏰🚀

[Lucas Cavalieri @luki_cavalieri]

@LinkofSunshine @castle_tech_ really hedging anything

[Lucas Cavalieri @luki_cavalieri]

Now it is... hedge with @castle_tech_ 🏰

[Basil🧡 @LinkofSunshine]

I low key have always been surprised custom insurance has never been that popular

Back in the day, air lines used to spend vast amounts on oil futures for this! Being able to hedge against random expenditures is so cool