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Parrot Trading Partners
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Access This Page Directly:
http://parrottrading.altavra.com
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Program Description
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Types of Transactions
The
Advisor has sole discretion as to which futures and
options on futures contracts he will trade, and his
strategy for making such trades. The Advisor
reserves the right to trade in any futures or
options on futures contract traded on any U.S.
exchange, including commodity type contracts such as
other US based equity index contracts and energy
contracts. Notwithstanding the foregoing,
generally, the Advisor will trade futures in
securities-related contracts such as the S&P 500 and
the electronic version of the S&P 500, which is
referred to as an “e-mini”, or similar equity based
contracts.
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Trading Methodology
The
Advisor’s trading strategy is proprietary and
confidential. The following description is of
necessity general and is not intended to be all
inclusive. The Advisor seeks to capture profits from
intermediate to long-term trends in the futures,
forward, or cash markets. Trading signals are
generated from proven trading strategies.
The
basic strategy is to employ the use of diagonal
calendar spreads. The Advisor will purchase puts and
calls in the deferred months, and sell offsetting
puts and calls in the nearby months, in order to
maintain a reasonably balanced delta neutral
position. A delta neutral position simply means that
the Advisor will take positions that substantially
offset one another, so that if the market moves up,
the increase in the value of one contract may be
offset by the loss in value of a different contract.
The objective is to allow the time premium to bleed
off the nearby months at a much more rapid pace than
the time premium bleeds off the deferred months.
This Disclosure Document will describe the effect of
volatility changes. The most recent high volatility
conditions the S&P 500 futures contracts experienced
was during 2001- 2002 and over the past twelve
months.
Higher
volatility trades requires less cash because the
nearby options are sold at a lower price as compared
to the deferred options. In either case, the nearby
contracts can be rolled out to collect additional
premium and offset the up front cost of this
position (which by the way does not account for
slippage that might amount to another 2 points @
$250.00 per point). Positions must be adjusted
to account for market activity and the Advisor’s
history indicates that it can successfully monitor
and adjust the trade to maintain a profitable
position over time. Recent conditions have
seen VIX trading at more elevated conditions
compared to the previous eighteen months.
During 2007 volatility conditions saw VIX trade back
to a range in the mid- to upper 20's. The Advisor
expects volatility to resume trading somewhere near
its mean, but cannot predict its movements in the
short term.
Depending on market direction and volatility,
sometimes it is necessary to sell additional naked
positions in the nearby month, generally expiring in
less than three weeks, in order to maintain delta
neutrality. The Advisor has found this procedure to
be extremely beneficial in that the time premium
bleeds so rapidly. An investor is able to roll to a
deferred month and out as occurred in the violent
volatility of the Summer of 2002 and again in the
Fall of 2002. It may also be necessary to hedge with
futures contracts. As indicated, the overall
objective is to utilize the collection of time
premium in the nearby months. This is a relatively
brief description of the Advisor’s strategy to
collect a time premium. The Advisor believes this
strategy provides an edge in the market place, as
the nearby months' daily theta are generally
greater, more so than the deferred months. The
Advisor has seen this strategy be successful in both
low volatility or high volatility conditions. The
strategy can be particularly successful when moving
from high volatility to low volatility conditions.
The Advisor may be able to anticipate in certain
situations when the market is becoming more volatile
and effectively lower the investor’s risk by
avoiding the market and the use of this strategy in
these conditions, or utilize a different strategy
that seeks to take advantage of this greater
volatility. There can be no assurance, of course,
that the Advisor will be able to do this, or the
Advisor will be able to anticipate correctly the
timing in the shift in market volatility.
Notwithstanding the foregoing, each investor must
understand that past performance cannot necessarily
accurately predict future performance, and that
there is always a risk that this strategy will not
be successful, that the strategy may not be properly
executed by the Advisor, or that the Advisor may not
decide to employ a different or slightly different
trading strategy that may not be as successful.
The information highlighted above is a very brief
and simple explanation of a very complex trading
mechanism that involves the pricing components of
options, the S&P itself, its relationship to the
inside strikes, the overall recent range of the
market as well as the market volatility (VIX) in an
environment where the Advisor will attempt to
maintain a reasonable amount of market neutrality on
a day to day basis. Sometimes, the Advisor will make
an adjustment every day while other times the
Advisor may not make any adjustment for a couple of
days.
The Advisor’s goal is to achieve an average positive
return of 1% - 2% per month over a year's time. When
the market is reasonably stable, the return may be
higher. Similarly, when the market is
extremely volatile, or the strategy has not been
successful, one may expect to see a drawdown in the
neighborhood of 10-20% negative return on an annual
basis. In the current low VIX environment it may be
harder to attain the high end of the goal (2%), yet
when VIX is trading above average, the high end of
our goal will be attainable.
