PTI Securities & Futures L.P. www.PTISecurities.com 800.821.4968 Protected Index Program® This is not investment advice – it is for educational purposes only. It is an example of investment risk management provided by PTI Securities and may or may not be suitable for every portfolio. Please read the Options Disclosure Document 1
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January 15, 2011 Protected Index Program Presentation
This is not investment advice – it is for educational purposes only. It is an example of investment risk management program provided by PTI Securities & Futures LP and may or may not be suitable for every portfolio. Information in this presentation is as of 1/15/2011.
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Considerations: Understand the obligations and risks Options are not suitable for all investors Commissions, Taxes, and Margin Requirements are not calculated here ..and may have significant effects on your returns Investors considering option investing should consult their tax advisor as ..to how taxes affect option transactions
Options involve risks and are not suitable for all investors. For more information, consult your investment advisor. Prior to buying or selling options, a person must
receive a copy of Characteristics and Risks of Standardized Options, which is available from the Chicago Board Options Exchange by calling 1-800-OPTIONS or by writing the Exchange 400 S. LaSalle St., Chicago, IL 60605. “Dow Jones(SM)” and “The Dow”(SM), are service marks of Dow Jones & Company, Inc. and have
been licensed for use for certain purposes by the Chicago Board Options Exchange, Inc. (CBOE). CBOE’s options based on Dow Jones Indexes are not sponsored,
endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in such a product. Copyright 1997, The
PTI Understands the Needs of Traders and Delivers Full
Service At Competitive Rates
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Excellent, Fast Spread Execution: Superior spread execution is critical and all PTI brokers fight to get the best and fastest execution. Many PTI clients do spread trading and our business is built on premium spread execution.
Competitive Commission Rates: PTI is not the cheapest place to trade, but we know that there is more to gainingyour business than simply the commission rate. Obtaining the best possible executions is what our clients want - at a fair competitive rate. And PTI Delivers!
Dedicated Team of Highly Qualified Brokers: At PTI our brokers work as a trading team – YOUR trading team! When you call PTI, every broker who picks up the phone is ready to answer our questions AND take your orders.
What Are SPDRs? SPDRs (SPY) represent ownership in the SPDR Trust, a unit investment trust owning substantially the same stocks and in the same percentage as the S&P 500 Index. These stocks represent a broadly diversified investment that spans over 90 separate industry groups. The price performance and dividend yield of the trust should be substantially the same as the S&P 500 Index.
What are QQQs? QQQs represent ownership in the NASDAQ 100 Trust, a unit investment trust owning substantially the same stocks and in the same percentage as the NASDAQ 100 Index. These stocks represent 100 of the largest non-financial U.S. and non-U.S. companies on the NASDAQ Stock Market. The price performance and dividend yield of the trust should be substantially the same as the NASDAQ 100 Index.
Define a maximum amount of downside investment risk when purchased to protect an underlying security Retain unlimited upside potential for the life of the option
Longer period until expiration – a LEAP is an option which has an expiration date in excess of 1year in the future. Short term options are less than 1 year.
The more time an option has until its expiration date, the more slowly the premium declines, and the more time in which an investor’s market opinion may be realized.
Long the S&P 500 Index - Purchase of the SPDRs Long the the Russell 2000 Index - Purchase of the IWMs Long the SPX and IWM LEAP Puts -To achieve a level of portfolio protection
PTI Proprietary Management Program Attempts to maximize returns and diversification through a blend of S&P 500, Russell and/or NASDAQ 100 indexes, as requires.
Looks to limit initial total risk to 10-15% of portfolio value.
Uses the faster time decay of the short Call to pay for the Put protection.
Looks to roll the Calls and/or Puts in volatile or trending markets as needed.
This strategy will under-perform the underlying index during periods of rapid price advances, due to the short Calls which limit upside potential and declining LEAP Put values.
This strategy should outperform the underlying index in static markets, due to the faster time decay of the short Call vs. the long LEAP Put.
This strategy should significantly outperform the underlying index in decreasing markets due to both the short Call premium and the long LEAP Put.
1. It seems a little easier to have patience and to do some minor market timing with the Calls when you are never in a panic situation. We were always protected and always knew what our risk was.
2. It is easier to take some small chances with the Calls within the framework of a successful program. Once the program starts to work and it is exceeding the return on the S&P you almost develop a “momentum”.
3. The ability to roll "up and out" has worked better than anticipated. We have solid brokerage relationships with brokers in the various pits that have surprised us with some amazing executions on several occasions.
4. We really had only one nightmare month, the wild swings in November, 1999 brought about by the Long-Term Capital situation and resulting bail-out.
5. Maybe, just maybe, part of it is because we have some talent and work hard for every dollar the market gives us. We believe in the program and think it is the right strategy for a lot of customers and institutions for the long term. We are motivated to prove ourselves correct. The first eight years only makes us more convinced.