OptHedge Advisors opthedge.altavra.com

OptHedge Advisors seeks capital appreciation of clients’ accounts through speculative trading in futures and options contracts on a diversified pool of futures products. There is no representation being made that the trading program offered by OptHedge Advisors will be successful in achieving this goal.

OptHedge Advisors recommends that clients open accounts with a minimum of $250,000 for the trading program to ensure that clients will have sufficient equity in their accounts to fully participate in the trading program. However, OptHedge Advisors reserves the right to waive these minimum funding requirements. OptHedge Advisors may accept notionally funded accounts.

The trading program utilized by OptHedge Advisors is proprietary and confidential. The description below is therefore general by necessity and is not intended to be an exhaustive description of the trading program.

Types of Transactions
OptHedge Advisors objective for the trading program is to achieve appreciation of clients’ assets through speculative trading strategies that involve executing trades on both futures contracts and options on futures contracts. There is no representation being made that the trading program being offered by OptHedge Advisors will be successful in achieving this goal.

For the trading program, OptHedge Advisors intends to focus on trading futures and/or options contracts on a diversified pool of futures products, including but not limited to various commodities (such as metals, softs, grains, and energies), stock indexes, U.S. treasury bonds, and foreign currencies. OptHedge Advisors reserves the right to trade any liquid futures or options contracts which, in its sole discretion, OptHedge Advisors determines represents an attractive trading opportunity for the trading program.

In General
Money managers generally rely on either fundamental or technical analysis, or a combination thereof, in making trading decisions and attempting to identify price trends in a commodity interest. “Fundamental analysis” is the consideration of factors external to the market of a particular instrument. For example, weather and political events which affect the supply and demand of that particular instrument, in order to predict future prices of that instrument. As an example, some of the fundamental factors that affect the supply of commodities (e.g., agricultural products such as corn and soybeans) include the acreage planted, weather during the growing season, harvesting and distribution of the commodity and the previous year’s crop carryover. The demand for such commodities is determined in part by domestic consumption and exports and is a product of many factors, including general world economic conditions, exports and the cost of competing products which might be substituted as alternate sources of food or fiber.

“Technical analysis” is not based on the anticipated supply and demand of the “cash” or “physical” (i.e., actual) commodity; instead, technical analysis is based on the theory that a study of the markets themselves (in particular, of trends of prices established by the markets for various instruments during selected historical periods) provides a means of anticipating prices. Technical analysis of the markets often includes a study of the actual daily, weekly and monthly price fluctuations, as well as volume variations and changes in open interest, utilizing charts and/or computers for analysis of these items and other technical market data.

Both general methodologies (i.e., fundamental analysis and technical analysis) have been employed with success by traders and investors in the past, however, neither trading method can be assured of success in a particular interval of time.

The trading program used by OptHedge Advisors employs trading strategies that OptHedge Advisors believes, based on both fundamental analysis and technical analysis of various markets, can potentially generate trading profits for clients. Past results are not necessarily indicative of future results.  The risk of loss exists in trading futures, options and off-exchange forex can be substantial.

Volatility Skew Options Strategy
OptHedge Advisors trading program will focus on identifying markets in which “volatility skew” opportunities potentially exist whereby OptHedge Advisors may attempt to purchase certain option contracts that may be trading at a low level of implied volatility and sell other option contracts that may be trading at a high level of implied volatility for the same underlying futures product. For example, OptHedge Advisors may seek to sell call and/or put options for a given futures product at certain selected strike prices and/or expiration months while simultaneously buying call and/or put options for that same futures product at certain selected strike prices and/or expiration months that may be different than for the options that are selected by OptHedge Advisors to be sold.

OptHedge Advisors trading program will trade options and futures contracts on various futures products and will often focus on establishing combined positions in a given futures product by simultaneously employing the following combinations of strategies:

(1) writing (selling) call and/or put options on a given futures product that OptHedge Advisors believes to be trading at prices that reflect a high level of implied volatility relative to other options that may be trading on such futures product,

(2) purchasing call and/or put options on such futures product that OptHedge Advisors believes to be trading at prices that reflect a low level of implied volatility relative to other options that may be trading on such futures product, and

(3) making adjustments that OptHedge Advisors believes are necessary to manage risk on such positions by trading futures and/or options contracts in response to directional price movements that take place in the underlying futures and commodities contracts.

The trading program can derive profits from employing the above described strategy when the price of options that have been written (sold) declines so that such options can be purchased for a lower price than the price at which such options were initially sold. Profits are further realized when options expire worthless, providing full profit on the option premium sold (after commission and other fees). In addition, the trading program can derive profits when the price of options that have been purchased increases so that such options can be sold for a higher price than the price at which such options were initially purchased.

