Petra Bakosova

Petra Bakosova is the CEO of Hull Tactical Asset Allocation, a firm founded by renowned options trader Blair Hull. Before joining Hull Tactical, Petra worked in institutional quantitative finance and derivatives. On this episode of Behind the Ticker, Petra joins Brad to discuss their tactical allocation ETF (HTUS), which uses a systematic, model-driven approach to dynamically shift equity exposure based on roughly 20 proprietary signals spanning macro, technical, sentiment, and valuation factors.

Blair Hull's Legacy and the Timing Model

Blair Hull built one of the most successful options market-making firms in Chicago and later sold it to Goldman Sachs. After that exit, he turned his attention to equity market timing, spending years building and refining models that attempt to identify when to be invested in equities and when to step aside. Hull Tactical is the vehicle for that multi-decade research effort.

Petra explains that the firm's model uses approximately 20 different signals that are independently tested and weighted based on their historical predictive power. These signals span macroeconomic indicators (employment data, manufacturing surveys, credit conditions), market technicals (momentum, breadth, volatility measures), sentiment indicators (investor positioning, put/call ratios, surveys), and valuation metrics (earnings yields, relative valuations across asset classes). The aggregate output produces a conviction score that tells the portfolio how much equity exposure to hold at any given time.

The fund can range from roughly 0% equity exposure (fully in cash or short-term Treasuries) to over 100% equity exposure using leverage. In practice, the portfolio spends most of its time somewhere in between, adjusting gradually as signals shift. Petra emphasizes that this isn't a binary risk-on/risk-off switch. It's a continuum that reflects the model's aggregate view of the probability of positive equity returns over various time horizons. The gradual adjustment helps avoid the whipsaw problem that plagues simpler tactical systems.

How HTUS Operates and What Makes It Different

HTUS primarily uses S&P 500 ETFs and related instruments to gain equity exposure, keeping implementation simple and liquid. When the model signals deteriorating conditions, the fund reduces equity exposure and increases allocations to short-term Treasuries or cash equivalents. When conditions are favorable, it adds equity. The rebalancing happens on a regular cadence rather than daily, which helps smooth out noise during volatile periods.

Petra is careful to distinguish HTUS from momentum or trend-following strategies. It's a multi-factor timing model that assesses the probability of positive market returns, not a system that simply follows price trends. Blair Hull's background in options pricing gives the firm a distinctive perspective on probability and expected outcomes. In options, you're always thinking about the distribution of potential outcomes and pricing accordingly. That same probabilistic thinking drives the tactical model.

One key differentiator is the fund's ability to use leverage when conditions are strongly favorable. Most tactical allocation funds cap equity exposure at 100%. HTUS can exceed that, which means it has the potential to compound faster during strong bull markets while maintaining the ability to de-risk aggressively during downturns. The asymmetric structure is designed to improve risk-adjusted returns over full market cycles rather than trying to perfectly time every move.

Where Tactical Allocation Fits in a Portfolio

Brad and Petra discussed the practical challenge of selling tactical allocation to advisors. The pitch is conceptually simple: reduce exposure before drawdowns and increase it before rallies. But every tactical model misses some calls, and the key question for advisors is whether the model improves outcomes over a full cycle compared to staying fully invested. Petra positions HTUS not as a standalone solution but as a complement to static equity allocations.

Her recommended sizing is 20-30% of an equity allocation in HTUS, with the rest in traditional index or active equity strategies. This way, the tactical component provides potential drawdown mitigation and enhanced risk-adjusted returns without requiring the advisor to bet their entire equity allocation on one model's signals. The fund can also complement buffer or defined outcome products, since it uses a completely different mechanism (dynamic exposure adjustment versus options structures) to manage equity risk.

Key Takeaways

• HTUS uses roughly 20 independent signals spanning macro, technical, sentiment, and valuation factors to determine equity exposure, with the ability to range from 0% to over 100%.
• Founded by Blair Hull, who built and sold one of Chicago's most successful options market-making firms to Goldman Sachs, then applied decades of research to equity market timing.
• The fund uses S&P 500 ETFs for equity exposure and short-term Treasuries for the risk-off position, keeping implementation liquid and operationally simple.
• Unlike most tactical funds that cap at 100% equity, HTUS can use leverage in strongly favorable conditions, creating an asymmetric return profile across market cycles.
• Recommended usage is 20-30% of an equity allocation, complementing traditional index exposure with a systematic tactical overlay for drawdown risk management.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.