The Advisor will upon request explain in more detail
this strategy with each investor as may be required.
Each investor should understand that this strategy
represents dynamic positions that are subject to
change on a
daily basis. The Advisor’s experience in the market
allows him to maximize the results of this strategy.
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Management Information
J. E. Santaularia (“Jes”), an sole proprietor, was
registered as CPO and became an NFA member as of
March 17, 2004, and registered as a CTA on August
26, 2004. On January 25, 2006, Jes formed the
Advisor as a Florida limited liability company for
the purpose of managing commodity trading accounts
on his behalf. Beginning on January 25, 2006, the
Advisor began receiving payments, on behalf of Jes,
with respect to the operations of Parrot Trading
Partners, LLC, a commodity pool. In August, 2006,
Jes received a power of attorney (“POA”) with
respect to a client account, for which the Advisor
received payments on behalf of Jes for his
management services. Although Jes received the POA,
payments were made to the Advisor on behalf of Jes
without the Advisor being registered as a CPO or
CTA, and without the Advisor being an NFA member.
Although Jes was not aware of any violation at the
time, the receipt of such payments by the Advisor
was determined to be a violation of CFTC regulations
and NFA rules during an NFA audit of Jes (a sole
proprietor); the Advisor was promptly registered
upon Jes becoming aware of such violation.
The Advisor became an NFA member and a CPO on March
19, 2008, and registered as a CTA on March 20, 2008.
The Advisor currently manages one commodity pool
(Parrot Trading Partners, LLC) in addition to client
accounts which were formerly managed and operated by
Jes. Jes, as a sole proprietorship, is pending
withdrawal as a CPO, CTA and NFA member.
Additionally, Jes withdrew, as a sole
proprietorship, his registration as an Associated
Person and NFA Associate Member on May 6, 2008. In
summary, the Advisor is registered as a CTA, CPO and
NFA Member while Jes is a trading principal of the
Advisor. The Advisor’s principals, Jes and Charlie
Santaularia, became Associated Persons of the
Advisor on May 6, 2008 and March 19, 2008,
respectively.
As set forth above, the Advisor shall utilize the
services of Jes and Charlie Santaularia as its
trading principals. Jes has served as the president
of Diversified Concepts, L.L.C., a Kansas limited
liability company, from January, 1986 to the
present. Diversified Concepts, L.L.C. develops and
manages real estate in several states, including
Kansas, Missouri and Florida. While serving as
president of Diversified Concepts, L.L.C., Jes has
directed the construction, financing and management
of numerous self-service storage facilities,
including overseeing the acquisition and rezoning of
real property and the negotiation process with
Diversified Concepts' lenders. Jes
Santaularia’s complete Curriculum Vitae is attached
as Exhibit A to this Disclosure Document.
Jes has been successfully trading commodities on his
own account for more than twenty years. He is a
Certified Public Accountant, Certified Financial
Planner, Financial Industry Regulatory Authority
Arbiter (FINRA) and a Kansas Real Estate Broker. Jes
became a principal of the Advisor on March 18, 2008.
In addition, Jes became an Associated Person and NFA
Associate Member of the Advisor on May 6, 2008.
Charlie Santaularia holds an bachelors degree in
economics from the University of Kansas, and holds a
Series 3 NASD (National Association of Securities
Dealers) license. Charlie Santaularia has been
employed by Jes since the formation of Parrot
Trading Partners, LLC (a commodity pool) on April
13, 2004. During that time, Charlie performed
administrative and back office operations. Prior to
that time, Charlie Santaularia worked as an
assistant for Diversified Concepts, L.L.C.,
assisting the CEO in connection with certain real
estate development projects. Charlie Santaularia
attended the University of Texas in Austin from 2001
to 2002, and the University of Kansas in Lawrence
from 2002 to 2005. Charlie Santaularia became a
principal of the Advisor on March 18, 2008. In
addition, Charlie became a Branch Manager of the
Advisor on April 28, 2008. Charlie is also a branch
manager of Jes (a sole proprietorship), as of April
28, 2008. Charlie became an Associated Person and
NFA Associate Member of the Advisor on March 19,
2008. Charlie became an NFA Associate Member and
Associated Person of Jes on December 4, 2006.
Furthermore, Charlie has been an approved principal
of Jes since February 21, 2008. Pending Jes’
withdrawal of registration (as described on page 1),
Charlie’s status under Jes will also be withdrawn.
Please see Exhibit A in the disclosure document for the Curriculum Vitae of
Charlie Santaularia.
The Advisor currently manages a commodity pool for
Parrot Trading Partners, L.L.C., a Delaware limited
liability company, and is currently registered as a
CPO and CTA (please refer to "Past Performance" on
page 10 of the disclosure document).
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.
Disclosure Statement
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