Nassim Taleb speaks during a presentation

June 1 (Bloomberg) — Universa Investments LP, the hedge-fund firm advised by “Black Swan” author Nassim Taleb. is adding a new strategy, betting that government efforts to pump money into economies around the world won’t prevent deflation or could result in hyperinflation.

Universa manages $6 billion under investment chief Mark Spitznagel. offering funds and accounts wagering on extreme market moves. The Santa Monica, California-based firm is investing client funds on the premise that no one knows where inflation is headed, Taleb said in an interview today.

“Policy makers have no control over the outcome of their actions,” Taleb said. “The plane they are flying will either hit the mountain, which is hyperinflation, or crash in the ocean, which is deflation. There is a chance of the pilot hitting the runway. But if he’s not skilled, it’s less than he thinks.”

Universa is buying options on about 20 products that move according to expectations about inflation, Taleb said. Universa’s strategy is based on buying deep out-of-the money options — puts and calls whose strike price is either lower or higher than the market price of the underlying security. A put option gives the buyer the right, though not the obligation, to sell a specific quantity of a particular security by a set date. A call option gives the right to buy a security.

The new strategy was reported earlier by the Wall Street Journal.

Funds Doubled

As the founder of New York-based Empirica LLC, a hedge-fund firm he ran for six years before closing it in 2004, Taleb built a strategy based on options trading to protect investors from market declines while profiting from rallies. Some funds overseen by Universa more than doubled last year when markets collapsed after the bankruptcy of Lehman Brothers Holdings Inc.

Taleb wrote “The Black Swan: The Impact of the Highly Improbable,” which argues that history is littered with rare, high-impact events.

“The options are not as expensive as they should be,” Taleb said. “The market is not pricing in” significant events.

Universa, which opened under Spitznagel’s direction in 2007, runs the Black Swan Protection Protocol, which buys puts and calls on a portfolio of stocks and the S&P 500 Index Futures. Pallop Angsupun manages the portfolio and is overseen by Spitznagel and Taleb.

To contact the reporter on this story: Stephanie Baker in London at stebaker@bloomberg.net

To contact the editor responsible for this story: Larry Edelman at ledelman3@bloomberg.net