Tactical options trades (such as delta neutral positions, calendar spreads, and volatility skew spreads) may frequently be initiated by the Advisor when utilizing the above described strategy with the expectation of profiting from a change in overall implied volatility and/or the relationship among the volatilities of options with different strike prices and/or different expiration dates.

OptHedge Advisors will attempt to manage risk on positions that may be established utilizing the above described strategy by entering into transactions in futures contracts and/or options on futures contracts that are intended to hedge the overall exposure of a position in a commodity or futures product in a manner that OptHedge Advisors believes will maximize the profits and/or minimize the losses that may be associated with anticipated directional price movements in the underlying futures and commodities contracts. However, there is no representation being made that the trading program will be successful in achieving this goal.

Strangle Options Strategy
OptHedge Advisors trading program will also focus on identifying certain non-trending markets in which OptHedge Advisors can potentially generate trading profits by employing “strangle” strategies that involve the Advisor simultaneously executing trades to both sell call options and sell put options on the same underlying futures product.

Trading and Risk Management Strategies
OptHedge Advisors may trade client accounts and manage risks on positions established in client accounts using various options strategies, including purchasing options to initiate positions or manage risk on open positions in a given futures product, selling uncovered or “naked” options for the purpose of generating additional income, and using both credit and debit spread strategies.

For the trading program, OptHedge Advisors will generally attempt to limit risk to between three percent (3%) and ten percent (10%) of an account’s equity per position established in a given futures product. However, there is no guarantee that losses on any given position will be limited to these amounts.

While OptHedge Advisors will make every effort to adhere to the above described risk management guidelines in managing the positions held pursuant to the trading program, OptHedge Advisors reserves the right to take appropriate actions outside the above described risk management guidelines if warranted by exceptional or unusual market conditions or if a futures product’s market situation results in unusually high amounts of risk.

OptHedge Advisors anticipates that the trading program will typically result in between twenty percent (20%) and thirty-five (35%) of the total assets of the clients’ accounts being used to margin positions based on the margin requirements. The Standard Portfolio Analysis of Risk (“SPAN”) performance bond margining system, which has been developed by the Chicago Mercantile Exchange and has become the futures industry standard, is the margining system that OptHedge Advisors anticipates will be used to calculate a client’s margin requirements. SPAN evaluates the risk of an entire account’s futures/options portfolio in a given commodity or futures product and assesses a margin requirement based on such risk. Although OptHedge Advisors intends to utilize a target margin percentage of between 10% and 25% of the total assets of a client’s account in order to satisfy such client’s margin requirements, the percentage margin requirement that may be utilized by OptHedge Advisors for a client’s account may at certain times be higher than or lower than these target margin percentages.

Diversification Strategy
The trading program will be managed by OptHedge Advisors in a manner that focuses on diversifying the positions established pursuant to the trading program across numerous different futures products in order to minimize the risks that may be associated with an adverse price move in any particular futures product in which a position may be held.

In managing the trading program, OptHedge Advisors will attempt to maintain open positions in futures and/or options contracts in at least five different futures products at any given time. However, OptHedge Advisors may not succeed in continuously achieving this goal during certain time periods since it is possible that the Advisor may be unable to identify a sufficient number of futures products for which the Advisor believes profitable trading opportunities may exist in a given time period.
 

Coby M. Hyman is the sole Principal and President of OptHedge Advisors. Coby Hyman is responsible for all aspects of the firm’s operation, including market research, trading, operation and management. Coby Hyman holds a business degree (B.B.A.) in Finance from Texas Tech University and a law degree (J.D.) from The University of Texas School of Law.

Coby Hyman has over ten years of experience designing complex investment structures and derivative instruments for hedge funds, private equity funds, and commodity trading funds. Mr. Hyman has extensive experience in the investment fund industry and has spent a significant portion of his career structuring investments for two of the largest investment advisors in the Dallas/Fort Worth area. Mr. Hyman has previously worked as Director of Tax for Highland Capital Management, L.P. in Dallas, Texas and as Director of Strategic Planning for Q Investments, Inc. in Fort Worth, Texas. While at these positions, Coby Hyman specialized in the design of complex investment structures utilizing various derivative instruments, including options, swaps, and prepaid forward contracts. Mr. Hyman became registered as an Associated Person of OptHedge Advisors on January 29, 2010. He was approved as a Principal of OptHedge Advisors on January 29, 2010.

The descriptions above are from the manager's disclosure document.

THE RISK OF LOSS IN TRADING FUTURES, OPTIONS AND OFF-EXCHANGE FOREX CAN BE SUBSTANTIAL.  PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.  PLEASE READ THE CTA'S RISK DISCLOSURE DOCUMENT CAREFULLY BEFORE INVESTING MONEY.